2022 WI APP 23

COURT OF APPEALS OF WISCONSIN

PUBLISHED OPINION

Case No.: 2021AP538

Complete Title of Case: 

†Petition for Review filed

SARAH MAGNUSSEN,

PLAINTIFF-APPELLANT,†

V.

STATE OF WISCONSIN,

DEFENDANT-RESPONDENT.

Opinion Filed: April 5, 2022

Submitted on Briefs: January 12, 2022

Oral Argument: 

JUDGES: Brash, C.J., Donald, P.J., and Dugan, J.

Concurred:

Dissented:

Appellant

ATTORNEYS: On behalf of the plaintiff-appellant, the cause was submitted on the 

briefs of James A. Walcheske, Scott S. Luzi, and David M. Potteiger of 

Walcheske & Luzi, LLC of Brookfield. 

Respondent

ATTORNEYS: On behalf of the defendant-respondent, the cause was submitted on the 

brief of Joshua L. Kaul, attorney general, Colin A. Hector, assistant 

attorney general, and Steven C. Kilpatrick, assistant attorney general. 
2022 WI App 23

COURT OF APPEALS

DECISION

DATED AND FILED

April 5, 2022

Sheila T. Reiff

Clerk of Court of Appeals

NOTICE

This opinion is subject to further editing. If 

published, the official version will appear in 

the bound volume of the Official Reports. 

A party may file with the Supreme Court a 

petition to review an adverse decision by the 

Court of Appeals. See WIS. STAT. § 808.10 and 

RULE 809.62. 

Appeal No. 2021AP538 Cir. Ct. No. 2019CV3112

STATE OF WISCONSIN IN COURT OF APPEALS

SARAH MAGNUSSEN,

PLAINTIFF-APPELLANT,

V.

STATE OF WISCONSIN,

DEFENDANT-RESPONDENT.

APPEAL from an order of the circuit court for Milwaukee County: 

DAVID C. SWANSON, Judge. Affirmed. 

Before Brash, C.J., Donald, P.J., and Dugan, J. 

¶1 BRASH, C.J. Sarah Magnussen appeals an order granting summary 

judgment in favor of the State of Wisconsin, her employer, with regard to her wage 

claim. Magnussen asserts that the trial court erred in rejecting her claim that the 

State violated the Wisconsin Wage Payment and Collection Laws by categorizing 
No. 2021AP538

2

her position as a nurse clinician as being exempt from their provisions, particularly 

with regard to the calculation of overtime pay as set forth in the Fair Labor Standards 

Act (FLSA). The trial court determined that the State met its burden of 

demonstrating that Magnussen satisfies the criteria for exemption from those 

provisions. Upon review, we affirm.

BACKGROUND

¶2 Magnussen, a registered nurse, works for the State Department of 

Corrections as a “nurse clinician.” The State treats all nurse clinicians as salaried 

employees, which means that they receive a specific amount of base pay for “every 

pay period during which they are ready, willing and able to work.” 

¶3 Based on this pay structure, the State categorizes nurse clinicians as 

exempt from FLSA overtime requirements. Those requirements generally prohibit 

an employee from working more than forty hours per week without being 

compensated for that overtime “at a rate not less than one and one-half times the 

regular rate at which he [or she] is employed.” See 29 U.S.C. § 207(a)(1) (2010). 

However, the FLSA allows for an exemption from its overtime pay requirements 

for employees who are “employed in a bona fide executive, administrative, or 

professional capacity[.]” See 29 U.S.C. § 213(a)(1) (2018). The State considers 

nurse clinicians exempt under that professional exemption.1

 

1

 The Wisconsin Department of Workforce Development has determined that the FLSA 

regulations relating to overtime issues are applicable to employees of the State. See WIS. ADMIN.

CODE § DWD 274.08(2) (April 2018). Magnussen’s initial complaint included claims that the 

State had violated the FLSA as well, but those claims were dismissed with prejudice by the trial 

court on the grounds that they were barred because of sovereign immunity. Magnussen does not 

raise any arguments on appeal regarding that dismissal, so we do not address it. See Cosio v. 

Medical Coll. of Wis., Inc., 139 Wis. 2d 241, 242-43, 407 N.W.2d 302 (Ct. App. 1987) (arguments 

not briefed on appeal are deemed abandoned). 
No. 2021AP538

3

¶4 Magnussen, however, asserts that nurse clinicians should be 

considered non-exempt employees based on their pay structure. In addition to their 

salary, nurse clinicians may receive supplemental or “add-on” pay, which is offered 

for positions where incentives are necessary to recruit and retain employees. For 

example, when Magnussen was working as a “weekend nurse,” she received addon pay of $10 per hour. Nurse clinicians are also eligible to receive an additional 

$1 per hour as add-on pay when providing “direct patient care.” 

