Court Opinion

ID: 4710122
Source: CourtListenerOpinion
Date Created: 2021-08-09 22:02:07.450062+00
Date Added: 2024-06-11T08:07:01.647690
License: Public Domain

In the

     United States Court of Appeals
                  For the Seventh Circuit
                      ____________________
No. 20-1697
TOM REED and MICHAEL ROY, individually
and on behalf of those similarly situated,
                                           Plaintiffs-Appellants,

                                  v.

BREX, INC., et al.,
                                               Defendants-Appellees.
                      ____________________

          Appeal from the United States District Court for the
                      Southern District of Illinois.
      No. 3:17-cv-00292-NJR — Nancy J. Rosenstengel, Chief Judge.
                      ____________________

    ARGUED NOVEMBER 9, 2020 — DECIDED AUGUST 9, 2021
                ____________________

   Before SYKES, Chief Judge, and HAMILTON and BRENNAN,
Circuit Judges.
   HAMILTON, Circuit Judge. At the center of this overtime pay
case is a complicated payment scheme for auto repair techni-
cians. The Fair Labor Standards Act generally requires that
covered workers be paid extra for overtime work, but it ex-
empts from that requirement some retail and service employ-
ees who are paid bona ﬁde commissions. Plaintiﬀs Tom Reed
2                                                    No. 20-1697

and Michael Roy are auto repair technicians for defendant
Brex, Inc. They claim that Brex’s payment plan is not a true
commission, so that under the Act they are paid hourly wages
and thus are entitled to overtime pay. Brex counters that,
when one peels back the layers of its complex payment sys-
tem, it is in fact a bona ﬁde commission based on each techni-
cian’s sales during a pay period. The district court granted
summary judgment for Brex based on the bona ﬁde commis-
sion exemption. We aﬃrm.
I. Fair Labor Standards Act
    The Fair Labor Standards Act requires that most covered
employees be paid one and a half times their hourly wage for
time that they work beyond 40 hours a week. Yi v. Sterling
Collision Centers, Inc., 480 F.3d 505, 506 (7th Cir. 2007), citing
29 U.S.C. § 207(a)(1). The Act is full of exceptions, however,
and one is that the time-and-a-half requirement does not ap-
ply to employees in retail or service establishments if (1) the
employee’s regular rate of pay exceeds one and a half times
the statutory minimum wage and (2) more than half the em-
ployee’s compensation comes from bona ﬁde commissions on
goods or services. § 207(i). The statute does not elaborate fur-
ther, except to say that “all earnings resulting from the appli-
cation of a bona ﬁde commission rate shall be deemed com-
missions on goods or services without regard to whether the
computed commissions exceed the draw or guarantee.” Id.
    What counts as a bona ﬁde commission? “The essence of a
commission is that it bases compensation on sales, for exam-
ple a percentage of the sales price, as when a real estate broker
receives as his compensation a percentage of the price at
which the property he brokers is sold.” Yi, 480 F.3d at 508. If
an employee’s “commissions vary in accordance with the
No. 20-1697                                                 3

employee’s performance on the job,” he or she may qualify
for exemption. 29 C.F.R. § 779.416(b). Thus, a “commission
rate is not bona ﬁde if … the employee, in fact, always or al-
most always earns the same ﬁxed amount of compensation
for each workweek.”§ 779.416(c). Likewise, commission plans
designed so that employees always receive the same take-
home pay with only “slight” upward variances for excep-
tional sales weeks are not “bona ﬁde.” Id.
    We examined these requirements in detail in Yi v. Sterling
Collision Centers, Inc., where we aﬃrmed summary judgment
for a similar employer. Like this case, Yi was brought by auto
repair technicians who worked on a commission basis subject
to a convoluted pay algorithm. Noting that commission-
based pay for such technicians was widespread and
longstanding, we held that the plaintiﬀs in Yi qualiﬁed as
commission-eligible workers in retail stores or other service
establishments. 480 F.3d at 510.
    We also explained that commission plans may qualify as
bona ﬁde under the Act even if they partially reﬂect hours
worked or if an employer describes them using idiosyncratic
terms that do not correspond closely with the Act’s language.
Id. at 508–09. The payment plan in Yi recognized that some
workers may work collaboratively on big projects and accord-
ingly split commissions for each project based on the number
of hours each mechanic worked on the collaboration. The plan
also compared actual hours worked to the nominal labor costs
charged to the customer. Finally, each employee was paid a
diﬀerent baseline wage based on his or her skills and quality
of work. Id. at 509. We concluded that this hybrid hourly-com-
mission structure was a bona ﬁde commission as a matter of
law because each group’s total commission incentivized
4                                                            No. 20-1697

