Ramon Alvarado v. Corporate Cleaning Services, I
782 F.3d 365
| 7th Cir. | 2015Background
- 24 current/former window washers sued Corporate Cleaning Services (CCS) under the FLSA seeking overtime pay under 29 U.S.C. § 207(a)(1); CCS conceded it did not pay time-and-a-half but claimed the § 207(i) commission exemption.
- CCS pays workers on a points-based system tied to jobs; points × worker-specific rate (from a union collective-bargaining agreement) determines employee pay; CCS sets customer prices using points but makes adjustments (permits, rounding, competitive discounts) so worker pay is not a fixed percentage of customer price.
- Window-washing work is irregular (weather, building policies, safety concerns), so employees cannot reliably work 40 hours each week year-round and often concentrate hours seasonally.
- District court granted summary judgment for CCS on retail-or-service status and, after bench trial, found the compensation system satisfied the “commission” requirement; plaintiffs appealed.
- Parties later filed a joint Rule 42(b) stipulation to dismiss the appeal; the court recalled the mandate to verify all plaintiffs consented, dissolved the stipulation as insufficiently documented, retained jurisdiction, and proceeded to decide the merits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the points-based pay is a commission (§ 207(i)) or piece-rate (excluded) | System must show an "identifiable and consistent correlation" to customer price; CCS's adjustments defeat a commission characterization | System need only be proportional/correlated to price; adjustments do not preclude commission status | Points-based system is commission-like (employees paid by sale of service), so commission requirement met |
| Whether CCS is a "retail or service establishment" for § 207(i) | Sale to building managers who pass costs to occupants is effectively resale; Dept. of Labor regs and §213(a)(2) factors show no retail concept | CCS sells services to end customers (owners/managers), not wholesalers; demand variability and unit-of-sale (per building) fit retail/service concept | CCS is a service establishment (and effectively a retail service) satisfying § 207(i) |
| Relevance of irregular hours to commission exemption | Not disputed by plaintiffs; focus on statutory/regulatory definitions instead | Irregular hours support classifying workers as commission employees and justify exemption | Irregular, nonuniform hours are central to rationale for applying the commission exemption |
| Procedural propriety of joint stipulation to dismiss appeal | Plaintiffs’ counsel represented all clients consented; dismissal should be allowed | Court concerned some plaintiffs may not have given informed consent and costs payment arrangement was unexplained | Court dissolved stipulation, retained jurisdiction, and adjudicated merits (affirmed district court) |
Key Cases Cited
- Yi v. Sterling Collision Centers, Inc., 480 F.3d 505 (7th Cir.) (adjustments to customer price do not preclude commission characterization)
- Parker v. NutriSystem, Inc., 620 F.3d 274 (3d Cir.) (declining a strict percentage test for commission under § 207(i))
- Mechmet v. Four Seasons Hotels, Ltd., 825 F.2d 1173 (7th Cir.) (irregular hours factor in commission analysis)
- Gieg v. DDR, Inc., 407 F.3d 1038 (9th Cir.) (commission-exemption analysis emphasizing variable work/sales relationship)
- Idaho Sheet Metal Works, Inc. v. Wirtz, 383 U.S. 190 (U.S. 1966) (context for § 213 intrastate exemption and limits on applying that definition elsewhere)
- Americana Art China Co., Inc. v. Foxfire Printing & Packaging, Inc., 743 F.3d 243 (7th Cir.) (court’s scrutiny of joint stipulations to dismiss appeals under Rule 42(b))