Reed v. Brex Inc., No. 20-1697 (7th Cir. 2021)
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The Fair Labor Standards Act, 29 U.S.C. 207(a) generally requires that covered workers be paid extra for overtime work, but it exempts from that requirement some retail and service employees who are paid bona fide commissions. Brex auto repair technicians claimed that Brex’s complex payment plan is not a true commission so that under the Act they are paid hourly wages and are entitled to overtime pay. 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 divisions, multiplications, and additions, some of which are redundant.” The hourly wage has a floor that applies even if the mechanic’s hourly production is anemic during a particular pay period, which is one and a half times the applicable state minimum wage, rounded up. The alternative wage floor is triggered in only 16 percent of paychecks; 84 percent of Brex paychecks are paid on the commission scale.
The Seventh Circuit affirmed summary judgment for Brex based on the bonafide commission exemption. Undisputed evidence showed that there was substantial hourly and weekly variation in pay and that the guarantees are “computed in accordance with a bona fide commission payment plan or formula under which the computed commissions vary in accordance with the employee’s performance on the job.”
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