eﬃcient work, and pay was “decoupled from actual time
worked.” Id.; see also 29 C.F.R. § 779.416(b) (illustrating that
commissions work by varying pay “in accordance with the
employee’s performance on the job”); Klinedinst v. Swift In-
vestments, Inc., 260 F.3d 1251, 1254–56 (11th Cir. 2001) (simi-
lar).
II. Undisputed Facts and Brex’s Payment Plan
    Defendant Brex operates a chain of over two dozen “Car-
X” auto repair shops in Illinois and Missouri. Plaintiﬀs Tom
Reed and Michael Roy worked for Brex as auto repair techni-
cians. They also represent other Brex technicians in this col-
lective and class action lawsuit, alleging that Brex’s pay scale
for auto technicians violates federal and state employment
laws that require employees to be compensated at time-and-
a-half for overtime hours. Because the parties agree that the
state-law claims are co-extensive with the federal ones, we fo-
cus on the federal Fair Labor Standards Act, 29 U.S.C. § 201 et
seq. It is undisputed that the technicians have worked more
than 40 hours per week. The appeal turns on whether Brex
pays its technicians a bona ﬁde commission within the mean-
ing of the Act. 1
    Brex’s pay scale for its auto technicians has some Rube-
Goldberg-esque qualities: to arrive at a technician’s take-
home pay, Brex starts with the total cost charged to customers
for each technician’s weekly repairs and applies a series of di-
visions, multiplications, and additions, some of which are re-
dundant.

    1Before the district court granted Brex’s motion for summary judg-
ment, the district court conditionally certified a collective action for the
federal wage claims and certified classes for the state-law claims.
No. 20-1697                                                      5

    First, Brex calculates its total receipts for repairs and sales
that a given technician has made during a pay period, exclud-
ing tire installations. That total sales number is then divided
by hours worked to come up with an average “hourly pro-
duction.” Brex publishes a table to convert bands of “hourly
production” to hourly wages (called “hourly commission”).
Generally, the calculated hourly wages translate to roughly 16
to 17 percent of the hourly production.
    For example, if a technician’s hourly production is be-
tween $100 and $104.99 per hour during a pay period, Brex’s
table deﬁnes the baseline hourly wage for that pay period as
$16.25. In contrast, if that technician’s hourly production is
between $80 and $84.99 per hour, then the base hourly wage
for that pay period is $12.80.
    There are a couple of further complications in Brex’s pay
system. First, tire sales and installation are counted sepa-
rately. Generally, mechanics are paid $5.00 per tire installed
regardless of the tire’s cost, but that number jumps to $8.75
per tire if the mechanic installs more than eight tires during a
pay period. Also, some mechanics receive hourly bonuses
based on having certain auto-repair certiﬁcations. The more
certiﬁcates a technician has, the higher his or her hourly bo-
nus. The magnitude of each hourly bonus is small, though,
and even in the aggregate the bonuses are dwarfed by the
minimum hourly earnings. The ﬁnal, adjusted hourly wage is
multiplied by hours worked during that pay period.
   The hourly wage also has a ﬂoor that applies even if the
mechanic’s hourly production is anemic during the particular
pay period. This ﬂoor works out to be one and a half times the
applicable state minimum wage, rounded up. Plaintiﬀs Reed
and Roy concede that the alternative wage ﬂoor is triggered
6                                                  No. 20-1697

