Hansberger v. Jalapeno Southwest Grill, LLC
MEMORANDUM OPINION. Signed by District Judge Elizabeth K. Dillon on 9/7/2017. (bw)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF VIRGINIA
L’ITALIA RESTAURANT, LLC,
Civil Action No. 5:16-cv-00056
By: Elizabeth K. Dillon
United States District Judge
This case is before the court on plaintiff Tonya Hansberger’s (Hansberger) and defendant
L’Italia Restaurant, LLC’s (L’Italia) joint motion for summary adjudication (Dkt. No. 36).1 The
parties request that the court determine whether L’Italia’s deduction of $100 from Hansberger’s
pay on January 23, 2016, when L’Italia closed due to inclement weather, defeats L’Italia’s
affirmative defense that Hansberger was an exempt employee. The court will resolve the joint
motion in L’Italia’s favor because, even construing the undisputed facts in the light most
favorable to Hansberger, the applicable legal principles show that the one-time improper
deduction from Hansberger’s pay does not destroy the possibility of Hansberger being an exempt
employee. This opinion briefly sets forth the reasons for the court’s ruling.
Hansberger alleges that L’Italia, her former employer, misclassified her as exempt from
overtime pay provisions of the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq. In
order to qualify under the executive exemption, Hansberger must have been paid on a salary
Although the deadline for summary judgment has passed, the court will treat L’Italia’s memorandum
(Dkt. No. 40) and Hansberger’s memorandum (Dkt. No. 44) in support of their joint motion for summary judgment
(Dkt. No. 36) as cross-motions for summary judgment.
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basis and her job duties must have fallen within one of the exemptions. The parties disagree over
both of these issues, but the instant motion involves only the salary requirement.
There are five undisputed facts for purposes of this motion that are relevant to whether
L’Italia’s deduction defeats its affirmative defense: (1) Hansberger was docked a day’s pay when
L’Italia closed the restaurant on January 23, 2016, due to inclement weather; (2) this was
L’Italia’s only deduction from Hansberger’s pay; (3) the deduction was improper; (4) L’Italia
has no written policy regarding deductions; and (5) Hansberger was not reimbursed for the
A. Summary Judgment Standard
Summary judgment may be granted if the moving party “shows that 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). When considering cross-motions for summary judgment, the court must
“consider each motion separately on its own merits to determine whether either of the parties
deserves judgment as a matter of law.” Defs. of Wildlife v. N.C. DOT, 762 F.3d 374, 392 (4th
Cir. 2014) (quoting Bacon v. City of Richmond, Va., 475 F.3d 633, 638 (4th Cir. 2007)). For
each motion, “the court must take care to ‘resolve all factual disputes and any competing,
rational inferences in the light most favorable’ to the party opposing that motion.” Id. (quoting
Wightman v. Springfield Terminal Ry. Co., 100 F.3d 228, 230 (1st Cir. 1996)). “The party who
bears the burden of proof on an issue at trial, however, cannot survive summary judgment
without forecasting evidence sufficient to sustain his or her burden of proof on that point.”
McIntyre v. Aetna Life Ins. Co., 581 F. Supp. 2d 749, 756 (W.D. Va. 2008) (citing Celotex Corp.
v. Catrett, 477 U.S. 317, 327 (1986)).
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The parties rely on two primary regulations in their analysis of whether this improper
deduction means that Hansberger was not paid on a salary basis and thus loses the exemption.
The first is 29 C.F.R. § 541.602. Pursuant to this regulation, an employee is considered to be
paid on a “salary basis” if she regularly receives each pay period “a predetermined amount” that
is “not subject to reduction because of variations in the quality or quantity of the work
performed.” Subsections (1) and (2) make clear that an exempt employee must receive her full
salary “without regard to the number of days or hours worked” and without deductions for
“absences occasioned by the employer or by the operating requirements of the business.” 29
C.F.R. § 541.602(1)–(2).
Under the second regulation, 29 C.F.R. § 541.603(a),
[a]n employer who makes improper deductions from salary shall lose the
exemption if the facts demonstrate that the employer did not intend to pay
employees on a salary basis. An actual practice of making improper deductions
demonstrates that the employer did not intend to pay employees on a salary basis.
In determining whether an “actual practice” exists, the court is to consider a number of factors,
including the number of improper deductions and the time period in which they were made, the
number of employees whose salary was improperly reduced, and whether the employer has a
clearly communicated policy regarding improper deductions. 29 C.F.R. § 541.603(a).
