Opinion
Case No. 18-cv-01494-RS Case No. 20-cv-7400-RS
2022-07-15
Tatyana LITVINOVA, Plaintiff, v. The CITY AND COUNTY OF SAN FRANCISCO, Defendant. Kristen Silloway, Plaintiff, v. City and County of San Francisco, Defendant.
Eduardo Gregory Roy, John R. Hurley, Prometheus Partners L.L.P., San Francisco, CA, for Plaintiff in 18-cv-01494-RS. Geoffrey Spellberg, Anastasia Bondarchuk, Arthur A. Hartinger, Linda Margaret Ross, Lori Schnitzer Liu, Spencer John Wilson, Renne Public Law Group, San Francisco, CA, Jonathan C. Rolnick, Jennifer Ann Donnellan, City Attorney's Office City of San Francisco, San Francisco, CA, for Defendant in 18-cv-01494-RS. Matthew J. Gauger, Weinberg Roger & Rosenfeld a Professional Corporation, Sacramento, CA, Benjamin J. Fuchs, Maximillian D. Casillas, Kerianne Ruth Steele, Weinberg, Roger & Rosenfeld a Professional Corporation, Emeryville, CA, Caitlin E. Gray, Weinberg Roger and Rosenfeld, Los Angeles, CA, for Plaintiff in 20-cv-7400-RS. Linda Margaret Ross, Anastasia Bondarchuk, Geoffrey Spellberg, Spencer John Wilson, Renne Public Law Group, San Francisco, CA, for Defendant in 20-cv-7400-RS.
Eduardo Gregory Roy, John R. Hurley, Prometheus Partners L.L.P., San Francisco, CA, for Plaintiff in 18-cv-01494-RS.
Geoffrey Spellberg, Anastasia Bondarchuk, Arthur A. Hartinger, Linda Margaret Ross, Lori Schnitzer Liu, Spencer John Wilson, Renne Public Law Group, San Francisco, CA, Jonathan C. Rolnick, Jennifer Ann Donnellan, City Attorney's Office City of San Francisco, San Francisco, CA, for Defendant in 18-cv-01494-RS.
Matthew J. Gauger, Weinberg Roger & Rosenfeld a Professional Corporation, Sacramento, CA, Benjamin J. Fuchs, Maximillian D. Casillas, Kerianne Ruth Steele, Weinberg, Roger & Rosenfeld a Professional Corporation, Emeryville, CA, Caitlin E. Gray, Weinberg Roger and Rosenfeld, Los Angeles, CA, for Plaintiff in 20-cv-7400-RS.
Linda Margaret Ross, Anastasia Bondarchuk, Geoffrey Spellberg, Spencer John Wilson, Renne Public Law Group, San Francisco, CA, for Defendant in 20-cv-7400-RS.
ORDER GRANTING DEFENDANT'S AND DENYING PLAINTIFFS’ MOTIONS FOR SUMMARY JUDGMENT
RICHARD SEEBORG, Chief United States District Judge
I. INTRODUCTION
Plaintiffs are nurses employed by the City and County of San Francisco who argue they are being denied overtime in violation of the Fair Labor Standards Act ("FLSA") when they volunteer to work extra shifts under a program open to all nurses. Plaintiffs argue they are hourly employees, but the evidence establishes they are salaried. Plaintiffs also argue that Defendant, the City and County of San Francisco, improperly deducts from their pay. However, the City is required only to pay workers for time they actually work, and the FLSA permits public employers to reduce salaried employees’ pay for various reasons. The City's motion for summary judgment is granted. Plaintiffs’ cross motions are denied. All other motions are denied as moot.
II. BACKGROUND
A. Procedural Background
There are two sets of Plaintiffs, in related cases, Litvinova , Case No. 18-cv-1494, and Silloway , Case No. 20-cv-7400, representing different groups of opt-in Plaintiffs. However, for purposes of these motions, the cases can be treated as one. The Litvinova Plaintiffs filed a motion for partial summary judgment, framed as attacking the City's affirmative defenses, but it trod much of the same ground as the Silloway Plaintiffs’ motion for complete summary judgment, and then the Litvinova Plaintiffs joined the Silloway motion. (The City responded to each motion in one opposition brief.) The City also moved for summary judgment, and in the alternative, decertification of the cases as collective actions. Finally, the Silloway Plaintiffs moved to continue the trial date.