¶5 Additionally, nurse clinicians are paid additional compensation when 

they work more than forty hours per week. However, this additional compensation 

is calculated in accordance with the State Compensation Plan—as opposed to the 

provisions of the FLSA—since they are considered exempt employees. The State’s 

method calculates this additional compensation for hours beyond the forty-hour 

work week at a rate of one and one-half times Magnussen’s base hourly rate. 

Magnussen contends that this rate is significantly less than if it was calculated based 

on her “regular” rate—which she asserts should include her add-on pay—as 

required under the FLSA. 

¶6 Therefore, Magnussen filed this action contending that she and other 

nurse clinicians should be considered hourly, non-exempt employees rather than 

salaried, exempt employees. She argued that the method by which she is required 

to record her hours, as well as the structure of her add-on pay, support her claims. 

She further pointed to at least two occasions where she was not paid her guaranteed 

minimum salary. Finally, she contended that even if the State demonstrated that she 
No. 2021AP538

4

was an exempt employee, her guaranteed salary was not reasonably related to her 

total actual compensation, as required by 29 C.F.R. § 541.604(b) (2020).

2

 

¶7 Magnussen filed a motion for partial summary judgment asking the 

trial court to find, as a matter of law, that she is an hourly, non-exempt employee. 

The State, on the other hand, filed a motion for summary judgment arguing that 

Magnussen is an exempt employee because she satisfies the criteria of the “salary 

basis” test.3 See 29 C.F.R. § 541.602(a). That test is met if the employee “regularly 

receives each pay period ... a predetermined amount constituting all or part of the 

employee’s compensation, which amount is not subject to reduction because of 

variations in the quality or quantity of the work performed.” Id. The State further 

asserted that the reasonable relationship requirement of 29 C.F.R. § 541.604(b) is 

not applicable to Magnussen since her guaranteed salary is not “computed on an 

hourly, a daily or a shift basis,” as described in that regulation. See id. 

¶8 The trial court determined that Magnussen met the criteria of the 

salary basis test and was therefore an exempt employee. The court noted that the 

FLSA regulations generally allow for the practice of tracking hours without 

forfeiting the exemption “if the employment arrangement also includes a guarantee 

of at least the minimum weekly-required amount paid on a salary basis,” see 29 

C.F.R. § 541.604(a), and found that Magnussen’s compensation records supported 

the State’s position that she receives a guaranteed salary amount. It noted that her 

paychecks show that she received a set amount of wages for eighty “regular hours” 

 

2

 All references to the Code of Federal Regulations are to the 2020 version unless 

otherwise noted.

3

 There are two tests for determining whether the professional exemption from FLSA is 

applicable: the duties test and the salary basis test. See 29 C.F.R. § 541.2; see also Auer v. 

Robbins, 519 U.S. 452, 455 (1997). Magnussen concedes that the duties test is satisfied. 
No. 2021AP538

5

worked, stating that “[t]he uniformity of these compensation records is highly 

indicative of a salary compensation structure.” 

¶9 Additionally, the trial court rejected Magnussen’s argument that her 

receipt of less than her guaranteed wages on two occasions defeated the exemption, 

citing the “public accountability” exception to the criteria of the salary basis test 

that prohibits a reduction of the guaranteed salary amount for hours not worked. See

Demos v. City of Indianapolis, 302 F.3d 698, 701-02 (7th Cir. 2002). Under the 

public accountability exception, a government entity is permitted to dock an 

employee’s pay for hours not worked and still satisfy the salary basis test. See id.

at 702. 

¶10 The trial court also rejected Magnussen’s argument that her 

compensation did not meet the reasonable relationship requirement of 29 C.F.R. 

§ 541.604(b). The court reasoned that because it had found that Magnussen was 

paid a guaranteed salary, she was not an hourly employee, and thus that provision 

did not apply to her. 

¶11 Therefore, the trial court denied Magnussen’s motion for partial 

summary judgment, and granted summary judgment in favor of the State. This 

appeal follows.

DISCUSSION

¶12 This court reviews a trial court’s decision to grant summary judgment 

independently, applying the same methodology, in accordance with WIS. STAT.

