Kristen Silloway v. City and County of San Francisco

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

KRISTEN SILLOWAY; CHRISTA No. 22-16079

DURAN; BRIGITTA VAN EWIJK,

D.C. No.

Plaintiffs-Appellants, 3:20-cv-07400-RS

v.

OPINION

CITY AND COUNTY OF SAN

FRANCISCO,

Defendant-Appellee.

TATYANA LITVINOVA, No. 22-16568

individually and on behalf of all others

similarly situated, D.C. No.

3:18-cv-01494-RS

Plaintiffs-Appellants,

v.

CITY AND COUNTY OF SAN

FRANCISCO,

Defendant-Appellee.

2 SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO

Appeals from the United States District Court

for the Northern District of California

Richard Seeborg, Chief District Judge, Presiding

Argued and Submitted February 12, 2024

San Francisco, California

Filed September 11, 2024

Before: Carlos T. Bea, David F. Hamilton,* and Morgan

Christen, Circuit Judges.

Opinion by Judge Hamilton;

Partial Concurrence and Partial Dissent by Judge Bea

SUMMARY**

Fair Labor Standards Act

The panel reversed the district court’s summary

judgment for the City and County of San Francisco, and

remanded, in two cases in which staff nurses employed by

the City allege that the City violated the Fair Labor

Standards Act (FLSA) by not paying them time-and-a-half

for overtime work.

*

The Honorable David F. Hamilton, United States Circuit Judge for the

Seventh Circuit Court of Appeals, sitting by designation.

**

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO 3

The FLSA provides that employees should generally

receive time-and-a-half pay for working overtime, but one

of the Act’s exemptions from that requirement applies to

employees working in a bona fide professional capacity. The

City claims that staff nurses fall into that exemption.

The dispute over whether the professional-capacity

exemption applies to staff nurses depends on whether the

City has shown that staff nurses were paid on a “salary basis”

during the relevant time. The City claims that staff nurses

were compensated on a salary basis because their annual

compensation figures were documented at the start of every

year through employment agreements and published salary

ordinances. The plaintiffs contend that the City compensated

them on an hourly basis because it divided those annual

figures into hourly rates and paid staff nurses only for each

hour worked.

The district court concluded that the annual pay figures

published in the salary ordinance provided definitive

evidence that the staff nurses were compensated on a salary

basis.

The panel held that the district court erred. To determine

whether employees are compensated on a salary basis, courts

must look beyond conclusory language in contracts and

similar documents such as the salary ordinance. Courts must

instead analyze how employees are actually paid. The proper

focus for the salary basis test is whether an employee

receives a predetermined amount of compensation on a

weekly or less frequent basis, irrespective of any promises

made in an employment contract.

The panel held that material factual questions remain in

dispute regarding whether the City satisfied the salary basis

test as a matter of practice. Plaintiffs offered evidence

4 SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO

showing that the City did not record them as working hours

consistent with their full-time equivalencies in a significant

number of pay periods. Those discrepancies raise material

factual questions as to whether the staff nurses received their

predetermined amounts of compensation in those pay

periods. The panel remanded for those factual issues to be

resolved.

Judge Bea concurred in part and dissented in part. He

agreed that summary judgment in favor of the City should

be reversed. But rather than remand for further discovery on

whether the plaintiffs are salaried under the FLSA, he would

hold that there is no genuine issue of disputed fact as to that

question. The plaintiffs are not salaried under that statute

because the City does not pay them a predetermined amount

of compensation each week that is independent of the

number of hours they work. He would remand with

instructions to grant the plaintiffs’ cross-motion for

summary judgment on their claim for overtime

compensation under the FLSA.

COUNSEL

Caitlin E. Gray (argued), Maximillian D. Casillas, and

Winnie G. Vien, Weinberg Roger & Rosenfeld, Los

Angeles, California; Eduardo G. Roy, Prometheus Partners

LLP, San Francisco, California; for Plaintiffs-Appellants.

Spencer J. Wilson (argued), Anastasia Bondarchuk, Ryan P.

McGinley-Stempel, and Linda M. Ross, Renne Public Law

Group, San Francisco, California, for Defendant-Appellee.

SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO 5

OPINION

HAMILTON, Circuit Judge:

In these appeals, we address whether staff nurses for the

City and County of San Francisco are entitled to time-and-a-

half overtime, or whether the method of compensating the

nurses satisfies the “salary basis test” in the Fair Labor

Standards Act so that the nurses are exempt from the

overtime requirement as bona fide professional employees.

The City employs staff nurses in its hospitals, jails, and

clinics. Many work more than 40 hours in a week. The Fair

Labor Standards Act provides that employees should

generally receive time-and-a-half pay for working overtime,

but one of the Act’s exemptions from that requirement

applies to employees working in a bona fide professional

capacity. The City claims that staff nurses fall into that

exemption. The plaintiffs disagree.