B. Plaintiffs’ Dual Status
Plaintiffs are nurses who are employed by the City's Department of Public Health, e.g., in its hospitals, jails, and clinics. Specifically, Plaintiffs are nurses who were employed as full-time or part-time staff nurses, and also volunteer to work more shifts as "per diem" nurses. The per diem shifts exist because the City is perennially short-staffed, so the staff nurses cannot cover the load with their normal shifts. Any nurse can sign up for a per diem shift ad hoc; a nurse might sign up for an individual shift the following day. Some nurses who work for private employers also work per diem shifts to earn additional income. These nurses are called "external per diem nurses." By contrast, staff nurses who pick up per diem shifts are referred to as "interned per diem nurses" or "dual status nurses." Many documents also refer to nurses by the codes the City uses: "2320 nurses" are staff nurses, and "P103 nurses" are per diem nurses; a 2320 staff nurse becomes a dual status nurse when he or she works a P103 per diem shift. When a staff nurse works a P103 shift, hours are logged separately, so a nurse might log an eight hour shift as a 2320 nurse, and a four hour shift as a P103 nurse, but will not receive overtime as they would if they had worked a 12-hour 2320 shift.
A few of the staff nurses in this action have classifications other than 2320, because they are in more specialized roles, but the vast majority of staff nurses, including those in this action, are coded as 2320.
Plaintiffs claim their dual status violates the overtime requirements of the FLSA; when they work more than 40 hours per week or eight hours per day, they should have been paid overtime. In essence, their case boils down to the idea that the distinction between their regular shifts and the per diem shifts is irrelevant: if they work an 8-hour salaried shift, and then a 4 hour per diem shift, they should be compensated for the per diem shift at their overtime salaried rate. The rate for a per diem shift is 25% over the rate for a regular salaried shift, while the overtime pay for a salaried shift is a 50% premium over the regular salaried rate. (The per diem shifts are compensated at a higher rate than regular shifts because the per diem only nurses have no job protections and benefits.)
C. Salary vs. Hourly Employment
There is an even more fundamental disagreement about the nurses’ pay structure: the nurses argue they are hourly employees, while the City says they are salaried. Plaintiffs have a laundry list of evidence that purportedly proves their case: for example, their paychecks feature an hourly rate of pay, the City's compensation manual states they are nonexempt from overtime, and they describe experiences where they have been paid less when they worked fewer hours.
The City, however, adduces definitive evidence that it compensates the nurses on a salary basis, biweekly, according to a memorandum of understanding ("MOU") between the City and the nurses’ union, SEIU, and published pay schedules approved by the City's Board of Supervisors. First, the current pay ordinance conclusively identifies 2320 nurses as salaried. Litvinova Dkt. No. 91-3 at 366. Also, the MOU has a section entitled "Salary Step Plan and Salary Adjustment" and contains numerous discussions of the details of the salaried positions, e.g.:
All wage increases provided in this Agreement will commence at the start of the payroll period closest to the date specified for the wage increase, unless noted otherwise, and shall be rounded to the nearest whole dollar bi-weekly salary. Rates for employees’ classes are on a biweekly basis for a normal work schedule of five days per week, eight hours per day.
Litvinova Dkt. No. 91-3 at 52, 66. (The MOU also refers to an "hourly" rate of pay, but this is best understood as an effective hourly rate, as explained in the Discussion section below.) The MOU also sets out the standard workweek of five days of eight hours each.
