FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

ANTHONY SANDERS; SHAWN 

HOLZBERGER; JUSTIN DOERING; 

ROBERT COUGHLIN; VIRGINIA 

TINOCO, on behalf of themselves and 

all similarly situated individuals, 

Plaintiffs-Appellants, 

 v. 

COUNTY OF VENTURA, 

Defendant-Appellee.

No. 22-55663 

D.C. No. 

2:19-cv-06370-

MWF-E 

OPINION

Appeal from the United States District Court

for the Central District of California

Michael W. Fitzgerald, District Judge, Presiding

Argued and Submitted August 22, 2023

Pasadena, California

Filed November 30, 2023

Before: Johnnie B. Rawlinson and Daniel A. Bress, Circuit 

Judges, and Jack Zouhary,* District Judge.

Opinion by Judge Bress

* The Honorable Jack Zouhary, United States District Judge for the 

Northern District of Ohio, sitting by designation.
2 SANDERS V. COUNTY OF VENTURA

SUMMARY**

Labor Law 

The panel affirmed the district court’s grant of summary 

judgment to the defendant in an action brought under the Fair 

Labor Standards Act by employees who opted out of their 

union- and employer-sponsored health plans. 

The employees received a monetary credit, part of which 

was deducted as a fee that was then used to fund the plans 

from which they had opted out. The employees argued that 

this opt-out fee should be treated as part of their “regular 

rate” of pay for calculating overtime compensation under the 

Act.

The panel held that the opt-out fees were not part of the 

employees’ “regular rate” of pay, but rather were exempted 

as “contributions irrevocably made by an employer to a 

trustee or third person pursuant to a bona fide plan for 

providing” health insurance under 29 U.S.C. § 207(e)(4). 

COUNSEL

David E. Mastagni (argued) and Taylor J. Davies-Mahaffey, 

Mastagni Holstedt APC, Sacramento, California, for 

Plaintiffs-Appellants. 

Brian P. Walter (argued) and Paul D. Knothe, Liebert 

Cassidy Whitmore, Los Angeles, California; Emily Gardner, 

** This summary constitutes no part of the opinion of the court. It has 

been prepared by court staff for the convenience of the reader.
SANDERS V. COUNTY OF VENTURA 3 

Office of Ventura County Counsel, Ventura, California; for 

Defendant-Appellee.

OPINION

BRESS, Circuit Judge:

Plaintiff employees who opted out of their union and 

employer-sponsored health plans received a monetary credit, 

part of which was deducted as a fee that was then used to 

fund the plans from which plaintiffs had opted out. Plaintiffs

argue that this opt-out fee should be treated as part of their

“regular rate” of pay for calculating overtime compensation 

under the Fair Labor Standards Act (FLSA). 29 U.S.C. 

§ 207(a). We hold that the opt-out fees are not part of the

employees’ “regular rate” of pay. The fees are exempted as 

“contributions irrevocably made by an employer to a trustee 

or third person pursuant to a bona fide plan for providing” 

health insurance. Id. § 207(e)(4). We affirm the grant of 

summary judgment to the employer. 

I 

Plaintiffs are Ventura County, California firefighters and 

law enforcement officers who (except for one plaintiff) are 

members of two unions, the Ventura County Professional 

Firefighters’ Association (PFA) and the Ventura County 

Deputy Sheriffs’ Association (DSA). The County sponsors 

various health insurance plans for its eligible employees and 

their dependents. Under agreements between the unions and 

the County, plaintiffs were eligible to enroll in unionsponsored health insurance plans instead of the County’s 

plans. 
4 SANDERS V. COUNTY OF VENTURA

The County manages health benefits for union and nonunion employees alike through its Flexible Benefits 

Program. As part of this “cafeteria plan,” the County

provides its employees every pay period with a Flexible 

Benefit Allowance, also known as the “Flex Credit,” which 

employees may use to purchase health benefits on a pre-tax 

basis. The amount of the Flex Credit for union members is 

set through negotiation between the County and the unions. 