in only 16 percent of paychecks, meaning that 84 percent of
Brex paychecks are paid on the commission scale.
    By way of example, say employee A worked 45 hours dur-
ing a pay period and produced $5,000 in non-tire sales. Em-
ployee A also installed six tires and was licensed in electrical
repair and as an inspector in Missouri. First, the pay scale
would divide total production ($5,000) by hours worked (45)
to arrive at an hourly production of $111.11. Using the pay
scale converter, any hourly production between $110.00 and
$114.99 translates to a base wage of $17.88 per hour (or 16.1
percent of hourly production). Both of this technician’s certi-
ﬁcations carry an additional bonus of 50 cents per hour, bring-
ing the total hourly wage up to $18.88, and each tire adds
$5.00 to the total. Because $18.88 exceeds one and a half times
the minimum wage in Illinois and Missouri, that is the appli-
cable hourly wage. So for this week, employee A’s gross pay
will be 45 hours times $18.88 per hour plus (six tires at $5.00
per tire) equals $879.60.
    Next, compare a slightly more eﬃcient employee B, who
produced the same amount of sales ($5,000) for just 35 hours
of work, holding everything else constant. This technician’s
hourly production would be $142.86. Using Brex’s conversion
chart, base hourly pay would be $22.75 (15.9 percent of hourly
production), and adjusted hourly pay with certiﬁcates would
be $23.75 per hour. During this pay period, employee B would
be paid (35 hours) times ($23.75 per hour) plus (six tires at
$5.00 per tire) equals $861.25. Though employee B worked 22
percent fewer hours than employee A, B would be paid just 2
percent less.
    Reed and Roy sued on behalf of 157 Brex technicians
claiming that this scheme violates the Fair Labor Standards
No. 20-1697                                                    7

Act because they are not paid overtime wages even though
they are entitled to time-and-a-half under the Act. Their pri-
mary claim is that the pay scale does not reﬂect a bona ﬁde
commission, which would be excepted from the overtime re-
quirements, because it incorporates hours worked in so many
steps in computing pay. They also point to Brex’s description
of its pay plan as providing hourly wages. In further support,
the technicians argue that the payment plan does not further
the purposes of the time-and-a-half requirement for overtime
hours because it does not discourage Brex from requiring its
technicians to work long hours. In fact, the evidence shows
that Brex technicians regularly work more than 40 hours per
week. Finally, plaintiﬀs advance the disconcerting alternative
theory that Brex’s minimum wage ﬂoor violates the Act be-
cause it is too generous: they say that employees who fall back
on this option for one pay period should have to pay back
their excess earnings in subsequent pay periods, though Brex
does not actually require such claw-backs from its techni-
cians.
    Brex moved for summary judgment on all these theories,
arguing that the undisputed evidence showed that the com-
mission structure was bona ﬁde and the guarantee was law-
ful. The district court initially granted judgment as a matter of
law on the ﬁrst theory, and after Brex moved to reconsider,
did so on the second as well, entering ﬁnal judgment for Brex.
Reed and Roy pursue both theories on appeal.
III. Analysis
    We review a district court’s summary judgment ruling de
novo, giving the non-moving parties the beneﬁt of conﬂicting
evidence and reasonable inferences from the evidence. Vesey
v. Envoy Air, Inc., 999 F.3d 456, 459 (7th Cir. 2021). Summary
8                                                  No. 20-1697

judgment is appropriate when “there is no genuine dispute as
to any material fact and the movant is entitled to judgment as
a matter of law.” Fed. R. Civ. P. 56(a).
    Reed and Roy’s primary claim that they are not paid bona
ﬁde commissions fails because the undisputed facts as pre-
sented to the district court show that Brex pays each techni-
cian based on his or her actual sales. Because pay is propor-
tional and correlated to each technician’s sales, the exception
applies to Reed and Roy, so that they are not entitled to addi-
tional overtime wages. As plaintiﬀs point out, we have traced
the purposes of the general overtime requirement in part to
Congress’s desire to prevent workers from working danger-
ously long hours. Yet the fact that Brex’s technicians work
long hours cannot on its own create an issue of triable fact as
to whether they qualify for this statutory exception to the gen-
eral overtime rule. On appeal, plaintiﬀs also raise factual is-
sues that were not presented to the district court, and in fact
contradict the positions they did take. These arguments were
forfeited.
    In the district court, Brex moved for summary judgment
on the ground that Yi foreclosed Reed and Roy’s claims. Ac-
cording to Brex, the undisputed evidence showed that each
technician’s earnings were determined almost entirely as a
roughly 16 percent commission on sales, so no reasonable jury
could conclude that the pay scale was not bona ﬁde. In oppos-
ing the motion, Reed and Roy focused on Brex’s repeated de-
scription of its plan as “hourly” in the written materials it
gave its technicians and in its executives’ deposition testi-
mony that hours worked is a factor in calculating take-home
pay. The technicians also highlighted that Brex’s pay algo-
rithm explicitly incorporates hours worked in several of the
No. 20-1697                                                     9