§ 802.08 (2019-20).

4

 Kohn v. Darlington Cmty. Sch., 2005 WI 99, ¶11, 283 Wis. 

 

4

 All references to the Wisconsin Statutes are to the 2019-20 version unless otherwise 

noted.
No. 2021AP538

6

2d 1, 698 N.W.2d 794. Summary judgment shall be granted only if “the pleadings, 

depositions, answers to interrogatories, and admissions on file, together with the 

affidavits, if any, show that there is no genuine issue as to any material fact and that 

the moving party is entitled to a judgment as a matter of law.” Sec. 802.08(2). In 

determining whether summary judgment was appropriately granted, this court 

reviews the summary judgment materials in the light most favorable to the 

nonmoving party. Kohn, 283 Wis. 2d 1, ¶11.

¶13 The trial court’s decision was based on its interpretation of the 

relevant federal regulations, and our review requires us to engage in such an analysis 

as well. Courts should apply the “general principles of statutory interpretation when 

construing federal regulations.” Voces De La Frontera, Inc. v. Clarke, 2017 WI 

16, ¶13, 373 Wis. 2d 348, 891 N.W.2d 803. That is, the meaning of the relevant 

regulations must be determined “so that it may be given its full, proper, and intended 

effect.” See State ex rel. Kalal v. Circuit Ct. for Dane Cnty., 2004 WI 58, ¶44, 271 

Wis. 2d 633, 681 N.W.2d 110. For this analysis, the language of the regulations is 

“interpreted in the context in which it is used; not in isolation but as part of a whole; 

in relation to the language of surrounding or closely-related [regulations]; and 

reasonably, to avoid absurd or unreasonable results.” See id., ¶46. This analysis 

presents a question of law, which we review de novo. See DOR v. River City Refuse 

Removal, Inc., 2007 WI 27, ¶26, 299 Wis. 2d 561, 729 N.W.2d 396. Furthermore, 

the application of a statute or regulation to undisputed facts is a question of law, 

which we also decide independently. See Kox v. Center for Oral & Maxillofacial 

Surgery, S.C., 218 Wis. 2d 93, 99, 579 N.W.2d 285 (Ct. App. 1998).

¶14 As previously stated, the trial court held that the State had met its 

burden of proving that Magnussen was an exempt employee. See Kennedy v. 

Commonwealth Edison Co., 410 F.3d 365, 370 (7th Cir. 2005) (“It is the 
No. 2021AP538

7

employer’s burden to establish that an employee is exempt from the FLSA’s 

overtime requirements.”). The court’s decision was based on its finding that 

Magnussen’s compensation met the salary basis test pursuant to 29 C.F.R. 

§ 541.602(a). To satisfy the criteria of that test, an employee must receive a 

“predetermined amount” of wages for each pay period that is “not subject to 

reduction because of variations in the quality or quantity of the work performed.” 

Id. In other words, “[i]f an employer docks an employee’s pay for partial day 

absences, violations of rules other than those of safety, or based on the quantity or 

quality of the employee’s work, the employee is not considered to be on a salary 

basis.” Kennedy, 410 F.3d at 370 (citation omitted). 

¶15 However, an employer which is a government entity may dock its 

employees’ pay for working fewer than the minimum amount of hours required and 

still meet the criteria for the salary basis test, under the principles of public 

accountability. See Demos, 302 F.3d at 702. This public accountability exception 

is grounded in the fact that government employment positions are funded by 

taxpayer money; thus, government employers track their employees’ hours “either 

because they are required by law to keep track of individual employees’ hours or 

because the public expects government workers to be available during normal 

business operating hours.” Id.

¶16 Moreover, the State’s requirement that its employees track their hours 

does not negate their exempt status under the salary basis test, because those 

employees can still be considered “salaried” if their compensation “consists of a 

guaranteed predetermined amount plus additional compensation.” Douglas v. 

Argo-Tech Corp., 113 F.3d 67, 71 (6th Cir. 1997). This rule was confirmed in an 

Opinion Letter by the United States Department of Labor on this issue:
No. 2021AP538

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Provided that employees regularly receive each biweekly 

pay period under the employment agreement no less than 

1/26th of their annual salary (except those deductions 

expressly permitted), their exempt status is not affected by 

the actual number of hours that are entered for a particular 

pay period or for each separate week within that pay period, 

or by how the time is described when it is entered into the 

payroll system (e.g., regular time, overtime, holiday pay, 

sick leave, personal leave or other codes).