If the premium for an employee’s chosen health insurance is

more than the Flex Credit, the balance of the premium owed

is deducted from the employee’s pre-tax earnings. If the 

premium is less than the Flex Credit, the remainder is paid 

to the employee in cash as taxable earnings. Employees can 

also waive participation in the Flexible Benefits Program 

altogether, in which case they do not receive the Flex Credit. 

In the early 1990s, the County, in consultation with 

union representatives, developed another option for 

employees who did not wish to purchase a sponsored 

benefits plan yet wanted to retain their Flex Credit. 

Specifically, an employee who already has medical 

insurance from another source, such as a spouse’s plan, may 

choose to “opt out” of the Flexible Benefits Program. 

Employees who opt out are allotted the same Flex Credit but 

must pay an opt-out fee.

Both the Flex Credit and opt-out fee appear on 

employees’ paystubs: the Flex Credit is listed under 

“Earnings” and the “opt-out fee” appears as a “before tax 

deduction.” The County subtracts the opt-out fee from the 

Flex Credit and then pays the balance to the employee in 

cash. Union members pay the same opt-out fee as all other 

County employees who opt out of the Flexible Benefits 

Program. The amount of the opt-out fee varies from year to 

year, but it generally comprises most of the Flex Credit. For 
SANDERS V. COUNTY OF VENTURA 5

example, PFA members in 2022 received a Flex Credit of 

$482, but their opt-out fee was $334.75, resulting in a net 

cash payment of $147.25 per pay period.

The opt-out fee consists of three separate charges. First, 

an “administrative fee” of approximately $14 per pay period

covers the cost of running the Flexible Benefits Program and 

funds various wellness initiatives for all County employees. 

Second, an “employee health services fee” of about $0.43

per pay period supports a small onsite health clinic. These

first two fees are also paid by participants who use their Flex 

Credit to purchase union or County-sponsored insurance; 

these fees are simply baked into the insurance premiums. 

The third charge, and by far the largest portion of the optout fee, is a “risk sharing fee,” which is assessed against only 

those employees who opt out. The risk sharing fee is based 

on the actuarial assumption that employees who opt out of 

the insurance plans are likely to be healthier than the average 

employee, because employees who expect higher medical 

expenses tend to remain in the plans. The risk sharing fee 

thus offsets the increased insurance premiums that 

participating employees would otherwise have to pay as 

members of a smaller insurance risk pool.

Aside from the small portion of the opt-out fee that is 

used for employee health services, which plaintiffs do not 

challenge, the rest of the opt-out fee for DSA and PFA 

members is remitted to the unions, which put those fees 

toward the amounts that other union members must pay for 

their insurance through the union-sponsored plans. For nonunion employees, the opt-out fees are remitted to the 

County’s medical insurance carriers to fund the Countysponsored plans. 
6 SANDERS V. COUNTY OF VENTURA

Plaintiffs opted out of the Flexible Benefits Program and

were paid in cash the balance of the Flex Credit less the optout fee. The County treated this residual cash payment as 

part of plaintiffs’ regular rate of pay when calculating their 

overtime compensation. But the County did not include in 

that calculation the value of the opt-out fee. 

Plaintiffs filed this putative class action under the FLSA

challenging that determination. See 29 U.S.C. § 216(b). 

They argued that the exclusion of the opt-out fee from their 

“regular rate” of pay resulted in the County underpaying 

plaintiffs for overtime work, in violation of the FLSA. See 

id. § 207(a), (e). The district court granted summary 

judgment to the County, concluding that the opt-out fee was 

properly excluded from plaintiffs’ regular rate of pay under 

a statutory exception for health plan contributions. See id.

§ 207(e)(4).

This appeal followed. We review the grant of summary 

judgment de novo. Silverado Hospice, Inc. v. Becerra, 42 

F.4th 1112, 1118 (9th Cir. 2022).