The dispute over whether the professional-capacity

exemption applies to staff nurses depends on only one issue:

whether the City has shown that staff nurses were paid on a

“salary basis” during the relevant time. The City claims that

staff nurses were compensated on a salary basis because

their annual compensation figures were documented at the

start of every year through employment agreements and

published salary ordinances. In response, plaintiff nurses

contend that the City compensated them on an hourly basis

because it divided those annual figures into hourly rates and

paid staff nurses only for each hour worked.

The district court granted summary judgment for the

City. It concluded that the annual pay figures published in

the salary ordinance provided definitive evidence that the

6 SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO

staff nurses were compensated on a salary basis. That was

error. To determine whether employees are compensated on

a salary basis, courts must look beyond conclusory language

in contracts and similar documents such as the salary

ordinance. Courts must instead analyze how employees are

actually paid. The proper focus for the salary basis test is

whether an employee receives a predetermined amount of

compensation on a weekly or less frequent basis, irrespective

of any promises made in an employment contract.

We must reverse the grant of summary judgment. The

City’s compensation system does not necessarily flunk the

salary basis test, but material factual questions remain in

dispute regarding whether the City satisfied the test as a

matter of practice. As we explain, plaintiffs offered

evidence showing that the City did not record them as

working hours consistent with their full-time equivalencies

in a significant number of pay periods. Those discrepancies

raise material factual questions as to whether the staff nurses

received their predetermined amounts of compensation in

those pay periods. We reverse and remand this case for those

factual issues to be resolved.

I. Factual Background

Because plaintiffs lost on summary judgment in the

district court, we take the facts in the light most favorable to

them as the nonmoving parties, giving them the benefit of

factual disputes and reasonable inferences from the

evidence. See Tuuamalemalo v. Greene, 946 F.3d 471, 476

(9th Cir. 2019).

Staff nurses’ compensation is determined by many

factors. The base salary for each staff nurse is the starting

point. Base salaries are established through negotiations

between the City and the nurses’ union. The agreed-upon

SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO 7

amounts are subject to approval by the San Francisco Board

of Supervisors. If the negotiated amounts are approved, then

the salary figures are recorded in a Memorandum of

Understanding and published in the City’s salary ordinance.

The City’s payroll department translates each nurse’s

annual salary into an hourly rate by dividing the annual

amount by 2,080, the number of hours a full-time nurse

working 40 hours per week would expect to work in a year.

A nurse who works 40 hours every week (or uses accrued

time off as discussed below) would receive the full amount

published in the salary ordinance.

A staff nurse can choose to work fewer hours than a full-

time nurse. For example, a staff nurse could choose to work

only 30 hours per week. In accounting jargon, the nurse

working 40 hours per week would be referred to as a 1.00

full-time equivalent, or 1.00 FTE for short, while the nurse

working 30 hours per week would be referred to as a 0.75

FTE. The staff nurse working three-fourths as much as the

full-time nurse would in turn receive three-fourths as much

in base salary compensation.

Staff nurses can also earn additional pay to supplement

their base pay. One way is by working particular shifts, like

evening or night shifts, which earn premium pay on top of

normal hourly rates. Another way is by working overtime

shifts as a staff nurse. Staff nurses who work overtime earn

time-and-a-half (150% of their normal hourly rates) during

those shifts.

A third way that staff nurses can earn additional pay is

by working so-called “per diem” shifts. Nurses working

these shifts are referred to as “per diem nurses.” The City

offers per diem shifts on an as-needed basis to staff nurses

employed by the City as well as to other nurses not already

8 SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO

employed by the City. Staff nurses are never required to

work these per diem shifts, but if they choose to do so, they

earn 125% of their normal hourly rate regardless of whether

they have worked more than, less than, or exactly 40 hours

of regular shifts in the applicable week.

Staff nurses also accrue time in designated leave banks

while working shifts, accumulating paid time off for

vacations, illnesses, and holidays. So long as a staff nurse

does not take off more time than the nurse has accrued in a

particular leave bank, the nurse will not suffer any reduction

in base compensation. However, if a staff nurse takes off

more time than he or she has accrued, the City will deduct

the amount of compensation equal to the amount of time

missed. The City will also deduct pay if a nurse arrives late

to a shift without permission from a supervisor.

All of these factors are taken into account when the City

runs its payroll every two weeks. The payroll process begins

with supervisors reviewing each nurse’s work schedule and

making adjustments to reflect additional hours worked or

time taken off. The supervisors then submit the revised

schedules to the payroll department.

Employees in the payroll department manually enter the

timesheets into an accounting software system. The hours

are entered under payroll codes that reflect the time spent

performing different activities. Specific codes designate the

amount of time devoted to working regular shifts, shifts

earning differential pay, overtime shifts earning time-and-a-

half pay, or per diem shifts earning time-and-a-quarter pay.

Other payroll codes indicate the amounts of time each nurse

allocated to vacation or illness, as well as the amounts of

time consumed by unexcused absences.

SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO 9

After all this information is entered into the system, the

payroll department runs the software’s final accounting

process, which aims to catch any discrepancies between the

time reported and payments allowed under the

Memorandum of Understanding. This accounting process

also flags nurses who have taken off more time than they

have accrued in their leave banks. If any errors are

identified, the payroll department and the individual nurse

work together to resolve the issue.

Sometimes errors slip through. A nurse might realize

that she was not paid for all the hours she worked or that her

differential pay was not paid properly. When that happens,

nurses work with their supervisors and the payroll

department to figure out what happened and correct the

problem.

II. Statutory Background

In 1938, Congress enacted the Fair Labor Standards Act

(FLSA) “to eliminate both substandard wages and

oppressive working hours.” Helix Energy Solutions Group,

Inc. v. Hewitt, 598 U.S. 39, 44 (2023) (internal quotation

marks and citation omitted). The FLSA curbs extra-long

working hours by, among other things, requiring employers

to pay employees overtime pay. Id. Generally, employers

must pay covered employees time-and-a-half when they

work more than forty hours in a week. 29 U.S.C.

§ 207(a)(1).

Many employees, however, are exempt from the

overtime requirement. As relevant here, an employer need

not pay overtime to “any employee employed in a bona fide

executive, administrative, or professional capacity.” 29

U.S.C. § 213(a)(1). That exemption is the focus of this case.

The statute gives little guidance on what it means to be a

10 SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO

bona fide professional employee, leaving the specifics to be

fleshed out through regulations promulgated by the

Secretary of Labor.

For a staff nurse to qualify as a bona fide professional,

the City must show that the staff nurse’s employment

satisfies three tests: a duties test, a salary level test, and a

salary basis test. See 29 C.F.R. § 541.300 (general rules for

professional employee exemption); 29 C.F.R. § 541.700

(duties test); 29 C.F.R. § 541.600 (salary level test); 29

C.F.R. § 541.602 (salary basis test). The plaintiffs do not

dispute that staff nurses satisfy the first two of these tests.

Only the salary basis test is at issue.

A. The Salary Basis Test

The regulations establish two paths for satisfying the

salary basis test. Helix, 598 U.S. at 55. Employees who are

compensated on a “weekly[] or less frequent basis” are

governed by the test in 29 C.F.R. § 541.602(a), while

employees compensated “on an hourly, a daily or a shift

basis” are subject to the test in 29 C.F.R. § 541.604(b). Id.

We discuss each path in turn.1

1

After giving full citations for each provision, we refer to these

regulations simply as § 602, § 604, and so on. Also, to establish by either

path that an employee is exempt from overtime as a salaried professional,

both § 602(a) and § 604(b) require that the employee be compensated on

a salary basis at a rate of at least $684 per week. 29 C.F.R. § 541.600(a).

Plaintiffs have not raised any issue here about that requirement.

Undisputed facts show that even the lowest-paid plaintiff nurses were

paid well above that $684 floor. See Litvinova v. City and County of San

Francisco, 615 F. Supp. 3d 1061, 1065 (N.D. Cal. 2022). Since these

appeals were submitted, the Secretary of Labor has raised the threshold

to $844 per week. 89 Fed. Reg. 32842 (Apr. 26, 2024). The change does

not affect these appeals.

SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO 11

Section 602(a) requires an employer to show that the

employee at issue receives “on a weekly, or less frequent

basis, a predetermined amount constituting all or part of the

employee’s compensation, which amount is not subject to

reduction because of variations in the quality or quantity of

the work performed.” If an employee performs any work in

a given week, the employee must be paid full compensation

for that week. § 602(a)(1). If not, the employee is not

regarded as a salaried employee under the FLSA. Helix, 598

U.S. at 46. The employer also cannot cause the employee to

miss work and receive less pay. “If the employee is ready,

willing and able to work, deductions may not be made for

time when work is not available.” § 602(a)(2). Essentially,

§ 602(a) requires an employee to receive a fixed amount—

referred to as a “predetermined amount”— of compensation

every week regardless of the number of days or hours

worked. Helix, 598 U.S. at 51.

Section 604(b) provides an alternative path for an

employer to show that an employee is paid on a salary basis.

Under § 604(b), an employer may compensate employees

“on an hourly, a daily or a shift basis” without running afoul

of the salary basis test so long as two requirements are met:

(1) the employment arrangement must include “a guarantee

of at least the minimum weekly required amount paid on a

salary basis regardless of the number of hours, days or shifts

worked,” and (2) there must be a “reasonable relationship”

between the employee’s guaranteed amount of money and

the money actually earned.

