Litz v. Saint Consulting Group, Inc.
772 F.3d 1
1st Cir.2014Background
- Saint Consulting employed Litz and Payne as project managers who earned well over $100,000 annually.
- Saint provided a guaranteed minimum weekly salary of $1,000, regardless of hours billed.
- Most weeks involved hours billed to clients, with no overtime premium paid for hours over 40.
- Plaintiffs sought to pursue FLSA overtime claims; district court held them exempt as highly compensated employees.
- Plaintiffs moved to amend to add Massachusetts overtime claim; district court denied.
- Appeal concerns whether stipend constitutes salary basis and whether exemptions apply under 29 C.F.R. § 541.601.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether stipend payments meet salary-basis test | Stipend not salary; payments depend on hours worked. | Stipend is predetermined, part of compensation, not subject to improper deductions. | Saint Consulting paid on salary basis; exemption applies. |
| Whether plaintiffs meet the highly compensated employee exemption criteria | Duties satisfied but salary-basis fails. | Duties, >$100k, and salary-basis satisfied. | All three elements satisfied; exempt. |
| Whether there was a material deduction practice sufficient to defeat the exemption | Emails suggest potential deductions for non-work hours. | No actual practice of improper deductions shown. | No evidence of actual deduction practice; exemption remains. |
| Whether the paystub structure undermines the salary-basis finding | Paystubs reflect hours × rate, not a separate salary line. | Paystub formula reflects the guaranteed salary; substance controls. | Pay structure confirms salary basis; exemption applies. |
| Mootness of Massachusetts claim at district court level | Massachusetts overtime claim should be allowed. | Resolution of FLSA claim moots the Massachusetts claim. | Massachusetts claim moot; no reversible error. |
Key Cases Cited
- Anani v. CVS RX Servs., Inc., 730 F.3d 146 (2d Cir. 2013) (highly compensated exemption when guaranteed salary exists)
- Hogan v. Allstate Ins. Co., 361 F.3d 621 (11th Cir. 2004) (salary basis when guaranteed minimum compensation exists)
- McBride v. Peak Wellness Ctr., Inc., 688 F.3d 698 (10th Cir. 2012) (deductions from salary–basis not allowed unless actual practice exists)
- Taylor v. Eastern Connection Operating, Inc., 465 Mass. 191 (Mass. 2013) (Mass. independent contractor statute with reference to federal law)
- Goodrow v. Lane Bryant, Inc., 432 Mass. 165 (Mass. 2000) (Massachusetts overtime law track federal law)
- Swift v. AutoZone, Inc., 441 Mass. 443 (Mass. 2004) (overtime provisions essentially identical to Federal law)
- Cash v. Cycle Craft Co., 508 F.3d 680 (1st Cir. 2007) (federal-exemption framework governs state-law overtime claim interplay)