Anani v. CVS, No. 11-2359 (2d Cir. 2013)
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Plaintiff, employed as a pharmacist for CVS, filed suit against CVS seeking additional compensation. During the relevant time period, plaintiff's base salary was based on a forty-four hour work week and that base weekly salary exceeded $1250 at all pertinent times. His base salary was guaranteed, and CVS classified him as a salaried employee exempt from the time-and-a-half overtime requirement of the Federal Fair Labor Standards Act (FLSA), 29 U.S.C. 201 et seq. The court affirmed the judgment, agreeing with the district court's holding that plaintiff was exempt from the FLSA's time-and-a-half overtime requirement because of an exemption for highly-paid employees.
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11-2359-cv Anani v. CVS 1 UNITED STATES COURT OF APPEALS 2 FOR THE SECOND CIRCUIT 3 August Term, 2011 4 (Argued: June 27, 2012 Decided: September 20, 2013) 5 Docket No. 11-2359-cv 6 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 7 8 SALAH ANANI, Plaintiff-Appellant, 9 v. 10 11 CVS RX SERVICES, INC., Defendant-Appellee. 12 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 13 B e f o r e: WINTER, STRAUB, and CHIN, Circuit Judges. 14 Appeal from a grant of summary judgment in the United 15 States District Court for the Eastern District of New York 16 (Arthur D. Spatt, Judge) holding a pharmacist exempt from the 17 FLSA time-and-a-half overtime pay requirement. 18 19 20 21 22 23 24 25 26 27 28 29 30 We affirm. SETH R. LESSER (Fran Rudich, on the brief), Klafter, Olsen & Lesser LLP, Rye Brook, New York, for PlaintiffAppellant. JAMES J. SWARTZ, JR. (Felice B. Ekelman, Jackson Lewis LLP, New York, New York, on the brief), Ashe Rafuse & Hill LLP, Atlanta, Georgia, for Defendant-Appellee. 1 1 2 WINTER, Circuit Judge: Salah Anani appeals from Judge Spatt s grant of summary 3 judgment dismissing Anani s complaint against CVS RX Services, 4 Inc. ( CVS ). 5 from the Federal Fair Labor Standards Act s ( FLSA ) time-and-a- 6 half overtime requirement because of an exemption for highly-paid 7 employees. The district court held that appellant was exempt We affirm. 8 BACKGROUND 9 Appellant was employed by CVS as a pharmacist from 2003 10 until his resignation in July, 2009. 11 a two-year statute of limitations, limiting his claim to the 12 period from December 18, 2007 to July 20, 2009. 13 RX Servs., Inc., 788 F. Supp. 2d 55, 58 (E.D.N.Y. 2011). 14 During the relevant period, appellant s base salary was based on 15 a forty-four hour work week (paid bi-weekly). That base weekly 16 salary exceeded $1250 at all pertinent times. As explained 17 infra, his base salary was guaranteed, and CVS classified him as 18 a salaried employee exempt from the time-and-a-half overtime 19 requirement of the FLSA. 20 Appellant has stipulated to See Anani v. CVS See 29 U.S.C. § 207(a)(1). Appellant also received additional compensation because he 21 invariably, or almost so, worked hours in addition to the base 22 forty-four hours each week. 23 usually ranged from 16 to 36 hours per week, increasing his total 24 compensation in each relevant year to over $100,000. Appellant s additional hours worked 2 Appellant 1 worked these extra shifts voluntarily.1 2 extra work -- in excess of forty-four hours -- was paid according 3 to an hourly Compensation Rate determined by dividing 4 appellant s weekly guaranteed salary by forty-four, multiplying 5 the number of hours worked over forty-four by the resultant 6 amount and then adding Premium Pay of six dollars per hour.2 7 8 9 10 11 Compensation for the DISCUSSION There are no material facts in dispute, and our review of a grant of summary judgement is, of course, de novo. Lawrence v. Cohn, 325 F.3d 141, 147 (2d Cir. 2003). FLSA Section 207(a)(1) provides that employees who work more 12 than forty hours in a given week must receive time-and-a-half 13 compensation for excess hours except as otherwise provided. 14 U.S.C. § 207(a)(1). 15 from this requirement for any employee employed in a bona fide 16 executive, administrative, or professional capacity. 17 § 213(a)(1). 18 must satisfy both a duties requirement and a salary requirement. 19 29 C.F.R. §§ 541.2, 541.300. 20 requirement, quoted above and amplified by regulations found in 21 Subparts B-F of 29 C.F.R. Part 541, is met. 29 FLSA Section 213(a)(1) provides an exemption 29 U.S.C. To qualify for this exemption an employee s work Appellant concedes that the duties 1 In his pre-trial deposition, appellant could recall only one instance where he was told that he might be in trouble if he did not agree to work a particular extra shift. See Anani Dep. 89-114. 2 Appellant also received certain bonus payments not relevant to this appeal. 3 1 The disposition of this appeal, therefore, turns on the 2 salary requirement as defined in Subpart G of Title 29, Subtitle 3 B, of C.F.R. §§ 541.600 through 541.606. 