As the regulations show, both § 602(a) and § 604(b) seek

to ensure that exempt professional employees receive a fixed

minimum amount of money in their paychecks. Implicit in

that promise, and made explicit in 29 C.F.R. § 541.603(a), is

the general rule that employers are prohibited from taking

12 SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO

deductions from a salaried employee’s compensation. Only

in a few limited circumstances described in § 602(b) can an

employer lawfully deduct pay. Under that provision,

employers can deduct pay when an employee takes off one

or more full days for personal reasons (not including illness

or disability). § 602(b)(1). But deductions can be made only

for full days missed: “if an exempt employee is absent for

one and a half days for personal reasons, the employer can

deduct only for the one full-day absence.” Id. Similarly, if

an employee takes off one or more full days due to sickness

or disability, the employer may deduct compensation for

those full days (and only those full days) if “the deduction is

made in accordance with a bona fide plan, policy or practice”

that compensates for the loss of salary. § 602(b)(2). An

employer may also deduct compensation if an employee

violates a written policy and is suspended for one or more

full days. § 602(b)(5).

In all these circumstances, the FLSA permits only full-

day deductions. Partial-day deductions are off-limits for

private employers. Public employers are allowed to make

partial-day deductions, as we discuss below, but that

flexibility comes not from § 602(b) but a separate FLSA

regulation, 29 C.F.R. § 541.710.

Supplemental compensation is a different story under the

FLSA. While the FLSA strictly regulates deductions from

pay, it permits employers to provide additional

compensation on any basis—flat sum, straight-time hourly,

or time-and-a-half hourly—without losing the benefit of the

exemption, so long as “the employment arrangement

. . . includes a guarantee of at least the minimum weekly-

required amount paid on a salary basis.” § 604(a).

Essentially, if an employer satisfies § 602(a), it can provide

additional compensation under § 604(a) on any basis.

SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO 13

B. The Public Accountability Principle

Only in the limited circumstances spelled out in § 602(b)

may a private employer deduct money from a bona fide

professional employee’s compensation. But the FLSA gives

public employers much more leeway. Most significantly,

public employers like the City of San Francisco can deduct

pay for partial-day absences without losing the benefit of the

exemption. § 710. So if a public employee shows up five

minutes late to work and exceeds the time in his accrued

leave bank by less than a day, his employer may deduct the

corresponding amount of pay. This latitude is based on the

“public accountability principle,” the idea that taxpayers’

money should not be spent on public employees for time

they are not working. See Exemptions from Minimum Wage

and Overtime Compensation Requirements of the Fair Labor

Standards Act, 57 Fed. Reg. 37666, 37667 (Aug. 19, 1992).

For public employers to make deductions under § 710, the

deductions must be made “according to a pay system

established by statute, ordinance or regulation.” § 710(a).

C. Improper Deductions

Aside from the permissible deductions mentioned in

§ 602(b) and, for public employers the public accountability

principle codified in § 710, an employer may not deduct pay

from a bona fide professional employee’s paycheck without

losing the exemption. § 603(a). If facts reveal that an

employer maintains an “actual practice of making improper

deductions,” the employer will lose the benefit of the

professional-employee exemption for the period in which

the improper deductions were made. § 603(a), (b). Whether

an employer maintained an “actual practice” of improperly

deducting pay is a case-specific question of fact that asks

14 SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO

whether the employer intended to pay its employees on a

salary basis. § 603(a).

All that said, the FLSA’s regulations also offer an escape

hatch to employers who make only “isolated or inadvertent”

improper deductions. Under what is sometimes referred to

as the “window of correction,” employers can retain the

professional-capacity exemption if they reimburse

employees for any improper deductions. See § 603(c).

D. The Burden-Shifting Framework

Courts have developed a burden-shifting framework for

applying the FLSA in many contexts. At the outset, when

an employee alleges that her employer is violating the FLSA,

the employee bears the burden of proving that she performed

work for which she was not properly compensated. Brock v.

Seto, 790 F.2d 1446, 1447–48 (9th Cir. 1986). If an

employer invokes the professional-capacity exemption to

the FLSA’s overtime requirement, then the employer bears

the burden of showing that the employee falls within the

exemption. Klem v. County of Santa Clara, 208 F.3d 1085,

1089 (9th Cir. 2000).2

2

We have said that the employer must meet its burden “plainly and

unmistakably.” Leever v. Carson City, 360 F.3d 1014, 1018 (9th Cir.

2004). The Supreme Court recently granted certiorari to decide the

evidentiary burden an employer bears for proving that an exemption to

the FLSA applies. See E.M.D. Sales, Inc. v. Carrera, 144 S. Ct. 2656

(2024). We need not decide whether the “plainly and unmistakably”

standard applies here because the City would not carry its summary

judgment burden under a “plainly and unmistakably” standard, a “clear

and convincing” standard, or “preponderance of the evidence” standard.

SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO 15

III. Procedural Background

On March 8, 2018, Tatyana Litvinova filed a putative

collective-action complaint against the City and County of

San Francisco alleging that the City violated the Fair Labor

Standards Act by not paying staff nurses time-and-a-half for

overtime work, including per diem shifts. Litvinova v. City

and County of San Francisco, No. 3:18-cv-1494-RS (N.D.

Cal.). She moved to certify a collective action under 29

U.S.C. § 216(b), and the district court granted the motion.