II

The FLSA generally prohibits an employer from 

requiring a covered employee to work more than forty hours 

in any workweek unless the employer pays the employee 

overtime compensation “at a rate not less than one and onehalf times the regular rate at which he is employed.” 29 

U.S.C. § 207(a)(1). The statute defines “regular rate” “to 

include all remuneration for employment paid to, or on 

behalf of, the employee,” subject to specified exceptions. Id.

§ 207(e). One such exception is at issue here: an employee’s 

“regular rate” of pay does not include “contributions 

irrevocably made by an employer to a trustee or third person 

pursuant to a bona fide plan for providing old-age, 
SANDERS V. COUNTY OF VENTURA 7

retirement, life, accident, or health insurance or similar 

benefits for employees.” Id. § 207(e)(4).

Plaintiffs argue at the outset that we should not even 

consider the import of the § 207(e)(4) exemption for benefits 

contributions because in their paystubs, the entire Flex 

Credit amount was listed as earnings, with the opt-out fee 

shown as a pre-tax deduction. Relying on our decision in 

Flores v. City of San Gabriel, 824 F.3d 890 (9th Cir. 2016), 

plaintiffs maintain that the FLSA requires the whole Flex 

Credit, including the opt-out fee, to be included in their

regular rate of pay. Plaintiffs are mistaken.

In Flores, the City of San Gabriel provided its employees 

with a designated sum that they could use to purchase 

medical benefits, but any employee who supplied proof of 

alternate coverage could forgo the benefits and instead 

directly receive that sum in cash. Id. at 896. We concluded 

that these “cash-in-lieu of benefits payments” were not 

excluded under § 207(e)(4) because they were not paid “to a 

trustee or third person,” as that statutory exception requires. 

Id. at 901–02. The County here complied with this aspect of 

Flores: it treated the cash it paid to plaintiffs—the difference 

between the Flex Credit and the opt-out fee—as part of 

plaintiffs’ regular rate of pay when calculating overtime 

compensation. 

But Flores did not consider opt-out fees like the ones at 

issue here, and nothing in Flores supports plaintiffs’ theory 

that the opt-out fee is itself part of plaintiffs’ regular rate of 

pay. On the contrary, in Flores we distinguished between

the City’s contributions to employee benefits and the other

amounts it paid in cash to employees. While the latter 

formed part of the regular rate of pay, whether the former 

could be excluded depended on whether the City’s benefits 
8 SANDERS V. COUNTY OF VENTURA

program was a “bona fide plan” under § 207(e)(4). Id. at 

902. Plaintiffs would treat the amounts that the County paid 

in cash and used for benefits as equivalent, but Flores drew 

a distinction between the two based on how the funds were 

used.

Plaintiffs’ argument that the opt-out fee should be treated 

like the cash-in-lieu payments in Flores rests on a 

misunderstanding of the opt-out fee. Under the Flexible

Benefits Program, employees are only entitled to a cash 

payment representing the balance of the Flex Credit after the 

opt-out fee is deducted. The opt-out fee is directed to the 

unions to fund the employee health plans, or, for non-union

employees, to the third-party insurance companies 

administering the plans. 

The nature of the arrangement is significant under our 

precedent. We have explained that “what is included in the 

regular rate of pay . . . ‘must be discerned from what actually 

happens under the governing employment contract.’” 

Clarke v. AMN Servs., LLC, 987 F.3d 848, 853 (9th Cir. 

2021) (quoting Newman v. Advanced Tech. Innovation 

Corp., 749 F.3d 33, 37 (1st Cir. 2014)); see also Brunozzi v. 

Cable Commc’ns, Inc., 851 F.3d 990, 996 (9th Cir. 2017).

Thus, in Clarke, which concerned the exclusion from the

regular rate of pay of certain per diem benefits under

§ 207(e)(2), we asked whether the payments “are 

functioning as compensation.” 987 F.3d at 854; see also id.

at 853 (“[A] payment’s function controls whether the 

payment is excludable from the regular rate under 

§ 207(e)(2) . . . .”).