steps for computing pay. Not only does Brex pay an hourly
bonus to some well-credentialed technicians, but it also deter-
mines an hourly commission by dividing sales by hours
worked, and it reports hourly wages. Since Brex pays its tech-
nicians an “hourly” wage for each “hour” worked during a
pay period, plaintiﬀs reason, pay is not “decoupled” from
time worked, as required by Yi.
    We understand the point, but as we have said before, “the
nomenclature is not determinative.” Alvarado v. Corporate
Cleaning Services, Inc., 782 F.3d 365, 371 (7th Cir. 2015), citing
Yi, 480 F.3d at 508 (holding payment plan to be a bona ﬁde
commission even though it described itself as a non-exempt
“piece-rate” plan). It is uncontested that Brex’s payment plan
determines weekly pay by dividing sales by hours worked,
multiplying by the commission rate of roughly 16 percent,
and then multiplying that “hourly” rate by hours worked.
The formula is convoluted, but it is mathematically identical
to paying a straight commission. First multiplying and then
dividing by the same number (hours worked) is equivalent to
multiplying by one.
    Likewise, the fact that Brex reports an “hourly” wage does
not change the nature of the plan. It was undisputed before
the district court that the “hourly” wage varies in accordance
with a technician’s sales in that week. It was therefore a bona
ﬁde commission under our precedents, and summary judg-
ment was appropriate. Alvarado, 782 F.3d at 367–68 (aﬃrming
summary judgment for employer where undisputed facts
showed that compensation was “proportional and corre-
lated” to sales receipts); Yi, 480 F.3d at 509–10 (aﬃrming sum-
mary judgment for employer notwithstanding evidence that
employer weighted otherwise bona ﬁde commission formula
10                                                       No. 20-1697

by hours worked); see also Parker v. NutriSystem, Inc., 620 F.3d
274, 283 (3d Cir. 2010) (aﬃrming summary judgment for em-
ployer where undisputed evidence showed that employee
pay was “proportionally related to the charges passed on to
the consumer,” and rejecting rule that commissions are bona
ﬁde only if they are calculated “strictly as a percentage of sale
price”). 2
    Brex’s admissions that technician pay is partially a func-
tion of hours worked do not create a triable issue of fact. Ob-
viously, to some extent, technicians who work more hours are
likely to have more repair opportunities and therefore make
more money. Yi, 480 F.3d at 508 (noting that a commission
employee’s “income is likely to be inﬂuenced by the number
of hours a week that he works”). And small hourly bonuses
for certiﬁcation do not convert an employee’s pay into a
standard wage so long as “more than half his compensation
… represents commissions on goods and services.” 29 U.S.C.
§ 207(i); see also Yi, 480 F.3d at 509 (baseline wages of com-
mission-eligible employees may vary based on skill and qual-
ity of work). Here, plaintiﬀs have not argued on appeal that
these “hourly rate” bonuses make up half of their pay, and
Brex’s pay scale conﬁrms that commission-based hourly pay-
ments dwarf any hourly-rate bonuses.
   No factual issues preclude summary judgment. With one
caveat, which was forfeited in the district court, the terms and