On October 22, 2020, Kristen Silloway, Christa Duran,

and Brigitta van Ewijk filed a similar complaint on behalf of

themselves and “similarly situated dual-status registered

nurses.” Silloway v. City and County of San Francisco, No.

3:20-cv-7400-RS (N.D. Cal.). Given the factual similarity

between the two cases, the district court issued an order

treating them as related. Between the two separate collective

actions, a total of about 353 plaintiffs opted in.

On cross-motions for summary judgment, the district

court granted summary judgment in favor of the City,

concluding that the staff nurses were paid on a “salary basis”

and therefore exempt from the FLSA overtime requirements.

Litvinova v. City and County of San Francisco, 615 F. Supp.

3d 1061, 1069 (N.D. Cal. 2022). The district court treated

the published salary ordinance, which referred to staff nurses

as salaried employees, as “dispositive evidence” that the

nurses were compensated on a salary basis. Id. at 1066. The

district court found the nurses’ hourly pay rates to be a mere

“accounting fiction” used for administrative purposes, id. at

1066–67, and it rejected plaintiffs’ allegations of improper

pay deductions by finding that the City’s expert report

provided adequate explanations for those discrepancies, id.

at 1069.

16 SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO

Silloway timely appealed the district court’s decision.

Litvinova filed a Motion for Reconsideration under Federal

Rules of Civil Procedure 59 and 60 and then, after it was

denied, timely appealed as well. We have consolidated the

two appeals for argument and decision.

IV. Standard of Review

On appeal, we review “both the granting of summary

judgment and rulings regarding exemptions to the FLSA de

novo.” Haro v. City of Los Angeles, 745 F.3d 1249, 1256

(9th Cir. 2014). Summary judgment is not appropriate

unless, viewing the evidence in the light most favorable to

the nonmoving parties and drawing all reasonable inferences

in their favor, no genuine issues of material fact remain in

dispute. Fed. R. Civ. P. 56(a); Anderson v. Liberty Lobby,

Inc., 477 U.S. 242, 255 (1986). In the past, most lower

courts have said that they construed the FLSA’s exemptions

narrowly. In Encino Motorcars, LLC v. Navarro, the

Supreme Court rejected that approach and instructed that

exemptions be given a “fair” construction. 584 U.S. 79, 88–

89 (2018).3

V. Analysis

The district court erred in granting summary judgment to

the City. The salary ordinance, which the district court

found to be dispositive evidence that the staff nurses were

paid on a salary basis, is neither the starting point nor the

ending point for that inquiry. Rather, the salary basis test

asks whether an employee actually receives a predetermined

3

Plaintiffs argue that this was dicta in Encino Motorcars. We disagree.

It is hard to imagine how the Supreme Court could have been clearer on

this point.

SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO 17

amount of compensation on a weekly or less frequent basis

as a matter of practice.

In this case, the parties dispute several factual issues that

are material to answering that question. The most significant

is whether staff nurses are guaranteed the opportunity to

work the hours corresponding to their full-time equivalency

every week. According to an expert report submitted by the

City itself, the City recorded staff nurses as working or being

credited for fewer hours than their full-time equivalencies in

at least 72 employee pay periods out of more than 2,200

reviewed. Because staff nurses are paid according to the

number of hours they are recorded as working or otherwise

credited, it is uncertain whether staff nurses received their

predetermined amounts of compensation during these

irregular pay periods.

Additionally, the FLSA’s “actual practice” and “window

of correction” provisions offer the City no refuge, at least on

summary judgment. Assuming that the 72 abnormal pay

periods represent improper deductions—as we must in

reviewing a grant of summary judgment against the

plaintiffs—the City made improper deductions much more

frequently than in cases where courts have found that no

“actual practice” existed. Questions about the propriety of

these 72 deductions leave material factual issues in dispute

as to whether the City maintained an “actual practice” of

making improper deductions. As for the “window of

correction” defense, the City has not provided evidence

showing that the staff nurses were reimbursed for any of

these possibly improper deductions, so summary judgment

cannot be granted or affirmed on that ground, either.

We address these points in more detail below, but the

takeaway is this: the plaintiffs identified evidence that

18 SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO

creates a material dispute of fact as to whether staff nurses

actually received a predetermined amount of compensation

on a weekly or less frequent basis. If they did not, they are

not exempt from the overtime requirement. Summary

judgment was not appropriate.

A. The Ordinance and the Memorandum of

Understanding

We start with the district court’s reasoning, which

centered on the City’s published salary ordinance and the

Memorandum of Understanding. The salary ordinance lists

the low and high ends of the range of biweekly compensation

a full-time nurse could expect to receive. Echoing the salary

ordinance, the Memorandum of Understanding explained

that compensation rates were based on a full-time employee

working “on a biweekly basis for a normal work schedule of

five days per week, eight hours per day.” Throughout these

documents, staff nurses were described as receiving salaries.

The district court concluded that these public and contractual

statements were “dispositive evidence” that the City paid the

plaintiff staff nurses on a salaried basis. Litvinova, 615 F.

Supp. 3d at 1066.