In this case, the opt-out fee does not function like the

cash payment in Flores. Indeed, the opt-out fee is not 

provided to the plaintiffs in cash at all, and employees have 
SANDERS V. COUNTY OF VENTURA 9

no right under the program to access that amount as cash-inlieu. From the functional perspective that our precedents 

endorse, what “actually happen[ed]” under the Flexible

Benefits Program, Clarke, 987 F.3d at 853 (citation omitted), 

is that the opt-out fee amounts were plowed back into the 

health plans, with plaintiffs receiving in cash only the 

amount left over after the opt-out fees were subtracted.

Ignoring the practical reality of these transactions, 

plaintiffs focus on the fact that their paystubs listed the Flex 

Credit as “Earnings” subject to a “before-tax deduction” (the 

opt-out fee). But the County sets its paystubs to align with 

the Internal Revenue Code, not the FLSA. Plaintiffs cite no 

authority suggesting that the tax accounting concepts

reflected in their paystubs are dispositive of whether sums 

must be included in an employee’s regular rate of pay under 

the FLSA. Cf. Baouch v. Werner Enters., Inc., 908 F.3d 

1107, 1113–14 (8th Cir. 2018) (explaining that IRS 

requirements are “not synonymous” with the obligations 

imposed by the FLSA). In relying on their paystubs, 

plaintiffs improperly focus on the “label” affixed to the optout fees rather than the “substance or function” of those fees. 

Clarke, 987 F.3d at 856.

For these reasons, this case is not resolved by plaintiffs’ 

theory that they were directly paid the entire Flex Credit in 

cash. Flores treated as “cash-in-lieu of benefits” the cash 

paid to employees; the opt-out fees here were used for 

benefits. This case thus turns on the legal import of the optout fee and whether it formed part of plaintiffs’ regular rate 

of pay even though it was used to fund the health benefits of 

other employees.
10 SANDERS V. COUNTY OF VENTURA

III

The opt-out fee was properly excluded from plaintiffs’

regular rate of pay if it is a “contribution[] irrevocably made 

by an employer to a trustee or third person pursuant to a bona 

fide plan for providing . . . health insurance or similar 

benefits for employees.” 29 U.S.C. § 207(e)(4). The 

County as the employer bears the burden of establishing that 

the opt-out fee amounts are excluded from the regular rate of 

pay under a statutory exception. See Clarke, 987 F.3d at 

853. Although we previously held that these exemptions 

should be interpreted narrowly, the Supreme Court in Encino 

Motorcars, LLC v. Navarro, 138 S. Ct. 1134 (2018), later 

clarified that “FLSA exemptions are construed under ‘a fair 

(rather than a “narrow”) interpretation.’” Clarke, 987 F.3d 

at 853 (quoting Encino Motorcars, 138 S. Ct. at 1142).

Here, plaintiffs do not dispute that the opt-out fee amount

was irrevocably provided to third parties (the unions and 

insurance companies). Instead, plaintiffs argue that (1) the 

exception in § 207(e)(4) does not apply to them, and (2) the 

County’s Flexible Benefits Program is not “bona fide.” We 

address each argument in turn.

A

Plaintiffs first maintain that § 207(e)(4) does not apply 

because the opt-out fee was not used to support plaintiffs’ 

health care, as plaintiffs had opted out of the union and 

County plans. Plaintiffs believe that § 207(e)(4) exempts 

only employer contributions made for plaintiffs’ own health 

care, not for the health care of other employees.