To the extent that Hansberger is arguing that any improper deduction means that the
employer cannot meet the “salary basis” requirement for that employee or class of employees,
that interpretation of § 541.602 renders § 541.603 meaningless. So, the court does not read
§ 541.602 as effectively a threshold barrier to even reaching § 541.603. Instead, the court must
determine whether the facts demonstrate that L’Italia did not intend to pay employees on a salary
basis and, relatedly, whether it had an “actual practice” of making improper deductions, all while
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heeding § 541.603(e)’s admonition against construing the section “in an unduly technical manner
so as to defeat the exemption.”2
The question of which party bears the burden of showing an employer’s actual practice of
making improper deductions, or lack thereof, is unsettled. Broad language in some cases suggest
it might be the employee’s burden. See, e.g., Yourman v. Giuliani, 229 F.3d 124, 128 (2d Cir.
2000) (“[W]e must consider whether the appellants [employees] have shown . . . an ‘actual
practice’ by the employers of making pay deductions.”); Rebischke v. Tile Shop, LLC, 229 F.
Supp. 3d 840, 856 (D. Minn. 2017), appeal filed, No. 17-1502 (Mar. 7, 2017) (noting but not
explicitly accepting employer’s argument, based on Yourman, that it was employee’s burden to
put forth evidence of “actual practice”). Hansberger’s counsel conceded that he could not point
to any cases saying it was not the employee’s burden.
Regardless of who bears the burden, here “the facts [do not] demonstrate,” 29 C.F.R.
§ 541.603(a), that an “actual practice” of improper deductions exists. Far from it. A one-time
improper deduction, without more, “preclude[s] a finding of an ‘actual practice.’” Ellis v. J.R.’s
Country Stores, Inc., 779 F.3d 1184, 1196 (10th Cir. 2015). The facts show that L’Italia made a
one-time improper deduction from one employee’s salary on one day. For every other pay
period during Hansberger’s employment when she was a salaried employee, L’Italia made no
improper deductions. Hansberger argues that no other snow days afforded L’Italia the
opportunity to improperly dock her pay. Be that as it may, a “one-time improper deduction[,]
Subsection (e) “supports the conclusion that the DOL intended § 541.603’s subsections to offer
independent bases by which an employer might preserve the FLSA exemption despite some improper salary
deductions.” Rebischke v. Tile Shop, LLC, 229 F. Supp. 3d 840, 854–55 (D. Minn. 2017) (detailing history of and
amendments to § 541.603). Because the DOL is charged with enforcing the FLSA, Gonzales v. Oregon, 546 U.S.
243, 256 (2006), its regulations are entitled to Chevron deference, see Chevron, U.S.A., Inc. v. Nat. Res. Def.
Council, Inc., 467 U.S. 837, 844 (1984).
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‘taken in unusual circumstances,’ would not defeat” Hansberger’s exempt status, should it exist.
Ellis, 779 F.3d at 1195 (collecting cases) (citing Auer v. Robbins, 519 U.S. 452, 460–61 (1997)).
Furthermore, even if the facts demonstrated that L’Italia had an “actual practice” of
improper deductions, it would only lose the exemption for the week of January 23, 2016. 29
C.F.R. § 541.603(b) (“If the facts demonstrate that the employer has an actual practice of making
improper deductions, the exemption is lost during the time period in which the improper
deductions were made for employees in the same job classification working for the same
managers responsible for the actual improper deductions.”). Hansberger’s arguments to the
contrary are unpersuasive. Although Section 541.603 allows for both a “window of correction”
and a “safe harbor” that protect employers from having to forfeit exemptions, neither provision is
applicable here.3 Thus, even if the facts demonstrated “actual practice, ” L’Italia would lose the
exemption, should it exist, only for the week of January 23, 2016.
For the above reasons, the court concludes that L’Italia’s docking of Hansberger’s pay on
January 23, 2016, does not defeat its affirmative defense that Hansberger was an exempt
employee. To be clear, this ruling does not determine whether L’Italia intended to pay
Hansberger on a salary basis or whether Hansberger’s duties met the executive exemption
requirements under 29 C.F.R. § 541.100.
The window of correction protects against exemption loss if “isolated or inadvertent” improper
deductions are later reimbursed to employees, 29 C.F.R. § 541.603(c); the safe harbor, if an employer has a “clearly
communicated policy” prohibiting improper deductions and “makes a good faith commitment to comply in the
future,” 29 C.F.R. § 541.603(d). L’Italia neither reimbursed Hansberger the $100 nor has a clearly communicated
policy regarding improper deductions. 29 C.F.R. § 541.603(d) (“The best evidence of a clearly communicated
policy is a written policy that was distributed to employees prior to the improper pay deductions. . . .”).
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For the foregoing reasons, the parties’ joint motion for summary adjudication will be
resolved in L’Italia’s favor. An appropriate order will be entered.
Entered: September 7, 2017.
/s/ Elizabeth K. Dillon
Elizabeth K. Dillon
United States District Judge
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