See U.S. Dep’t of Labor, Wage & Hour Div., Opinion Letter on the Fair Labor 

Standards Act (July 9, 2003), 2003 WL 23374601, at *2.

¶17 Magnussen’s appointment letter from the State for the nurse clinician 

position indicated that she would be paid a salary based on an hourly rate. The State 

calculates an hourly rate of pay for all of its employees, regardless of exemption 

status. This is due in part to principles of public accountability, as explained above. 

See Demos, 302 F.3d at 702.

¶18 Magnussen argues that her appointment letter did not specify a 

guaranteed salary. However, her compensation records indicate that, generally, her 

regular wages were for eighty hours per pay period at the hourly rate set forth in the 

letter.5 Any pay periods where she was docked wages for hours she did not work 

were properly subtracted under the public accountability exception. See id. This 

pay structure meets the criteria of the salary basis test. See Douglas, 113 F.3d at 

71; 29 C.F.R. § 541.602(a).

¶19 Nevertheless, Magnussen argues that even if this court determines that 

she meets the salary basis test, her guaranteed salary is based on an hourly 

calculation and, as a result, the reasonable relationship requirement for additional 

compensation of 29 C.F.R. § 541.604(b) is applicable. As stated in Douglas, 

 

5

 State employees are paid bi-weekly. See WIS. STAT. § 16.53(1)(d)1.
No. 2021AP538

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salaried employees may receive additional compensation without losing their status 

as exempt employees, see id., 113 F.3d at 71, with the guidelines for such additional 

compensation set forth in § 541.604(a)-(b). Specifically, § 541.604(a) allows for an 

employer to “provide an exempt employee with additional compensation without 

losing the exemption or violating the salary basis requirement, if the employment 

arrangement also includes a guarantee of at least the minimum weekly-required 

amount paid on a salary basis.” Such additional compensation may include “a 

percentage of the sales or profits of the employer” or “additional compensation 

based on hours worked for work beyond the normal workweek.” Id. This additional 

compensation “may be paid on any basis (e.g., flat sum, bonus payment, straighttime hourly amount, time and one-half or any other basis), and may include paid 

time off.” Id. (emphasis added). 

¶20 The provisions of 29 C.F.R. § 541.604(b) explain that an employee 

whose earnings are “computed on an hourly, a daily or a shift basis” may also 

receive additional compensation without losing exemption status as long as “the 

employment arrangement also includes a guarantee of at least the minimum weekly 

required amount paid on a salary basis ... and a reasonable relationship exists 

between the guaranteed amount and the amount actually earned.” Furthermore, this 

subsection specifically states that “[t]he reasonable relationship requirement applies 

only if the employee’s pay is computed on an hourly, daily or shift basis.” Id.

¶21 We conclude that Magnussen’s compensation clearly falls within the 

parameters of 29 C.F.R. § 541.604(a). As previously discussed, the record indicates 

that Magnussen is paid on a salary basis; that is, she was paid a set amount each pay 

period regardless of the number of hours she worked, except for deductions under 

the public accountability exception. The fact that her compensation is broken down 

into an hourly amount—as is the case for all State employees’ compensation—does 
No. 2021AP538

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not translate into her wages being “computed on an hourly, daily or shift basis,” as 

required for the application of § 541.604(b) and the reasonable relationship 

requirement. See id.

¶22 Furthermore, the add-on pay Magnussen received for working 

weekend shifts or for direct patient care is an incentive the State offers, akin to the 

examples of sales commissions or bonuses described in 29 C.F.R § 541.604(a). In 

fact, as noted above, § 541.604(a) expressly allows for such incentives to be paid 

on an hourly basis. See id. We therefore conclude that § 541.604(a), by its plain 

language, applies to Magnussen’s compensation. See Kalal, 271 Wis. 2d 633, ¶49 

(the “purpose or scope” of a statute or regulation “may be readily apparent from its 

plain language”). Thus, we need not address § 541.604(b) and its reasonable 

relationship requirement. 

¶23 In sum, based on the FLSA regulations and other applicable case law 

as applied to the facts of this case, we conclude that Magnussen was paid a 

guaranteed salary, and thus the State has met its burden of demonstrating that she is 

exempt from the FLSA overtime requirements. See Kennedy, 410 F.3d at 370. 

Accordingly, we affirm the trial court’s grant of summary judgment in favor of the 

State.

By the Court.—Order affirmed.