The district court’s analysis centered on the wrong

evidence. In 2004, the Department of Labor revised the

FLSA regulations, shifting the focus of the salary basis test

from the “employment agreement” to the pay an employee

actually receives. See Orton v. Johnny’s Lunch Franchise,

LLC, 668 F.3d 843, 847–48 (6th Cir. 2012) (discussing

revised regulations). The district court should have

determined whether, as a matter of practice, staff nurses

received predetermined amounts of compensation on a

weekly or less frequent basis. See § 602(a).

SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO 19

B. Section 602(a) and the Public Accountability

Principle

The question of law at the heart of this case is whether

the City’s compensation scheme, which assigns each staff

nurse an hourly rate and computes paychecks based on the

number of hours worked, satisfies the salary basis test. More

than twenty years ago, we held that municipalities could use

an hourly accounting system without offending the salary

basis test. McGuire v. City of Portland, 159 F.3d 460, 464

(9th Cir. 1998). In light of revisions to the regulations

governing the salary basis test, as well as the Supreme

Court’s recent decision in Helix Energy Solutions Group,

Inc. v. Hewitt, 598 U.S. 39 (2023), we take a fresh look but

reach the same conclusion that we did in McGuire.4

We start by examining the interplay between two

provisions in the FLSA’s implementing regulations,

§ 602(a) and § 710. Section 602(a) requires an employer to

pay a professional employee “a predetermined amount

constituting all or part of the employee’s compensation” on

a weekly or less frequent basis. Other than a few limited

exceptions listed in § 602(b), that predetermined amount

cannot be subject to reduction due to the quantity or quality

4

In determining whether the plaintiff staff nurses were compensated on

a salary basis, we consider only the money that staff nurses earned while

working regular shifts designated for staff nurses. That is because the

City argues that the annual figures posted in its salary ordinances were

fulfilled if a staff nurse worked the 2,080 hours expected of a 1.00 FTE.

The published salary amounts did not incorporate additional sources of

income, such as overtime pay, differential pay, or compensation earned

while working as a per diem nurse. These supplemental income streams

should not be factors in the salary basis test under either § 602(a) or

§ 604(b). This approach accords with how the City’s own expert

witnesses defined the staff nurses’ compensation

20 SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO

of work performed. However, § 710 adds another

permissible deduction to that list for public employers:

partial-day deductions.

The City’s ability to make partial-day deductions allows

it to reduce staff nurses’ compensation in direct correlation

to the amount of time worked. The FLSA permits private

employers to deduct salaried pay only in full-day

increments, but public employers can make minute-by-

minute pay deductions for unexcused absences. That is the

purpose of the public accountability principle: to prevent

public employers from spending taxpayers’ money on

employees who are not working. Thus, for public

employers, § 710 qualifies § 602(a)’s mandate that an

employee’s predetermined amount of compensation shall

not be “subject to reduction because of variations in the . . .

quantity of the work performed.”

Section 710 does not, however, give public employers

free rein to make pay deductions. To keep the benefit of the

professional-capacity exemption, public employers must

“otherwise meet[] the salary basis requirements of

§ 541.602.” § 710. So while public employers can make

partial-day deductions for unexcused absences, they still

cannot cause employees to miss work and suffer resulting

pay deductions. See § 602(a)(2).

Section 710’s modification means that, as a practical

matter, the salary basis test applies differently to private and

public employers. Whereas a private employer must pay its

employees predetermined amounts on a weekly or less

frequent basis, a public employer must give its employees

the opportunity to earn predetermined amounts on a weekly

or less frequent basis, a prospect that will be fulfilled so long

as employees do not miss work for unexcused reasons. In

SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO 21

both situations, neither private nor public employers can

cause employees to receive less than the predetermined

amounts of compensation. Any deduction must be due to an

employee’s own actions.

A hypothetical example shows how the salary basis test

plays out differently for private and public employers.

Imagine that a hospital employs a 1.00 FTE staff nurse and

pays her $124,800 per year. That would mean that the staff

nurse would have an hourly rate of $60 and earn $2,400 in a

typical week. One week, a scheduling error occurs, resulting

in the staff nurse being scheduled to work only 38 hours.

Additionally, the staff nurse shows up an hour late to work

one day that week.

If the hospital is a private employer, it must pay the staff

nurse $2,400 for that week. The private employer may not

deduct any compensation for the two hours the employer

caused the employee to miss work. Nor may the employer

deduct compensation for the employee showing up late to

work because that would be an impermissible partial-day

deduction.

If the hospital is a public employer, however, it must pay

the staff nurse only $2,340 for working 39 hours that week.

Due to the public accountability principle, the employer is

not obliged to pay the staff nurse for the hour that she was

late. But it must still pay the staff nurse for the two hours

that the employer caused the staff nurse not to work—it did

not give the staff nurse the opportunity to work those hours.

