     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

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7    SALAH ANANI,
8         Plaintiff-Appellant,

9                v.

10   CVS RX SERVICES, INC.,
11             Defendant-Appellee.

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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.     We affirm.
18                                SETH R. LESSER (Fran Rudich, on the
19                                brief), Klafter, Olsen & Lesser LLP,
20                                Rye Brook, New York, for Plaintiff-
21                                Appellant.
22
23                                JAMES J. SWARTZ, JR. (Felice B.
24                                Ekelman, Jackson Lewis LLP, New York,
25                                New York, on the brief), Ashe Rafuse &
26                                Hill LLP, Atlanta, Georgia, for
27                                Defendant-Appellee.
28
29
30


                                                    1
1    WINTER, Circuit Judge:

2         Salah Anani appeals from Judge Spatt’s grant of summary

3    judgment dismissing Anani’s complaint against CVS RX Services,

4    Inc. (“CVS”).   The district court held that appellant was exempt

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.   We affirm.

8                                  BACKGROUND

9         Appellant was employed by CVS as a pharmacist from 2003
10   until his resignation in July, 2009.       Appellant has stipulated to

11   a two-year statute of limitations, limiting his claim to the

12   period from December 18, 2007 to July 20, 2009.      See Anani v. CVS

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.   See 29 U.S.C. § 207(a)(1).

20        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.    Appellant’s additional hours worked

23   usually ranged from 16 to 36 hours per week, increasing his total

24   compensation in each relevant year to over $100,000.      Appellant




                                       2
1    worked these extra shifts voluntarily.1   Compensation for the

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                                DISCUSSION

8         There are no material facts in dispute, and our review of a

9    grant of summary judgement is, of course, de novo.   Lawrence v.
10   Cohn, 325 F.3d 141, 147 (2d Cir. 2003).

11        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.”     29

14   U.S.C. § 207(a)(1).   FLSA Section 213(a)(1) provides an exemption

15   from this requirement for “any employee employed in a bona fide

16   executive, administrative, or professional capacity.”   29 U.S.C.

17   § 213(a)(1).   To qualify for this exemption an employee’s work

18   must satisfy both a duties requirement and a salary requirement.
19   29 C.F.R. §§ 541.2, 541.300.   Appellant concedes that the duties

20   requirement, quoted above and amplified by regulations found in

21   Subparts B-F of 29 C.F.R. Part 541, is met.

          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.    C.F.R. § 541.600

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.”   29 C.F.R. § 541.600(a).   The term “salary basis” is in

7    turn defined in C.F.R. § 541.602, which provides,

 8              An employee will be considered to be paid on
 9              a “salary basis” within the meaning of these
10              regulations if the employee regularly
11              receives each pay period on a weekly, or less
12              frequent basis, a predetermined amount
13              constituting all or part of the employee's
14              compensation, which amount is not subject to
15              reduction because of variations in the
16              quality or quantity of the work performed.
17              Subject to the exceptions provided in
18              paragraph (b) of this section, an exempt
19              employee must receive the full salary for any
20              week in which the employee performs any work
21              without regard to the number of days or hours
22              worked. Exempt employees need not be paid
23              for any workweek in which they perform no
24              work. An employee is not paid on a salary
25              basis if deductions from the employee’s
26              predetermined compensation are made for
27              absences occasioned by the employer or by the
28              operating requirements of the business.
29
30   29 C.F.R. § 541.602(a).   It is undisputed that, at all pertinent

31   times, appellant’s base salary substantially exceeded $455 per

32   week and there were no impermissible deductions.    There is also

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.    The

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.”

                                        4
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:   (i) under

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        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.”   Regarding the “extras,” C.F.R. §

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.”     This

17   provision allows additional compensation to be computed and paid

18   in a straight-time hourly amount.    Id.   (“Such additional
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). . . .”).

22

23        Appellant argues that the provisions of C.F.R. § 541.604(b)

24   prevent the exemption from applying to him.     That Section states:

25             An exempt employee’s earnings may be computed
26             on an hourly, a daily or a shift basis,
27             without losing the exemption or violating the
28             salary basis requirement, if the employment

                                      6
 1             arrangement also includes [the specified
 2             guarantee] . . . and a reasonable
 3             relationship exists between the guaranteed
 4             amount and the amount actually earned. The
 5             reasonable relationship test will be met if
 6             the weekly guarantee is roughly equivalent to
 7             the employee’s usual earnings at the assigned
 8             hourly, daily or shift rate for the
 9             employee’s normal scheduled workweek.
10
11   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.”   Id.   Focusing exclusively on that language, he argues

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.

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.   Indeed, C.F.R. § 541.601 is rendered
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.    To be

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


                                       7
1    fits the description of having a “minimum guarantee plus extras.”

2    Appellant’s interpretation thus renders C.F.R. § 541.601

3    superfluous.    The reading that gives full meaning to both C.F.R.

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.”     The first exemption deals with those employees who earn

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
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.     However, that reading is unsustainable.   First, the

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.     The “Introductory statement” in C.F.R. § 541.0,

9    quoted in the margin,4 explicitly states that the “exemption[s]”

10   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.”   Second, to guild the lily, the language

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.    Therefore, the very structure

8    and express language of C.F.R. § 541.601 indicate that its

9    purpose was to relax the duties requirement in order to    exempt
10   employees from the time-and-a-half requirement because they earn

11   over $100,000 annually.

12                               CONCLUSION

13        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.




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