4 provides that to qualify for the exemption, an employee must be 5 compensated on a salary basis at a rate of not less than $455 per 6 week. 7 turn defined in C.F.R. § 541.602, which provides, 29 C.F.R. § 541.600(a). C.F.R. § 541.600 The term salary basis is in 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 An employee will be considered to be paid on a salary basis within the meaning of these regulations if the employee regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of the employee's compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed. Subject to the exceptions provided in paragraph (b) of this section, an exempt employee must receive the full salary for any week in which the employee performs any work without regard to the number of days or hours worked. Exempt employees need not be paid for any workweek in which they perform no work. An employee is not paid on a salary basis if deductions from the employee s predetermined compensation are made for absences occasioned by the employer or by the operating requirements of the business. 29 C.F.R. § 541.602(a). 31 times, appellant s base salary substantially exceeded $455 per 32 week and there were no impermissible deductions. 33 no dispute that appellant s base weekly salary was guaranteed, 34 i.e. to be paid regardless of the number of hours appellant 35 actually worked in a given forty-four-hour shift. 36 requirements of C.F.R. §§ 541.600 and 541.602 are thus satisfied 37 with regard to the minimum guaranteed weekly amount being paid 38 on a salary basis. It is undisputed that, at all pertinent 4 There is also The 1 Two further regulations relating to the salary requirement 2 need to be addressed: C.F.R. §§ 541.601 and 541.604. First, 3 C.F.R. § 541.601(a), entitled Highly compensated employees, 4 provides that [a]n employee with total annual compensation of at 5 least $100,000 is deemed exempt . . . if the employee customarily 6 and regularly performs one or more of the exempt duties or 7 responsibilities of an executive, administrative or professional 8 employee identified in [the Subparts defining the duties 9 requirement]. 10 Subsection 601(b) adds refinements, inter alia: 11 (b)(1), to be exempt, the employee s [t]otal annual 12 compensation must include $455 weekly on a salary or fee 13 basis, i.e. guaranteed; (ii) under (b)(2), if an employee s 14 total compensation falls short of an expected total of $100,000 15 at the end of the particular twelve-month period, the employer 16 may, during the next month, make up the difference through an 17 unearned cash payment; (iii) under (b)(4), the employer has 18 discretion to choose the dates of the relevant twelve-month 19 period; and (iv) under (c) a relaxed standard is applied to 20 determine whether an employee who fulfills the other requirements 21 of being a highly compensated employee also meets the duties 22 requirement. 23 (i) under Subsection (b) thus renders C.F.R. § 541.601 something of a 24 safe harbor for employers. It gives employers a high degree of 25 certainty regarding the exemption by allowing them discretion to 26 designate the relevant twelve-month period and to make up a 5 1 deficiency (salary less than $100,000) found at the end of that 2 period by a payment made within 30 days after the period ends. 3 Because, as noted, appellant concedes that he received an annual 4 base salary in excess of $455 per week throughout the relevant 5 period, earned over $100,000 annually, and no improper deductions 6 were made, appellant falls within the C.F.R. § 601 exemption. 7 However, appellant argues that the C.F.R. § 601 exemption is 8 not applicable because of C.F.R. § 541.604, which governs 9 circumstances where an exempt employee s earnings [are] computed 10 on an hourly, daily or a shift basis and there is a [m]inimum 11 guarantee plus extras. 12 541.604(a) states that [a]n employer may provide [such] an 13 exempt employee with additional compensation without losing the 14 exemption or violating the salary basis requirement, if the 15 employment arrangement also includes a guarantee of at least the 16 minimum weekly-required amount paid on a salary basis. 17 provision allows additional compensation to be computed and paid 18 in a straight-time hourly amount. 19 compensation may be paid on any basis (e.g., flat sum, bonus 20 payment, straight-time hourly amount, time-and-one-half or any 21 other basis). . . . ). Regarding the extras, C.F.R. § Id. This ( Such additional 22 23 24 25 26 27 28 Appellant argues that the provisions of C.F.R. § 541.604(b) prevent the exemption from applying to him. That Section states: An exempt employee s earnings may be computed on an hourly, a daily or a shift basis, without losing the exemption or violating the salary basis requirement, if the employment 6 1 2 3 4 5 6 7 8 9 10 11 arrangement also includes [the specified guarantee] . . . and a reasonable relationship exists between the guaranteed amount and the amount actually earned. The reasonable relationship test will be met if the weekly guarantee is roughly equivalent to the employee s usual earnings at the assigned hourly, daily or shift rate for the employee s normal scheduled workweek. 29 C.F.R. § 541.604(b). 12 Appellant s argument is based on Subsection 604(b) s 13 condition that a reasonable relationship exist[] between the 14 guaranteed amount and the amount actually earned and the weekly 15 guarantee is roughly equivalent to the employee s usual 16 earnings. 17 that his total earnings so substantially exceeded his guaranteed 18 salary -- slightly less than 2 to 1 - that the relationship 19 between the guaranteed salary and his total earnings was 20 unreasonable. Id. Focusing exclusively on that language, he argues 21 We perceive no cogent reason why the requirements of C.F.R. 22 § 541.604 must be met by an employee meeting the requirements of 23 C.F.R. § 541.601. 