At the current pay schedules, full time staff nurses make at least $142,220 per year. Part time nurses are paid according to their "full time equivalent," or the portion of a 40-hour week that they work, e.g., if they work 75% of a 40-hour week, they are paid 75% of the wages of a full time nurse, and referred to as a .75 FTE. No staff nurses work less than .5 FTE. Part time nurses work a consistent schedule, e.g., they are not like per diem nurses, picking up individual shifts on the fly. Nurses cannot be denied the right to work if they are scheduled for a salaried shift, and Plaintiffs’ depositions confirms that they have never been denied the right to work their regularly scheduled shifts. See, e.g. , Silloway Depo., Ex. H to Defendant's MSJ, at 21:4-23:6.) The MOU also establishes overtime pay for certain situations, e.g., if a salaried nurse was ordered to work more than 40 hours per week. However, the City maintains that this is not required by the FLSA—only the MOU.
Plaintiffs introduce evidence that their paychecks varied week to week; this is relevant both for the salary vs. hourly question, but also as a potential standalone violation of the FLSA for improper deductions from salary. The City accounts for this evidence by noting that the MOU also contains requirements that the City pay extra for certain shifts or duties, e.g., night shifts are compensated at a higher rate. Further, it deducts pay for various situations, for example, when a nurse is late, or takes brief leave. III. LEGAL STANDARD
Each case's Complaint makes out only a claim for overtime violations, although the briefing verges into addressing the deductions as a standalone violation, to which the City does not object, although it is possible it interprets them only to be discussing the deductions as relevant for the salary vs. hourly question.
Each side makes various evidentiary objections. The most prominent of these are Plaintiffs’ objections to the expert report and the Ponder declaration. These are denied. Because none of the rest affect the outcome of this order, they need not be addressed individually.
Under Federal Rule of Civil Procedure 56, summary judgment is appropriate if "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). The moving party "bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "The non-moving party must then offer evidence of such a caliber that ‘a fair-minded jury could return a verdict for the [nonmoving party] on the evidence presented. The mere existence of a scintilla of evidence in support of the [ non-moving party's] position will be insufficient.’ " United States v. Wilson , 881 F.2d 596, 601 (9th Cir. 1989) (quoting Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ). "The deciding court must view the evidence, including all reasonable inferences, in favor of the non-moving party." Reed v. Lieurance , 863 F.3d 1196, 1204 (9th Cir. 2017). On summary judgment, "[a] party may object that the material cited to support or dispute a fact cannot be presented in a form that would be admissible in evidence." Fed. R. Evid. 56(c)(2).
IV. DISCUSSION
A. Salaried vs. Hourly Employees
The City argues Plaintiffs are not eligible for overtime under the FLSA because they are salaried "learned professionals." The parties dispute who has the burden of proof: as exemption from FLSA's overtime requirements is an affirmative defense, it is the City. Cleveland v. City of Los Angeles , 420 F.3d 981, 988 (9th Cir. 2005). There is a two-part test to determine whether someone qualifies as a learned professional: a duties test and a salary basis test. 29 C.F.R. § 541.300(a). Plaintiffs concede they meet the duties test but argue they do not meet the salary basis test. The test is met where an employer provides a "predetermined amount constituting all or part of the employee's compensation" on a weekly or less frequent basis, regardless of the quality or quantity of work performed. 29 C.F.R. § 541.602(a). Currently, the amount must be at least $684 per week, or $35,568 per year. 29 C.F.R. § 541.600(a). (Even the lowest-paid staff nurses, .5 FTE nurses, make roughly double this amount. Declaration of Steven Ponder, Silloway Dkt. No. 61-3, ¶ 11(j).)
Plaintiffs also argue FLSA's exceptions must be narrowly construed, and the City must show that they plainly and unmistakably fall into an exception. The City responds that this standard was overruled in Encino Motorcars, LLC v. Navarro , ––– U.S. ––––, 138 S.Ct. 1134, 200 L.Ed.2d 433 (2018). Plaintiffs in turn counter that that was dicta. That is incorrect. Encino Motorcars squarely held that the exemptions are to be construed fairly, not narrowly. Id.
