Court Opinion

ID: 9905980
Source: CourtListenerOpinion
Date Created: 2023-11-30 18:01:04.076791+00
Date Added: 2024-06-11T09:24:03.247197
License: Public Domain

FOR PUBLICATION

    UNITED STATES COURT OF APPEALS
         FOR THE NINTH CIRCUIT

ANTHONY SANDERS; SHAWN                         No. 22-55663
HOLZBERGER; JUSTIN DOERING;
ROBERT COUGHLIN; VIRGINIA                        D.C. No.
TINOCO, on behalf of themselves and           2:19-cv-06370-
all similarly situated individuals,              MWF-E

                  Plaintiffs-Appellants,
    v.                                           OPINION

COUNTY OF VENTURA,

                  Defendant-Appellee.

          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 union-
sponsored health insurance plans instead of the County’s
plans.
4               SANDERS V. COUNTY OF VENTURA

     The County manages health benefits for union and non-
union 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 opt-
out 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 non-
union employees, the opt-out fees are remitted to the
County’s medical insurance carriers to fund the County-
sponsored 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 opt-
out 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 one-
half 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-in-
lieu. 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 opt-
out 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 opt-
out 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 opt-
out 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 opt-
out 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.