24 essentially meaningless if a highly compensated employee must 25 also qualify for the exemption under C.F.R. § 541.604 or, to 26 state the converse, would lose the highly compensated employee 27 exemption by failing to qualify under C.F.R. § 541.604. 28 sure, C.F.R. § 541.604 deals with employees who earn the 29 [m]inimum [g]uarantee plus extras, but every employee with a 30 guaranteed weekly amount exceeding $455 who earns over $100,000, 31 and is therefore purportedly exempted by C.F.R. § 541.601, also Indeed, C.F.R. § 541.601 is rendered 7 To be 1 fits the description of having a minimum guarantee plus extras. 2 Appellant s interpretation thus renders C.F.R. § 541.601 3 superfluous. 4 § 541.601 and C.F.R. § 541.604 is that each deals with different 5 groups of employees who receive a minimum guarantee plus 6 extras. 7 over $100,000 annually while the second exemption deals with 8 employees whose guarantee with extras totals less than $100,000 9 annually.3 The reading that gives full meaning to both C.F.R. The first exemption deals with those employees who earn 10 3 In any future case with facts similar to the present one but for the employee s failure to earn over $100,000 (thus rendering C.F.R. § 541.604 applicable), it would be helpful to have the following issues briefed. First, C.F.R. § 541.604(a) states that it applies where the employee s earnings are computed on an hourly, daily or shift basis with a guarantee, while C.F.R. § 541.604(b) requires that a requisite reasonable relationship exist between the guarantee and the employee s usual earnings at the assigned hourly, daily or shift rate for the normal scheduled workweek. An open question is whether this provision requires that the reasonable relationship be between the guaranteed hourly, daily, or shift amount reduced to an hourly, daily, or shift rate of pay and the hourly, daily, or shift rate by which pay for extra work is calculated, rather than between the total of guaranteed earnings and total earnings. Relevant to this issue are the Section s two examples: The first example is a worker who is guaranteed $500 per week for any week in which some work is performed and who usually works four or five shifts at $150 per shift. 29 C.F.R. § 541.604(b). Such a worker is exempt from the overtime requirement because the rates of pay are reasonably related. The second example is a store manager who is guaranteed $650 per week and receives in addition a percentage of sales revenue or store profits. Id. Such an employee is not exempt because the additional compensation is not computed on an hourly, daily or shift basis. Id. Second, the parties should consider briefing the effect, if any, of the words normal scheduled workweek in a case where the amount of hours worked varies each week according to the employee s voluntary decision to work extra hours. 8 1 Appellant s sole argument regarding C.F.R. § 541.601 is that 2 it is intended only to provide a relaxed standard as to 3 determining the duties requirements for employees who earn over 4 $100,000. 5 regulation is found in the Salary Requirements Subpart rather 6 than in the duties requirements Subparts, and there is direct 7 evidence that this placement was not the result of administrative 8 inadvertence. 9 quoted in the margin,4 explicitly states that the exemption[s] 10 However, that reading is unsustainable. First, the The Introductory statement in C.F.R. § 541.0, defined in Part 541 are from the Act s minimum wage and overtime 4 That provision states in relevant part: Introductory statement (a) Section 13(a)(1) of the Fair Labor Standards Act, as amended, provides an exemption from the Act s minimum wage and overttime requirements for any employee employed in a bona fide executive, administrative, or professional capacity . . . . (b) The requirements for these exemptions are contained in this part as follows: executive employees, subpart B; administrative employees, subpart C; professional employees, subpart D; computer employees, subpart E; outside sales employees, subpart F. Subpart G contains regulations regarding salary requirements applicable to most of the exemptions, including salary levels and the salary basis test. Subpart G also contains a provision for exempting certain highly compensated employees. Subpart H contains definitions and other miscellaneous provisions applicable to all or several of the exemptions. 29 C.F.R. § 541.0. 9 1 requirements and that Subpart G s definition of salary 2 requirements includes an exempt[ion] [for] certain highly 3 compensated employees. 4 of C.F.R. § 541.601(a) plainly states that it is providing an 5 overall exemption from the time-and-a-half requirement to 6 employees who meet the relaxed duties requirement based on an 7 annual salary of over $100,000. 8 and express language of C.F.R. § 541.601 indicate that its 9 purpose was to relax the duties requirement in order to Second, to guild the lily, the language Therefore, the very structure exempt 10 employees from the time-and-a-half requirement because they earn 11 over $100,000 annually. 12 13 CONCLUSION For the reasons stated above, the exemption from the time- 14 and-a-half requirement applies to appellant, and the judgment of 15 the district court is affirmed. 10
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