Although it does not appear that any court has addressed 

this argument, we conclude it lacks merit. “As in all 

statutory interpretation, ‘our inquiry begins with the 
SANDERS V. COUNTY OF VENTURA 11

statutory text, and ends there as well if the text is 

unambiguous.’” Desire, LLC v. Manna Textiles, Inc., 986 

F.3d 1253, 1265 (9th Cir. 2021) (quoting BedRoc Ltd., 

LLC v. United States, 541 U.S. 176, 183 (2004)). Section 

207(e)(4) exempts from the regular rate of pay 

“contributions irrevocably made by an employer to a trustee 

or third person pursuant to a bona fide plan for providing 

old-age, retirement, life, accident, or health insurance or 

similar benefits for employees.” (emphasis added). The optout fees here were paid to third parties to fund health care 

benefits “for employees” of the County. The statutory 

reference to “employees” does not mean the plaintiffs 

themselves must receive health insurance through their 

employer. That plaintiffs chose to opt out of the health plans 

does not mean the opt-out fees were not used “for 

employees”; rather, it just means plaintiffs did not wish to 

receive the health coverage offered to them.

Plaintiffs focus on the statute’s direction that the “regular 

rate” of pay “shall be deemed to include all remuneration for 

employment paid to, or on behalf of, the employee.” 29 

U.S.C. § 207(e). From that, plaintiffs argue the exception in 

§ 207(e)(4) should have a parallel earmark requirement, 

such that it only applies to contributions made for the benefit 

of the employee’s own health care. 

The conclusion does not follow because by its text, 

§ 207(e)(4) is not limited to employer contributions made for

a particular employee. Plaintiffs rely on the first clause of 

§ 207(e), which describes what the regular rate “shall be 

deemed to include.” But § 207(e) then provides that the 

regular rate “shall not be deemed to include” the various 

exclusions, including the exemption applicable to the health 

plan contributions at issue here. Id. § 207(e)(4). Those 

contributions are to be provided “for employees.” Here, they 
12 SANDERS V. COUNTY OF VENTURA

were. The plain text of § 207(e)(4) encompasses the 

County’s payment of the opt-out fees to third parties and 

does not include the implicit limitation plaintiffs seek.

What this means is that § 207(e)(4) permits an employer 

to exempt from an employee’s regular rate of pay employer 

contributions made pursuant to bona fide health plans that 

are designed to alleviate the burden of a shrinking risk pool 

for the employees who choose to remain in the plans. When 

an employer, as here, decides to allow employees to retain 

some portion of an unused health insurance credit, it can 

permissibly structure the program to prop up the employee 

health plans without treating the full amount of the health 

credit as part of the FLSA regular rate of pay. 

B

The exclusion for health benefit payments applies only 

to contributions made to a “bona fide plan.” 29 U.S.C. 

§ 207(e)(4). Plaintiffs argue the County’s plans are not bona 

fide. We disagree.

The statutory requirement that a plan be “bona fide” 

reflects the determination that employers should not be able 

to evade the FLSA’s overtime rules through benefits 

programs designed to pay employees disguised 

compensation. See Loc. 246 Util. Workers Union of Am. v. 

S. Cal. Edison Co., 83 F.3d 292, 296 (9th Cir. 1996) (“If the 

employer meets the requirements of section 207(e)(4) in 

making irrevocable contributions to a trust, then those 

contributions will not be added to the regular pay rate on the 

theory that they are a form of indirect bonus to the worker.”). 

As we recognized in Flores, the FLSA does not define “bona 

fide plan,” but the Department of Labor (DOL) has provided 

some guidance. 824 F.3d at 902 & n.2.
SANDERS V. COUNTY OF VENTURA 13

The DOL has indicated that for § 207(e)(4) to apply, 

“[t]he primary purpose of the plan must be to provide 

systematically for the payment of benefits to 

employees . . . .” 29 C.F.R. § 778.215(a)(2); see also id.

§ 778.1 (explaining that “[t]his part contains the Department 

of Labor’s general interpretations with respect to the 

meaning and interpretation” of the FLSA’s overtime pay 

rules). The DOL has also addressed the permissibility of 

cash payments in plan arrangements. It has explained that a 

plan “will still be regarded as a bona fide plan even though 

it provides, as an incidental part thereof, for the payment to 

an employee in cash of all or a part of the amount standing 

to his credit . . . during the course of his employment . . . .” 