     2 Computing each employee’s actual hourly wages also seems neces-
sary for employers to ensure that they comply with the exemption, which
requires that an exempt employee’s regular rate of pay exceed one and a
half times the minimum wage. We do not see how the Act could simulta-
neously require a baseline level of pay and penalize employers who com-
pute and report whether they satisfy it.
No. 20-1697                                                    11

impact of the payment plan are not in dispute. Both sides’
summary judgment materials were packed with undisputed
examples of pay ﬂuctuations—person to person, week to
week, and year to year. No reasonable jury could look at that
data and conclude that a given technician “always or almost
always earns the same ﬁxed amount of compensation for each
workweek.” 29 C.F.R. § 779.416(c).
    Reed and Roy also argue that summary judgment is inap-
propriate because Brex technicians log, on average, 25 percent
more hours than a standard 40-hour workweek, creating, they
say, a factual dispute as to whether the commission plan en-
courages eﬃcient work. This argument stems from our previ-
ous discussion of the purposes of the Act’s overtime provi-
sions, ﬁrst adopted in 1938 before the nation had recovered
from the Great Depression: (1) preventing workers willing to
work longer hours from taking work away from those who
prefer shorter hours; (2) spreading work around to more em-
ployees to reduce aggregate unemployment; and (3) deterring
employers from forcing employees to work long, unhealthy,
or dangerous hours. Mechmet v. Four Seasons Hotels, Ltd., 825
F.2d 1173, 1176 (7th Cir. 1987); see also Alvarado, 782 F.3d at
371 (concluding that payment plan was bona ﬁde commission
in part because seasonal employees did not work more than
2,000 hours per year); Yi, 480 F.3d at 510 (similarly noting total
hours worked in ﬁnding employees were subject to commis-
sion exception).
   As discussed below, we are not opposed to interpreting
vague or ambiguous statutory texts in light of evident pur-
poses, but “no legislation pursues its purposes at all costs.”
Rodriguez v. United States, 480 U.S. 522, 525–26 (1987). We have
explained: “Compromises draw unprincipled lines between
12                                                           No. 20-1697

situations that strike an outside observer as all but identical.
The limitation is part of the price of the victory achieved, a
concession to opponents who might have been able to delay
or block a bill even slightly more favorable to the propo-
nents.” Chicago Professional Sports Ltd. P’ship v. Nat’l Basketball
Ass’n, 961 F.2d 667, 671 (7th Cir. 1992).
     For more than eighty years, the detailed and evolving pro-
visions of the Fair Labor Standards Act provide ample proof
of the point. From its ﬁrst enactment in 1938, the scope of the
Fair Labor Standards Act has been the subject of complex po-
litical and policy compromises and statutory amendments. 3
    The commission exception is one of those statutory excep-
tions to the general overtime rule adopted as part of the gal-
axy of compromises essential to passage. Those exceptions

     3 For a nearly contemporaneous account of the debates and compro-
mises leading to the 1938 passage, see John S. Forsythe, Legislative History
of the Fair Labor Standards Act, 6 Law and Contemporary Problems 464
(1939) (concluding at page 489: “few legislative enactments in our history
have had such a stormy career”). For a sampling of scholarship consider-
ing both the general history of the Act and specific issues and amend-
ments, and showing both the purposes and limits of the Act, see, e.g., Rob-
ert N. Willis, The Evolution of the Fair Labor Standards Act, 26 U. Miami L.
Rev. 607 (1972); William G. Whittaker, The Fair Labor Standards Act: Exemp-
tion of “Executive, Administrative and Professional Employees” Under Section
13(a)(1), at 1–7 (Cong. Research Service 2003); William G. Whittaker, The
Fair Labor Standards Act: Continuing Issues in the Debate (Cong. Research
Service 2008); Llezlie Green Coleman, Rendered Invisible: African American
Low-Wage Workers and the Workplace Exploitation Paradigm, 60 Howard L. J.
61, 84–86 (2016) (summarizing scholarship regarding role of racial consid-
erations in enactment of Act); Megan McGinnis, Child Farm Labor Under
the Fair Labor Standards Act, 20 Kansas J. L. & Pub. Pol. 155, 167–70 (2010)
(summarizing evolution of Act’s exclusions of and later coverage of chil-
dren working on farms), as well as sources cited in these resources.
No. 20-1697                                                   13