1. The City's Evidence
The City argues it meets this test because staff nurses are paid on a predetermined basis every two weeks depending on their exact role, salary step, and FTE. These salaries are negotiated between the City and the nurses’ union, SEIU; approved by the Board of Supervisors; and published, including online. The City's published salary database and compensation manual do not indicate one way or another whether the nurses are hourly or salaried, however, the published salary ordinance identifies nurses as salaried. Litvinova Dkt. No. 91-3 at 366. Additionally, Steven Ponder, the Classification and Compensation Director for the City's Department of Human Resources, submits in a declaration that nurses are salaried and their compensation is determined on an annual basis, and then converted into hourly pay for convenience with the City's payroll software.
The City's motion provides a link to the database which appears to be outdated; it appears it meant to refer to the database currently available at https://careers.sf.gov/classifications/.
Ponder is also the employee who analyzed the dual status system to make sure it was FLSA-compliant, albeit long after it had been implemented.
The salary ordinance is dispositive evidence that the City pays "... a predetermined amount constituting all or part of the employee's compensation ..." on a weekly or less frequent basis. The one place where the City clearly states whether the nurses are salaried or hourly, it says they are salaried. The other evidence, including Ponder's declaration, bolsters that conclusion. 29 C.F.R. § 541.602(a). There can be no genuine dispute that the nurses are salaried. See Fed. R. Civ. P. 56(a).
2. Plaintiffs’ Evidence
Plaintiffs respond there are numerous indicators that have led them to believe they are hourly workers. Their misunderstanding is reasonable: the City's payroll system seems actively to foster this mistaken belief. Apparently they are not informed of any minimum salary; their paychecks have an hourly rate of pay; they are marked as non-exempt from FLSA's overtime requirements on their paychecks (exempt employees have the letter "Z" and they have none) and in the City's compensation manual; they must clock in and out; and the MOU allows the City to reduce their schedule. Further, the payroll system appears to calculate their paychecks using an hourly rate of pay, with no checks to ensure they are being paid the minimum salary owed.
Yet the question here is not whether there is a genuine dispute as to whether the nurses believe they are hourly or salaried employees: it is whether they are in fact paid hourly or salaried. The salary ordinance establishes that they are in fact salaried, bolstered by Ponder's declaration; furthermore, the City can explain each of the facts that Plaintiffs rely on. They are marked as nonexempt because they have overtime through the MOU. They must clock in because the City cannot pay them for time they do not work, even though they are salaried, as discussed below.
The MOU's references to an hourly rate of pay do not rebut that the "salary" section provides evidence of the nurses being salaried, for several reasons. First, there is no equivalent "hourly pay plan" section. The structure of the "pay, hours and benefits" part of the MOU in which the "salary" section appears sets out what a normal work schedule looks like for staff nurses, and how per diem nurses are paid. The "hourly" references uniformly occur when referring to extra pay for certain shifts, in which case it is much more natural to refer to a 20% premium on an (implied) hourly rate, as compared to the tiny difference in an annual salary. For example, nobody would say "I earn .078% more for a night shift" (roughly the premium as a percentage of an annual salary). Instead, one would say "I earn 20% more for a night shift," referring to the per hour or per shift premium. Finally, the MOU applies to both staff nurses and per diem-only nurses, and the per diem nurses only have an hourly rate.
Nor does the City's use of an "hourly" rate for nurses’ paychecks establish that they are not hourly workers. See McGuire v. City of Portland , 159 F.3d 460, 464 (9th Cir. 1998). Agencies are allowed to convert annual salaries into hourly increments, and use this system when calculating payroll. Id. The City notes that even the Mayor's salary is expressed as an "hourly" rate on her paycheck: that is simply an artificial bureaucratic misnomer. Plaintiffs’ cherry-picked use of deposition testimony in which payroll employees note that the pay is calculated on an hourly basis cannot overcome the broader context in which this is an administrative convenience, and also accounts for the fact that by definition, Plaintiffs work a fluctuating number of hours beyond their normal salary, as they occasionally pick up per diem shifts, and the City must also ensure it does not pay them for certain periods of leave. True, the payroll system does not check that nurses’ paychecks meet their minimum salary, but the guarantee of their shifts ensures it just as effectively.
