Tom Reed v. Brex Inc., 8 F.4th 569

Background

Brex, Inc. operates Car‑X auto repair shops; technicians Tom Reed and Michael Roy sued on behalf of technicians claiming Brex’s pay scheme violates the FLSA overtime requirement.
Brex’s pay formula: total non‑tire sales divided by hours = "hourly production," mapped via a table to an "hourly commission" (~16% of production), adjusted by small per‑hour certification bonuses and per‑tire fees, then multiplied by hours worked; an alternative wage floor (1.5× state minimum wage) applies in ~16% of payweeks.
Plaintiffs argue the plan is not a bona fide commission because it repeatedly uses hours in the computation, labels pay as "hourly," and the guarantee/floor should be treated as a draw (requiring reconciliation), converting pay into wages and defeating the §207(i) exemption.
Brex contends pay is proportional to individual sales (mathematically equivalent to a straight commission), bonuses are minor, and the guarantee is a lawful alternative floor that does not defeat the commission character.
The district court granted summary judgment for Brex on the bona fide commission exemption and the legality of the guarantee; the Seventh Circuit affirmed, holding the undisputed record showed pay varied with sales and met the exemption.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Brex’s pay plan is a "bona fide commission" under 29 U.S.C. § 207(i)	Pay plan incorporates hours and reports "hourly" wages, so pay is tied to time and not commission	Pay is proportional to each technician’s sales; the formula is mathematically equivalent to a straight commission	Affirmed for Brex: undisputed evidence shows pay varies with sales and qualifies as bona fide commission
Whether technicians’ routinely long hours create a triable factual issue about the exemption’s purpose	High overtime hours show the plan fails to promote efficiency and undermines statutory purposes	Statutory exceptions reflect legislative compromise; predictable effects on hours don’t negate a valid exemption	Rejected: hours alone do not defeat the exemption where pay is commission‑based
Whether the guarantee/floor without clawbacks converts payments into wages (draw vs guarantee)	The guarantee functions as a draw that must be reconciled; without clawbacks the guarantee is effectively fixed wages	Statutory text and DOL regs allow either a guarantee or a draw; guarantees may be used as an alternative floor and need not be clawed back	Rejected: guarantee is permissible as an alternative minimum and does not make the plan non‑commission when commissions predominate
Whether plaintiffs may raise novel factual calculations on appeal alleging arbitrary/non‑correlated pay	New spreadsheet calculations show commissions not correlated with sales and vary widely; raises triable issues	Plaintiffs forfeited these arguments by not presenting them to the district court	Rejected as forfeited/waived; appellate review will not entertain new factual theories

Key Cases Cited

Yi v. Sterling Collision Centers, Inc., 480 F.3d 505 (7th Cir. 2007) (upholding a convoluted auto‑repair commission plan as a bona fide commission when pay varied with sales and was decoupled from time worked)
Alvarado v. Corporate Cleaning Servs., Inc., 782 F.3d 365 (7th Cir. 2015) (nomenclature not dispositive; compensation proportional to sales can be commission‑based)
Klinedinst v. Swift Investments, Inc., 260 F.3d 1251 (11th Cir. 2001) (similar recognition that hybrid plans can qualify as commissions)
Parker v. NutriSystem, Inc., 620 F.3d 274 (3d Cir. 2010) (pay proportionally related to consumer charges can satisfy the commission exception)
Stein v. HHGregg, Inc., 873 F.3d 523 (6th Cir. 2017) (addressed a draw against commissions; discussed but did not resolve guarantees without clawbacks)
Beardsall v. CVS Pharmacy, Inc., 953 F.3d 969 (7th Cir. 2020) (summary judgment is the time to present the evidence that will convince a jury)
Henry v. Hulett, 969 F.3d 769 (7th Cir. 2020) (en banc) (plain‑error review in civil cases is severely constrained)