and compromises should not be undone by courts in the name
of achieving broader statutory purposes. E.g., Covalt v. Carey
Canada Inc., 860 F.2d 1434, 1439 (7th Cir. 1988) (“laws have
both directions and limits, and each must be scrupulously
honored”). Employers and employees do not and need not re-
spond to economic incentives imposed by statutory provi-
sions that do not apply to them.
    To be sure, evidence that employees regularly work ex-
treme hours can be relevant to whether a complex pay scale
actually oﬀers incentives for more eﬃcient work or whether
the employees are retail or service workers to begin with. See
Dyal v. PirTano Construction, Inc., 2018 WL 1508487, *10–12
(N.D. Ill. Mar. 27, 2018) (denying summary judgment in part
and correctly noting that hours worked are not relevant
where pay plan is unquestionably a bona ﬁde commission but
can aﬀect analysis of evidence showing that commissions are
not bona ﬁde). But where the evidence oﬀered to defeat sum-
mary judgment shows only that an exception to the Act’s
overtime requirement has predictable eﬀects on employers
and employees, more general statutory purposes will not de-
feat summary judgment on the application of an exception.
    On appeal, Reed and Roy point to a new issue of material
fact that they say is disputed. They now claim that the pay
plan is not implemented as described and that workers’ pay
is totally arbitrary. Plaintiﬀs cite a spreadsheet included as an
exhibit in the summary judgment brieﬁng that includes ag-
gregate data about “sales” and “commissions” for each tech-
nician-workweek. Plaintiﬀs’ appellate brief includes some
new back-of-the-envelope calculations, which show that the
pay scale is not a roughly 16 percent commission. In fact, they
say, the calculations show that each technician’s weekly pay
14                                                     No. 20-1697

was not correlated with sales at all, meaning that the alleged
commission structure is anything but bona ﬁde. For example,
they calculate that one technician’s commission rate equaled
11.4 percent of sales in one week, but 64.8 percent of sales in
another week, as opposed to the roughly 16 percent that re-
sults from using Brex’s table.
   Plaintiﬀs are correct that summary judgment would have
been inappropriate if there were factual disputes as to
whether commissions were actually correlated with sales. An
employee compensation algorithm that spits out random
numbers does not base compensation on sales and would not
be a bona ﬁde commission. See Yi, 480 F.3d at 508.
    But these arguments are at least forfeited and perhaps
waived. “Summary judgment is the proverbial put up or shut
up moment in a lawsuit, when a party must show what evi-
dence it has that would convince a trier of fact to accept its
version of events.” Beardsall v. CVS Pharmacy, Inc., 953 F.3d
969, 973 (7th Cir. 2020) (cleaned up). It is therefore incumbent
on the party opposing a summary judgment motion to “in-
form the district court of the reasons why summary judgment
should not be entered.” Riley v. City of Kokomo, 909 F.3d 182,
190 (7th Cir. 2018). Parties who fail to bring record evidence
to the district court’s attention risk forfeiting their right to rely
on it on appeal. Wrolstad v. Cuna Mutual Ins. Society, 911 F.3d
450, 455 (7th Cir. 2018).
    Reed and Roy did not present these new calculations to
the district court. In fact, they did not even dispute Brex’s as-
sertions that technician pay was determined using the pay
scale as described above. All their arguments were built on
that foundation. Plaintiﬀs’ new factual argument is not a mere
No. 20-1697                                                     15

“appellate ampliﬁcation of a properly preserved issue.” Law-
son v. Sun Microsystems, Inc., 791 F.3d 754, 761 (7th Cir. 2015).
    All the evidence underlying these new calculations was
available to plaintiﬀs during the summary judgment brieﬁng,
yet they did not bring them to the attention of the district
court or give Brex an opportunity to explain or clarify them.
These lapses are especially problematic because the calcula-
tions that plaintiﬀs now cite do not explicitly separate out tire
sales and commissions, rendering the spreadsheets inconclu-
sive at best. Accordingly, this appeal is not the “rare situa-
tion” in a civil case where we would review the district court’s
decision for plain error, and Reed and Roy may not raise these
novel issues of fact on appeal. See Henry v. Hulett, 969 F.3d
769, 786 (7th Cir. 2020) (en banc) (“our ability to review for
plain error in civil cases is severely constricted”); Wrolstad, 911
F.3d at 455.
    We are now left only with Reed and Roy’s unusual alter-
native argument that they were paid too much. The genesis of
this argument is the statute’s command that “all earnings re-
sulting from the application of a bona ﬁde commission rate
shall be deemed commissions on goods or services without
regard to whether the computed commissions exceed the
draw or guarantee.” 29 U.S.C. § 207(i). The plaintiﬀs claim
that the Department of Labor’s interpretative regulations for-
bid Brex’s alternative wage ﬂoor because the regulations de-
ﬁne any wage “guarantee” as a draw against future commis-
sions that requires reconciliation in subsequent pay periods.
Reed and Roy contend, in essence, that because Brex did not
claw back its technicians’ guarantee payments, all compensa-
tion up to the guarantee was actually ﬁxed hourly wages even
in weeks where the guarantee did not apply. If plaintiﬀs were
16                                                        No. 20-1697

