FI L ED
U.S. COURT OF APPEAL S

EL EVENTH CI RCUI T AUGUST 26, 2010

J OHN L EY
CL ERK [DO NOT PUBLISH]

IN THE UN ITED STATES COURT OF APPEALS

FOR THE ELE VENTH CIRCUIT

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No. 1 0- 11 08 6

Non -Arg um en t Ca le nd ar

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D.C. Dock et No. 1 :0 6- cv -0 19 93 -CC

HARRIET BELL, in di vi du al ly and on be ha lf o f al l
si m il arl y si tu at ed pe rs on s,

Pl ai nt iff -Ap pe ll an t,

ve rs us

CALLAW AY PARTNERS, LLC, HURON CONSULTING GROUP, INC.,

Defen da nt s- App el le es

.

__ __ __ __ __ __ __ __ __ __ __ __
App eal fro m

th e Uni te d S ta te s Di st ric t Co ur t fo r th e Nor th ern Dis tri ct of Ge or gi a

__ __ __ __ __ __ __ __ __ __ __ __ (Au gu st 26 , 20 10 )

Befo re TJ OFLAT, W ILSON an d C OX, Circ ui t J ud ge s.

PER CURI AM:

Pl ai nt iff Harri et Bel l is th e cl as s r e pr es en ta ti ve fo r an op t-i n cl as s of

ap pr ox im at el y 10 0 b o o kk eep er/ acco un ta nt s (“ Pl ai nt iff s” ) who were hi red ase m

pl oyee co ns ul ta nt s by Cal la way Part ne rs , LLC (“ Cal la way ”) fo r a la rg e-s cal e

fin an ci al au di t in vo lv in g th e res ta te m en t of Heal th So ut h Co rp or at io n fo ll owi ng

al le ga ti on s th at Heal th So ut h ha d pe rp et rat ed a m ul ti -b il li on do ll ar acco un ti ng frau d.

Cal la way cl as si fie d Pl ai nt iff s as ex em pt fro m th e Fai r Lab or St an da rd s Act’s (FLSA)

ov ert im e p ay

req ui rem en t.

Pl ai nt iff s’ pa y co ns is te d of two di st in ct co m po ne nt s. Fi rs t, Pl ai nt iff

s rece iv ed

a gu aran te ed week ly sa la ry of $1 60 0 or m or e th at di d no t de pe nd on th e qu al it y or

qu an ti ty of th e wor k pe rfo rm ed

. Thi s week ly sa la ry was red uc ed by on e-fi fth of th e

week ly sala ry fo r ev ery fu ll da y a Pl ai nt iff to ok of f fro m work for pe rs on al reas on s

du rin g th e no rm al wor kwe ek wit ho ut su bs ti tu ti ng Pai d Tim e Off (“ PTO”). Bu t, a

Pl ai nt iff co ul d wor k fewer th an ei gh t ho ur s du rin g a n y g i v en wor kd ay wit ho ut an y

red uc ti o n i n hi s or he r week ly sa la ry

. Seco nd

, Pl ai nt iff s were el ig ib le to rece iv e

ad di ti on al in cen ti ve co m pe ns at io n (a “ bo nu s” ) pa id at a st rai g h t

- t i me ho ur ly rat e

ba se d on th e cu m

ul at iv e nu m

be r of bi ll ab le ho ur s th at Pl ai nt iff s wor ke d. Any bo nu s

to be award ed was de te rm in ed ba se d on ho w m an y ad di ti o n a l ho ur s ov er fo rty a

Pl ai nt iff wor ke d i n a gi ve n week m in us an y “ de fic it ” ho ur s a Pl ai nt iff ha d

accu m ul at ed in pa st week s. Fo r ex amp l e , i f a Pl ai nt iff wor ke d se ve n an d no t ei gh t

ho ur s o n e ach reg ul arl y -s ch ed ul ed wor kd ay in a gi ve n week, t hu s t ot al in g 3 5 h ou rs

of wor k, he or sh e st il l earn ed th e fu ll pr ed et erm in ed week ly sa la ry , bu t wou ld no t

2earn a bo nu s in a su bs eq ue nt week un ti l he or sh e m ad e up th e bo nu s- ho ur de fic it of

fiv e h ou rs an d t he n wo rk ed m or e th an 40 ho ur s i n a gi ve n wee k.

Pl ai nt iff Bel l fil ed su it ag ai ns t Cal la way on Aug us t 24

, 20 06

, a s a c ol le ct iv e

act io n un de r th e FLSA, cl ai m in g th at Cal la way ha d vi ol at ed th e ov ert im e pr ov is io ns

of th e FLSA. The on ly is su e co ns id ered by th e di st ric t co ur t was whe th er Cal la way ’s

pa y syste m vi ol at ed th e sa la ry ba si s te st se t fo rth in 29 C.F.R. § 54 1.6 02

. The di st ric t

co ur t gr an te d su m

m ary jud gm en t fo r Cal la way

. The co ur t he ld th at Cal la way ’s bo nu s

pr act ic e co m

pl ie d wit h Dep art m en t of Lab or (DOL) reg ul at io ns , an d th at Pl ai nt iff s’

cl ai m s th at su ch pr act ic e vi ol at ed th e sa la ry ba si s te st were wit ho ut m eri t. The co ur t

al so fo un d th at Cal la way ha d com pl ie d wit h DOL reg ul at io ns reg ard in g ded uc ti on s

fro m sa la rie s fo r wor kd ay s m is se d, an d th at Pl ai nt iff s’ cl ai m th at th e m an ne r in whi ch

Cal la way cal cu la te d pa y fo r week e n d wor k co ns ti tu te d im pr op er “ pa rti al da y

de du ct io n s ” i n v i ol at io n of th e sa la ry ba si s te st was al so wit ho ut m eri t. Pl ai nt iff s

ap pe al ; th ey arg ue th at th e co ur t e r r e d i n c on cl ud in g th at Cal la way ’s b on us syste m

di d n ot vi ol at e th e FLSA’s ov ert im e req ui rem en ts

.