Id. § 778.215(a)(5) (emphasis added). As to this 

“incidental” cash payment proviso, a 2003 DOL Opinion 

Letter elaborated that a plan may qualify as bona fide if, 

among other things, “no more than 20% of the employer’s 

contribution is paid out in cash” on a plan-wide basis. U.S. 

Dep’t of Labor, Opinion Letter FLSA2003-4, 2003 WL 

23374600, at *3 (July 2, 2003). 

We considered the import of this DOL guidance in 

Flores, discussed above. In Flores, the City of San Gabriel 

had a Flexible Benefits Plan that gave employees a 

designated amount to purchase health benefits, but 

employees with alternative coverage could receive the 

unused portion as a cash payment. 824 F.3d at 896. The 

City did not, however, include any of these cash payments 

when calculating the employees’ regular rate of pay. Id.

We first concluded that § 207(e)(4) did not exempt the 

cash-in-lieu payments from the regular rate of pay 

calculation because the City paid the sums in cash to 

employees and not to a trustee or third person. Id. 901–02. 

This is the portion of Flores with which the County has 
14 SANDERS V. COUNTY OF VENTURA

already complied by including the residual cash paid to optout employees in their regular rate of pay. The next question 

in Flores was whether the payments made to trustees or third 

persons (i.e., the sums provided to purchase health benefits) 

should also have been included in the “regular rate” of pay 

calculation. Id. at 902. The answer turned on whether the

City’s Flexible Benefits Plan was “bona fide.” We 

concluded that it was not, and that even amounts paid to third 

parties for employee benefits should therefore have been 

included when tabulating overtime. Id. at 903.

We began by explaining that the term “bona fide” was 

ambiguous, and that because neither party had challenged it, 

we would defer under Skidmore v. Swift & Co., 323 U.S. 134 

(1944), to DOL’s interpretation in 29 C.F.R. § 778.215(a)(5)

that a plan could be bona fide even if it provided, “as an 

incidental part thereof,” for cash payments to employees. 

Flores, 824 F.3d at 902 & n.2. But we held that we would 

not defer under Skidmore to DOL’s 2003 Opinion Letter, 

which would generally find cash payments not “incidental” 

if they accounted for more than 20% of the employer’s total 

contributions on a plan-wide basis. Id. at 903. We explained 

that DOL “wholly fail[ed] to explain its reasoning for the 

adoption of the 20% ceiling” and had not provided “any 

rationale for why 20% was chosen as the percentage at which 

cash payments are no longer an ‘incidental’ part of the plan.” 

Id. 

Nevertheless, even without this additional DOL 

guidance and a bright-line 20% rule, we still found that the 

City’s Flexible Benefits Plan was not “bona fide.” Id. We 

did so because over 40% of the City’s total contributions 

were paid to employees in cash. Id. When “benefits 

payments constitute only a bare majority of” total 

contributions, we held, “[t]he City’s cash payments are 
SANDERS V. COUNTY OF VENTURA 15

simply not an ‘incidental’ part of its Flexible Benefits Plan 

under any fair reading of that term.” Id.

Turning back to the case before us, plaintiffs argue that 

the County’s plans are not bona fide because the entire Flex 

Credit made available to plaintiffs often exceeded 20% of 

the County’s total contributions for DSA and PFA plan 

participants. Plaintiffs acknowledge that Flores found 

unpersuasive any hard-and-fast 20% ceiling for cash 

contributions plan-wide. But plaintiffs point out that after 

Flores, the DOL issued a final rule, after notice and 

comment rulemaking, that included a statement in the 

preamble reaffirming its position that there should be a 20% 

cash contribution limit for a plan to be bona fide. See

Regular Rate Under the Fair Labor Standards Act, 84 Fed. 