correct and the bulk of each technician’s commissions should
be redeﬁned as “wages,” that would prevent Brex from satis-
fying the exception’s requirement that more than half of an
employee’s income come from commissions. Id.
    Reed and Roy rely almost exclusively on the regulations’
use of the phrase “a guarantee or draw against commissions,”
which they read as “guarantee[,] or [,that is,] draw against
commissions.” See 29 C.F.R. § 779.416(b). Their position is not
without support, though neither of the district court decisions
on which they chieﬂy rely hinges on this regulatory phrase.
See generally Tillis v. Southern Floor Covering, Inc., 2018 WL
4571924 (S.D. Miss. Sept. 24, 2018) (assuming that a guarantee
without claw-back provisions was de facto salary); Keyes v.
Car-X Auto Service, 2009 WL 4136586 (S.D. Ohio Nov. 20, 2009)
(similar, adopting magistrate judge’s report and recommen-
dation). The parties have not cited, and we have not found, a
federal appellate opinion on this issue. 4
    We are not persuaded by Reed and Roy’s argument. We
begin with the statutory text, which implicitly but plainly per-
mits a “draw or guarantee.” § 207(i). “Guarantee” normally
means a promise that a condition will be fulﬁlled. E.g., Black’s
Law Dictionary, Guarantee (11th ed. 2019) (“The assurance
that a contract or legal act will be duly carried out.”). It is hard
to see how compensation would be “guaranteed” if the em-
ployee must relinquish some of the guaranteed money.
Though plaintiﬀs argue that reading “guarantee” and “draw”

     4The Sixth Circuit considered a similar payment plan in Stein v.
HHGregg, Inc., 873 F.3d 523, 529–30 (6th Cir. 2017), though that case in-
volved a “draw” against commissions and did not address whether guar-
antees without claw-back provisions meet the statutory and regulatory re-
quirements.
No. 20-1697                                                  17

to mean the same thing somehow avoids redundancy, this in-
terpretation has things backwards. The plain meaning of the
Act allows employers to implement either a guarantee or a
draw, which are two distinct arrangements.
    Department of Labor regulations explain that employers
may smooth the peaks and valleys of a commission-based
payment model, without losing application of the bona ﬁde
commission exception, by providing employees with “peri-
odic payments, which are described variously in retail or ser-
vice establishments as ‘advances,’ ‘draws,’ or ‘guarantees.’”
29 C.F.R. § 779.416(a). Guarantees may be acceptable in cases
“where the employment arrangement is that the employee
will be paid the stipulated sum, or the commission earnings
allocable to the same period, whichever is the greater
amount.” Id. The regulations are sensitive to Congress’s
choice of language regarding guarantees. If the payments are
greater than commissions, it “may or may not be customary
under the employment arrangement” for the employer to
claw back excess payments. Id.
   “If [] it appears from all the facts and circumstances of the
employment that the stipulated sum … actually functions as
an integral part of a true commission basis of payment, then
such compensation may qualify as compensation which ‘rep-
resents commissions on goods or services.’” Id. “Thus an em-
ployee who is paid a guarantee or draw against commissions
computed in accordance with a bona ﬁde commission pay-
ment plan or formula under which the computed commis-
sions vary in accordance with the employee’s performance on
the job will qualify for exemption….” § 779.416(b).
  Brex’s payment plan, as described before the district court,
meets these ﬂexible criteria. The regulation allows that the
18                                                 No. 20-1697