The FLSA req ui res em

pl oyers to pa y em

pl oyees “ en ga ge d in co m m erce or in

th e pr od uc ti on of co m

m erce ” ov ert im e whe n an em pl oyee wor ks m or e th an f or ty

ho ur s in a week

. 29 U.S.C. § 20 7( a)(1 ). Bu t, an ex em p t i o n f r o m t h e ov ert im e pa y

re q u i rem en t ex is ts fo r em pl oyees in a “ bo na fid e ex ecu ti ve , ad m in is tra ti ve , or

3pr of

es si on al cap aci ty” as de fin ed by reg ul at io ns of th e Secr et ary. 29 U.S.C. §

21 3( a)(1 ). The cl as s of Pl ai nt iff s in th is la wsu it are hi gh ly-edu cat ed acco un ta nt s an d

Cert ifi ed Pu bl ic Acco un ta nt s who

, du rin g th ei r em pl oym en t wit h C a ll away, of te n

m ad e m or e th an $1 00 ,00 0 pe r y ear. (R.3 74 at 3.) Co ns eq ue nt ly, Pl ai nt iff s fal l un de r

th e o ve rti m e p ay

ex em pt io n.

An em pl oyee is co ns id ered “ pa id on a sa la ry ba si s” if “ he reg ul arl y rece iv es

each pa y pe rio d on a week ly, o r l e s s freq ue nt ba si s, a pr ed et erm in ed am ou nt

co ns ti tu ti ng al l or pa rt of hi s co m pe ns at io n, whi ch am ou nt is no t su bjec t to red uc ti on

be cau se of va ria ti on s in th e qu al it y or qu an ti ty of th e wor k pe rfo rm ed .” 29 C.F.R. §

54 1.6 02

. Pl ai nt iff

s arg ue th at th ey were no t pa id on a sa la ry ba si s be cau se th e am ou nt

of th ei r bo nu se s flu ct ua te d b as ed on th e cu m ul at iv e nu m

be r of ho ur s wor ke d. Bu t,

as w e h a v e p r e vi ou sl y de te rm in ed

, “ as lo ng as th ere is a no n- de du ct ib le m in im um ,

ad di ti on al co m

pe ns at io n on to p of th e no n- de du ct ib le sa la ry is pe rm is si bl e.” Hog an

v. All st at e In s. Co

. , 36 1 F.3 d 62 1, 62 5 (1 1t h Ci r. 20 04 ) (ci ta ti on om it te d)

. And

, whi le

ad di ti on al co m

pe ns at io n is pe rm is si bl e, th e r e g u l at io ns do no t req ui re ad di ti on al

co m pe ns at io n, no r do th ey pr es cri be a se t m et ho d fo r se tt in g up a bo nu s syste m

. 29

C.F.R. § 54 1.6 04 (a) (“ An em pl oyer m ay pr ov id e an ex em pt em pl oyee wit h ad di ti on al

co m pe ns at io n wit ho ut lo si ng th e ex em pt io n or vi ol at in g th e sa la ry ba si s req ui rem en t,

i f t h e e mp l oym en t arra ng em en t al so in cl ud es a gu aran te e of at le as t th e m in im um

4week ly-requ ire d a mo u n t pa id on a sa la ry ba si s.

. . . Su ch ad di ti on al co m pe ns at io n

m ay be pa id on an y

ba si s . . . .”).

Afte r a rev ie w o f th e rec or d, we ag ree wi th th e di st ric t co ur t’s well -rea so ne d

an al y si s co nc lu di ng th at Cal la way ’s bo nu s syste m co nf or m ed to th e req ui rem en ts of

th e sa la ry ba si s te st

. (R.3 74 at 13 -2 4.) W hi le Cal la way’s i nc en ti ve pr og ram m ay

ha ve be e n d e s i g ne d in a way th at en co ur ag ed ov ert im e wor k, as Pl ai nt iff s arg ue it

was , be cau se it de du ct ed fo r “ de fic it ” ho ur s, it ne ve rth el es s co nf or med t o t h e

req ui rem en ts of th e FLSA. Bec au se t h e re was a no n- de du ct ib le m in im um week ly

sa la ry , Cal la way

was fr ee t o s tru ct ur e an y bo nu s p ro gr am

as i t s aw fi t.

Pl a i n ti ffs al so arg ue th at Cal la way vi ol at ed th e sa la ry ba si s te st whe n it

d e d u c te d a fu ll da y ’s pa y fo r pe rs on al da y s m is se d du rin g th e wor kwe ek ( M o n d a y

th ro ug h Fri da y ) bu t di d no t pa y Pl ai nt iff s fo r a “ fu ll da y ” fo r pa rti al da y s wor ke d on

Sat ur d a y o r Su nd ay

. Aga in

, we ag ree wit h th e di st ric t co ur t’s an al y si s co nc lu di ng

th at su ch de du ct io ns were al lo wab le un de r th e pr ov is io ns of 29 C.F.R. §

54 1.6 02 (b )(1 ). (R.3 74 at 25 -3 4.) The refo re, w e h o l d t h a t th e di st ric t co ur t di d no t

err i n fi nd in g C al la way ’s pay po li ci es to be in co m pl ia nc e wit h t he FLSA.

AFFIR MED.

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