Plaintiffs also argue that because their pay is calculated on an hourly basis, the City must show there is a reasonable relationship between the guaranteed salary and wages actually paid, under 29 C.F.R. § 541.604(b). That section of the code appears to be inapplicable: it refers to cases in which an employee is actually paid by the hour, day, or shift, but also has a salary as a guaranteed backstop.
The section is intended to guard against employers putting hourly employees on a lowball guaranteed salary in order to exempt them from the FLSA's hourly provisions: an employer cannot say an employee is "salaried" if their "salary" is $200 per week when their usual earnings from hourly work per week are $1,000. (A reasonable relationship is, e.g., the earnings should not be more than 50% of than the salary. Opinion Letter Fair Labor Standards Act (FLSA), 2018 WL 5921453, at *2.)
The code section makes clear it does not apply to regular salaried employees who also receive some variable compensation: it ends "[this section] does not apply, for example, to an exempt store manager paid a guaranteed salary per week that exceeds the current salary level who also receives a commission of one-half percent of all sales in the store or five percent of the store's profits, which in some weeks may total as much as, or even more than, the guaranteed salary." Thus, courts have held an employer who shows an employee is salaried under another code section need not also prove there is a reasonable relationship between the salary and total compensation. E.g., Litz v. Saint Consulting Group , 772 F.3d 1, 1, 5 (1st Cir. 2014). Just because the City's payroll system uses an hourly rate does not mean the pay is actually "computed" hourly. The shift schedule effectively computes the nurses’ pay, and it is a regular, salaried schedule.
Consequently, this section's language about a "guarantee" does not apply, and the fact that the MOU has language that would undercut a "guarantee" is of no moment. In any case, Plaintiffs’ clear understanding that they were entitled to work their shifts establishes that their salary was a "matter of right" not a "matter of grace." Hughes v. Gulf Interstate Field Servs., Inc. , 878 F.3d 183, 191 (6th Cir. 2017). Even if this section did apply, nurses are guaranteed shifts (and thus a baseline salary) and it appears their compensation has a reasonable relationship to their salary.
Many of the cases Plaintiffs cite, e.g., Hughes , deal with an entirely different fact pattern. Hughes v. Gulf Interstate Field Servs., Inc. , 878 F.3d 183 (6th Cir. 2017). In Hughes , the workers were actually paid by the day: it was not simply an accounting fiction, as here. Also, the employer was private, not public. (The public accountability principles discussed below do not convert salaried public employees into hourly workers for this purpose, but it does mean public employers must ensure pay is not disbursed for unworked hours, even for salaried employees.)
The declaration of SEIU Employee Nato Green also does not create a genuine dispute of material fact as to whether Plaintiffs are salaried. For example, Green states "I am also readily familiar with the language and interpretation of MOU ¶ 311, which states, ‘Salaries for part time services shall be calculated upon the compensation for normal work schedules proportionate to the hours actually worked.’ " Silloway Dkt. No. 67-1 at 4. Green interprets "hours actually worked" to mean nurses are paid hourly: in context, the provision means at most that pay is calculated for the part time schedule, adjusted for hours actually worked, because the City cannot pay for hours not worked, as discussed below.
Green's vague declaration that the City has cut nurse's schedules does not create a genuine dispute of fact when weighed against the numerous depositions of nurses who explained their personal experience of never having their schedules cut nor hearing of it ever happening to colleagues. The City also introduces evidence it has instructed managers not to reduce nurse's schedules. (Plaintiffs’ argument that this suggests cuts had been made previously falls flat in the absence of any specific evidence of cuts.)
Beyond that, there are several elephants in the room that Plaintiffs either do not acknowledge or barely so. First, each nurse is well aware of their FTE. All recognize that there are full-time and part-time nurses, and that entails working a set number of shifts per pay period. This is a guarantee of a minimum amount of compensation. Each deposed Plaintiff acknowledges never having been denied the right to work their scheduled shifts. That is the essence of being a salaried worker under the FLSA. Further, Plaintiffs do not attempt to explain the MOU's discussion of "salary" and "salaries" in various places, nor the negotiated salary bands that the MOU contemplates and the Board of Supervisors in fact approves and publishes.