Reg. 68,736-01, at 68,760–61 (Dec. 16, 2019). 

The 2019 Final Rule does not override our holding in 

Flores that the 20% threshold is undeserving of deference. 

See Flores, 824 F.3d at 902 & n.2. The 2019 Final Rule 

made no changes to 29 C.F.R. § 778.215(a)(5). Although 

this Rule was passed after notice and comment, the DOL’s 

preamble provides no additional support for a 20% ceiling. 

Instead, it relies on DOL’s original 2003 Opinion Letter—

the very letter we found unpersuasive in Flores, even as we 

there applied a now-outdated narrow construction of FLSA 

exemptions that disfavored employers. 824 F.3d at 897, 903; 

cf. Encino Motorcars, 138 S. Ct. at 1142. Flores thus still

governs on the question of whether cash payments 

representing more than 20% of an employer’s contributions 

preclude a plan from being bona fide under § 207(e)(4). 

Under Flores, there is no such bright-line 20% ceiling.

But plaintiffs face another significant problem. In 

arguing that the cash payments exceed 20% of the total 
16 SANDERS V. COUNTY OF VENTURA

contributions for DSA and PFA plan participants, plaintiffs 

treat the opt-out fee amounts as cash payments. We have 

already explained above why this is not a correct 

characterization of the opt-out fees, which were instead 

irrevocably paid to third parties for the purpose of providing 

health care to County employees. For the same reasons, the 

opt-out fees should not be included when determining 

whether the County has made cash payments that exceed a 

claimed 20% threshold. From the perspective of whether the 

Flexible Benefits Program is bona fide, there is no 

justification for treating the opt-out fee sums, which are in 

fact being used to fund employee health benefits, as cash 

payments. Indeed, even the DOL’s 2019 Final Rule itself 

acknowledges that a plan may be “bona fide” if cash 

payments exceed 20% of total contributions so long as “such 

payments are used for benefits that are the same or similar to 

those listed in” § 207(e)(4), which is how the opt-out fee was 

used here. 84 Fed. Reg. at 68,760–61. 

Without the opt-out fees, the County’s cash payments to 

PFA and DSA members were below 20% of total 

contributions for each year in question. Although the exact 

contribution percentage varied from year to year, at the 

highest point in 2021, the County’s cash contributions 

represented 19.15% of its total contributions for DSA 

members. That number is even lower for PFA members. 

Thus, even if a strict 20% rule applied, plaintiffs’ argument

still fails. 

Stripped of the 20% cash contribution ceiling, plaintiffs 

offer no other basis to conclude that the Flexible Benefits 

Program is not bona fide. They do not claim, for example, 

that the provision of health benefits is not the “primary 

purpose” of the Program. 29 C.F.R. § 778.215(a)(2). This 

case is a far cry from Flores, in which over 40% of the 
SANDERS V. COUNTY OF VENTURA 17

employer’s contributions consisted of cash payments. See

824 F.3d at 903. And although plaintiffs do assert that the 

opt-out fee was taken from them “involuntarily,” it was 

plaintiffs who voluntarily chose to participate in the Flexible 

Benefits Program. The terms of that program, including the 

opt-out fee, were clearly set forth and negotiated by union 

representatives. We therefore conclude that the County’s 

Flexible Benefits Program is “bona fide” within the meaning 

of § 207(e)(4).1

* * *

For the foregoing reasons, we hold that the County 

properly excluded the Flex Credit opt-out fee from plaintiffs’ 

regular rate of pay under 29 U.S.C. § 207(e)(4). 

AFFIRMED.

1 Our analysis in this opinion disposes of plaintiffs’ remaining arguments 

on appeal, including that the opt-out fee is an unlawful kickback, an 

unlawful deduction from wages under 29 C.F.R. § 531.37(b), and an 

improper assignment. These arguments depend on plaintiffs’ incorrect 

theory that the opt-out fee forms part of their regularly paid wages.