guarantee can operate as an alternative minimum ﬂoor, and
Brex’s alternative minimum ﬂoor is thus within the regula-
tory ambit. And the Department’s suggestion that an em-
ployer “may or may not” recoup excess payments shields
Brex against the exact argument that Reed and Roy now raise.
    To be sure, the regulations admonish that further inquiry
may be needed to determine whether the guarantee is actu-
ally part of a bona ﬁde commission system. This guidance ap-
pears to be driven by the concern that an employer will im-
plement a sham “guaranteed commission” that employees
will almost never exceed—and when they do, the marginal
commissions will be minimal. See § 779.416(c).
    But the undisputed evidence presented to the district
court shows that the Brex payment plan is a bona ﬁde com-
mission because pay is highly responsive to sales perfor-
mance and varies in accordance with sales. Likewise, this
guarantee is the exception, not the rule: Brex’s technicians are
paid on a true commission basis 84 percent of the time. This
is not a case where an employer oﬀers a nearly insurmounta-
ble baseline wage threshold or allows only “slight” upward
deviations for exemplary performance. See id.
    Reed and Roy invoke the regulation’s observation that a
guarantee “can never represent commissions, of course, if it is
actually paid as a salary.” § 779.416(a). Distinguishing a guar-
antee from a salary can involve the fact-intensive task of de-
termining whether the guarantee “actually functions as an in-
tegral part of a true commission basis of payment.” Id. But
plaintiﬀs did not cite any evidence before the district court or
on appeal tending to show that any technicians were paid on
a salary basis, that is, that they received an “agreed compen-
sation for services … usually paid at regular intervals on a
No. 20-1697                                                   19

yearly basis, as distinguished from an hourly basis.” Black’s Law
Dictionary, Salary (11th ed. 2019) (emphasis added). To the
contrary, the undisputed evidence shows that the technicians
were paid commissions the overwhelming majority of the
time and that the commissions were not a sham.
    Even if the Act and regulations were ambiguous as ap-
plied to the Brex pay system, our reading also avoids an im-
probable, even perverse, outcome. The entire point of the Act
is to require or encourage employers to pay their employees
more, not less. Yet Reed and Roy say that Brex should have
paid them less by docking their pay during weeks of plenty
to compensate for the lean weeks. The statute and regulations
do not require us to ﬁnd that an employer violates the Act by
paying its employees more than necessary. We will not strain
to read them to arrive at that odd result.
    Reed and Roy argue that genuine issues of material fact
preclude summary judgment on this theory, but their argu-
ments are not persuasive. First, we reject their attempts to cite
new facts and calculations for the ﬁrst time on appeal for rea-
sons we discussed above. Second, plaintiﬀs characterize reg-
ulatory interpretation as a question of fact for the jury—but
they do not contest the actual facts, which are that Brex tech-
nicians are paid a straight commission 84 percent of the time.
Plaintiﬀs have not cited any evidence from which a jury could
conclude that the guarantee is actually a salary, even consid-
ering the modest hourly bonuses oﬀered to well-credentialed
technicians. See Yi; 480 F.3d at 510 (aﬃrming summary judg-
ment even though technicians were paid diﬀerent baseline
hourly rates based on skill and experience).
    Reed and Roy make other undeveloped factual arguments
in favor of reversal, but such arguments and legal arguments
20                                                  No. 20-1697

unsupported by pertinent authority are waived. See, e.g., Wil-
liams v. Board of Education of City of Chicago, 982 F.3d 495, 511
(7th Cir. 2020). They claim that the fact that the guaranteed
wage ﬂoor is paid for 16 percent of all workweeks raises an
issue of fact for the jury as to whether the guarantee operates
as an integral part of a true commission system. That ﬁgure
shows only that the guarantee occasionally guarantees. And
the Act permits guarantees. Plaintiﬀs’ observation of this fact,
without any citation to relevant authority or attempt to situate
Brex’s practices within the permissive statutory and regula-
tory framework, cannot defeat summary judgment on its
own. That is especially true here, where the undisputed evi-
dence presented to the district court showed that there was
substantial hourly and weekly variation in pay and that the
guarantees are therefore “computed in accordance with a
bona ﬁde commission payment plan or formula under which
the computed commissions vary in accordance with the em-
ployee’s performance on the job.” 29 C.F.R. § 779.416(b).
  For these reasons, the judgment of the district court is
AFFIRMED.