CHICAGO – Car-X paid technicians on a commission basis and doesn’t owe them overtime, U.S. Seventh Circuit appellate judges ruled on Aug. 9.
They affirmed Chief Judge Nancy Rosenstengel of the Southern Illinois district, who granted summary judgment against a class action last year.
Plaintiffs Tom Reed and Michael Roy claimed Car-X violated the Fair Labor Standards Act by disguising hourly wages as commissions.
“The formula is convoluted, but it is mathematically identical to paying a straight commission,’ Circuit Judge David Hamilton wrote.
He found that it was highly responsive to sales performance and that it varied in accordance with sales.
Attorney Jack Daugherty of Alton filed the suit in 2017, claiming Car-X owed Reed and Roy time and a half for weeks when they worked more than 40 hours.
Reed proposed to represent 77 mechanics residing in Illinois, and Roy proposed to represent 80 mechanics residing in Missouri.
Car-X moved for summary judgment that it paid commissions, and Rosenstengel denied the motion in January 2020.
She certified Reed and Roy as class representatives.
Car-X moved for reconsideration of summary judgment, and Rosenstengel couldn’t resolve the motion on the record before her.
She gave Reed and Roy two weeks to identify a representative period when Car-X broke a rule, with calculations to back it up.
They complied, and Car-X responded by filing their payment spreadsheets.
Rosenstengel reversed herself and closed the case in April 2020.
Reed and Roy appealed, and Car-X prevailed.
Hamilton found Car-X started with total charges for a technician’s weekly repairs and applied divisions, multiplications, and additions, some of them redundant.
He found Car-X came up with an hourly production average that converted to an hourly commission.
He found the hourly wage had a floor if production was anemic, at one and a half times minimum wage.
“Reed and Roy conceded that the alternative wage floor is triggered in only 16 percent of paychecks, meaning that 84 percent of Car-X paychecks are paid on the commission scale,” Hamilton wrote.
He found the Fair Labor Standards Act, from 1938, prevents workers willing to work longer hours from taking work from those who prefer shorter hours.
He found it spreads work around to reduce aggregate unemployment.
He found it deters employers from forcing employees to work unhealthy or dangerous hours.
“We are not opposed to interpreting vague or ambiguous statutory texts in light of evident purposes, but no legislation pursues its purposes at all costs,” he wrote.
He found the exception of commissions from the overtime rule was adopted, “as part of the galaxy of compromises essential to passage.”
Chief Circuit Judge Diane Sykes and Circuit Judge Michael Brennan concurred.
Attorney Randall Slade of Chicago represents Car-X.
Attorney Mark Potashnick of Creve Coeur, Mo. represents Reed and Roy in association with Daugherty.