3. Dual Status System
Nothing about the dual shift system itself means that Plaintiffs are not salaried, and the system does not violate the FLSA. Essentially, Plaintiffs are choosing to work a second type of job for the same employer. The City notes that FLSA allows employers to provide additional compensation "on any basis (e.g., flat sum, bonus payment, straight-time hourly amount, time and one-half or any other basis)" 29 C.F.R. § 604(a).
In Plaintiffs’ framing, the City is creating an arbitrary distinction: a nurse might work a regular shift, and then keep working in the same ward, on the same day, pushing past 40 hours for the week, yet because the nurse signed up for the extra shift, he or she is not paid overtime according to the MOU or the FLSA. Plaintiffs’ attempt to paint this distinction as contrived or technical obscures that it stems from an exceedingly important distinction: the extra shifts are outside of Plaintiffs’ job duties. Plaintiffs are voluntarily choosing to work extra shifts, knowing that these different shifts come with different pay.
Plaintiffs view the dual status system as a nefarious plot by the City to do an end run around FLSA's requirements because of short staffing. The undisputed evidence, by contrast, shows the City is not forcing them to pick up these extra shifts in a P103 capacity. If staff nurses do not fill them, external per diem nurses might, or shifts might go unfilled. That is a problem for the City, not the internal per diem nurses, even if understaffing makes their already difficult jobs even more demanding.
B. Deductions
Plaintiffs also argue they are not salaried because the City constantly deducts from their ostensible salary to the point that they must not be salaried. (As noted above, the briefing also veers into discussing this as a standalone FLSA violation, although the Complaints do not specifically aver any such violation.) In general, under the FLSA, salaried employees cannot have their paychecks reduced because, for example, there was not enough work to go around on a given day. If the employee is "ready, willing, and able to work" deductions cannot be made from his or her amount for absences "occasioned by the employer." 29 C.F.R. § 541.602(a). However, there are several exceptions. Most relevant here, public employers are allowed to operate under principles of "public accountability." Thus, when a public employee takes brief periods of leave, the employer can deduct pay or require that they use personal or sick leave, and if the employee has run out of those leave banks, that they take unpaid leave. 29 C.F.R. § 541.710(a). The employer can also deduct pay if "permission for [use of accrued leave] has not been sought or has been sought and denied." Id. Plaintiffs barely address this regulation in their briefing. Admittedly, it does not square well with other parts of FLSA, and effectively creates a sort of chimera between hourly and salaried employees. Still, nothing in the City's deductions creates a genuine dispute of material fact as to whether the employees are salaried, or whether there is a standalone FLSA violation.
A court in this district has already found that the City's pay system is one of public accountability. Stewart v. City and County of San Francisco , 834 F.Supp. 1233 (N.D. Cal. 1993). Defendants submit an expert report that purports to analyze a random subset of Plaintiffs’ deductions, although Plaintiffs dispute that it is reliable. The report's methodology is reliable enough to determine that there is neither an "actual practice of making such [inappropriate] deductions" nor a "significant likelihood" of them occurring, and the City's FLSA compliance has been in good faith, at least for the period applicable for this case. Auer v. Robbins , 519 U.S. 452, 461, 117 S.Ct. 905, 137 L.Ed.2d 79 (1997). (While the City could have done more to ensure FLSA compliance earlier, as the lone employee to analyze its compliance before this lawsuit was a nonlawyer, Steven Ponder, and he did so after the dual-status program was implemented, the City's conduct, in context, establishes good faith, at least for the period at issue here.) Any noncompliant deductions are best characterized as isolated and inadvertent, which is insufficient for finding a FLSA violation. 29 C.F.R. § 541.603(a). The majority of the fairly limited deductions are allowable: either an employee had exhausted his or her leave bank, or some other exception applies, e.g., the employee was tardy. Nothing in the City's deductions establishes a genuine dispute of material fact as to whether Plaintiffs are salaried or whether the dual status system violates the FLSA.
V. CONCLUSION
The City's motion for summary judgment is granted, and Plaintiffs’ summary judgment motions are denied. The remaining motions are denied as moot.
IT IS SO ORDERED .