From an accounting standpoint, the public employer

could determine the compensation owed to the staff nurse by

using a top-down approach, starting with a $2,400 weekly

amount and then making any necessary deductions—in this

example, subtracting $60. Or it could use a bottom-up

22 SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO

approach that counts the number of hours actually worked,

multiplies them by a $60 hourly rate, and makes any

necessary adjustments—in this example, adding $120

because the employer caused the staff nurse to miss two

hours. Through both adjustments, the staff nurse would be

paid according to the number of hours she worked and not

paid for hours she missed due to unexcused absences.

The only substantive disagreement we have with Judge

Bea concerns our application of the public accountability

principles embodied in § 710. This provision is not a minor

afterthought in the regulations. It is the product of a long

history of political and constitutional controversy and policy

disagreement in applying the FLSA to state and local

employers. As originally enacted in 1938, the FLSA defined

“employer” so that it “shall not include the United States or

any State or political subdivision of a State.” 29 U.S.C.

§ 203(d) (1940 ed.); see generally National League of Cities

v. Usery, 426 U.S. 833, 836–39 (1976) (reviewing history).

In 1966, Congress amended the FLSA to extend

application of the Act to employees of public transit

companies, hospitals, schools, and similar entities. That

amendment was challenged immediately on constitutional

grounds. The Supreme Court upheld application of the

FLSA to those state and local employees in Maryland v.

Wirtz, 392 U.S. 183 (1968). Congress then amended the

FLSA in 1974 to broaden its application to almost all

categories of state and local government employees,

including police, fire, sanitation, public health, and parks

employees. In a challenge to those new amendments, the

Court overruled Maryland v. Wirtz and held that the

constitutional commerce power did not authorize Congress

to apply the FLSA to employees working in “areas of

traditional governmental functions.” National League of

SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO 23

Cities v. Usery, 426 U.S. at 852. And nine years after that,

the Court overruled National League of Cities and its

“traditional governmental functions” test in Garcia v. San

Antonio Metro. Transit Authority, 469 U.S. 528, 557 (1985),

which allowed broad application of the FLSA to state and

local government employees.

In the wake of Garcia v. San Antonio Transit, “few

public employers compensated employees in a manner that

would satisfy the ‘on a salary basis’ provision” due to public

accountability laws, and many local governments feared

financial ruin due to the possibility of retroactive overtime

payments. See Exemptions from Minimum Wage and

Overtime Compensation Requirements of the Fair Labor

Standards Act, 57 Fed. Reg. 37666, 37667 (Aug. 19, 1992)

(summarizing history of applying FLSA to public sector

employees). Congress quickly amended the FLSA later in

1985 to address concerns of state and local governments,

especially about retroactive liability for overtime that had

not been required under National League of Cities but would

be required under Garcia. See Fair Labor Standards

Amendments of 1985, Pub. L. 99-150, 99 Stat. 787; see also

57 Fed. Reg. at 37667 (summarizing amendments).

But those statutory amendments did not address one

important concern of state and local governments. Many of

those governments operate under constitutional, statutory,

and/or regulatory provisions that bar governments from

paying employees for time not actually worked or covered

by accrued leave. Such prohibitions on “ghost employment”

are discussed in terms of the “public accountability”

principle. The Department of Labor has tried to

accommodate that principle while also protecting employees

through the revised rule that is now codified as § 710(a). It

allows public employers to continue paying employees

24 SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO

consistent with public accountability principles. 57 Fed.

Reg. at 37670, 37672–73.

Section 710(a) is a critical component in the FLSA’s

statutory and regulatory treatment of government

employees. It is also binding here, and we are required to

draw a sharp distinction between practices that are available

to public employers but prohibited to private employers.5

C. Applying the Salary Basis Test

The City failed to show beyond reasonable dispute that

it guaranteed staff nurses the opportunity to work the number

of hours corresponding to their full-time equivalencies

during the relevant time period. The expert report submitted

by the City revealed at least 72 employee pay periods in

which the City recorded staff nurses as working fewer hours

than their full-time equivalencies. These 72 discrepancies

create factual questions as to whether the staff nurses

received their predetermined amounts of compensation in

each of these 72 pay periods.6

5

Judge Bea’s opinion offers an example suggesting that our decision

here will undermine overtime protection for private employees. See post

at 46–47. We address in this decision the requirements for public

employers in enforcing the public accountability principle under

§ 710(a). We do not address here the more demanding requirements

applied to private employers under § 602(b) in allowing some pay

reductions for personal time off and sick leave and disability leave.

6

Though the City did not carry its burden on summary judgment in

satisfying the salary basis test, the City’s Charter has an ordinance that

prohibits paying public employees for non-chargeable time. See San

Francisco Charter § A8.400(g) (“No officer or employee shall be paid

for a greater time than that covered by his actual service . . . .”). This

ordinance satisfies the requirement in § 710 that the City pay its

employees “according to a pay system established by statute, ordinance

or regulation.”

SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO 25

The City offers two reasons why the discrepancies

should not prevent staff nurses from being considered

salaried employees. First, the City argues that even if a few

errant deductions were made, plaintiffs have not shown that

the City maintains an actual practice of paying staff nurses

less than their predetermined amounts. Second, the City

argues that staff nurses have a window of correction

available to them to correct any improper deductions. For

the reasons we discuss below, both of these arguments fail,

at least as a matter of law on summary judgment.

1. The Expert Report

The City retained Dr. Piling Fan and Dr. Hossein

Borhani to analyze the payroll data of staff nurses and to

opine on whether the City “fulfills its obligation to provide

the opportunity to staff nurses to work and be paid based on

fixed schedules.”7 Dr. Fan and Dr. Borhani selected a

sample of 26 plaintiff-nurses and retrieved about four years

of payroll data for each nurse. The experts then graphed the

sampled payroll records in a horizontal bar chart. Each

horizontal bar in the graph represented one pay period for a

single nurse. Within each bar, the experts color-coded the

number of hours recorded for specific payroll codes. The

color coding allows readers to discern how many hours each

nurse spent doing certain activities. For example, by looking

at Brigitta Van Ewijk’s chart, we can determine that she

worked or was credited with 80 hours in the two-week pay

period ending on November 17, 2017. She reported 48 of

those hours as “Regular Hours – Worked,” 16 hours as “Sick

7

The complete expert report can be found at pages 1793–1889 of

Volume 9 of plaintiff Silloway’s excerpts of record.

26 SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO

Leave Pay,” 8 hours as “Educational Leave w/ Pay,” and 8

hours as “Holiday OT Pay (1.5 times).”

Dr. Fan and Dr. Borhani concluded that “staff nurses

work based on fixed schedules and are consistently paid for

all the work and non-work hours on their regular work

schedules.” For the most part, the graphed data supported

the experts’ conclusion. The staff nurses appear to have

worked the hours associated with their full-time

equivalencies in over 2,000 employee pay periods across the

four years of sample data. However, the graphs show at least

72 employee pay periods in which the sampled staff nurses

appear to have worked fewer hours than their full-time

equivalencies. Because staff nurses are paid according to the

number of hours worked, these discrepancies raise

unanswered factual questions as to whether the staff nurses

earned their predetermined amounts of compensation in

these pay periods.

Consider, for instance, plaintiff Kristen Silloway.

During the two-week pay period ending May 31, 2019,

Silloway worked 48 hours, which was 24 fewer hours than

she had worked in other pay periods spanning from

November 2017 to May 2021. The expert report

acknowledged this discrepancy but dismissed it, concluding

that “it appears Ms. Silloway’s schedule [] changed from an

FTE of [0].9 to [0].6” for this one pay period. When asked

about this conclusion during her deposition, however, Dr.

Fan said that she did not verify whether Silloway had

reduced her full-time equivalency for that pay period. Dr.

Fan had just assumed that Silloway reduced her full-time

equivalency because her hours were lower than normal.

After being pressed further on the issue, Dr. Fan noted that

Silloway had also worked 47 hours in per diem shifts during

this pay period.

SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO 27

The additional hours that Silloway worked as a per diem

nurse during this pay period are irrelevant for the salary basis

test because, as noted above in footnote 4, only the hours that

staff nurses work as staff nurses count toward their base

compensation. Per diem shifts do not count. And the City

does not dispute that Silloway worked only 48 hours as a

staff nurse during this pay period. Because staff nurses’

compensation is determined by the number of hours worked,

there is a factual dispute as to whether Silloway received her

full, predetermined amount of compensation during this pay

period. The City has not provided any other evidence

showing that she received her full compensation this pay

period regardless of the number of hours it recorded her as

working.

In fact, the City failed to provide definitive proof that

staff nurses received their predetermined amounts of

compensation during any of the pay periods in which these

72 discrepancies occurred. Instead, in the district court and

on appeal, the City relies upon the unsubstantiated

explanations provided by Dr. Fan and Dr. Borhani. We

highlight a few of the experts’ deficient explanations to

demonstrate why they do not satisfactorily resolve the

factual disputes lingering around these discrepancies.

First, during the pay period ending on November 3,

2017, Silloway was recorded as working only 48 hours as a

staff nurse, again 24 hours shy of her normal 72 hours as a

0.9 FTE. In their expert report, Dr. Fan and Dr. Borhani tried

to explain away this discrepancy by saying that Silloway

reduced her FTE from 0.9 to 0.6 for that pay period. The

experts did not cite any documentation supporting that

assertion, and the City has not provided any, either. Instead,

when asked about this discrepancy during her deposition, Dr.

Fan shifted her explanation, saying that the discrepancy may

28 SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO

have been due to incomplete data. Again, though, Dr. Fan

did not research further to confirm her hypothesis. And,

more pertinent to the issue of summary judgment, the City

has not provided evidence showing beyond reasonable

dispute that Silloway received her predetermined amount of

compensation for this pay period.

Second, during the pay period ending on January 12,

2018, Silloway was recorded as working 62 hours, of which

38 hours were recorded as “Regular Hours – Worked,” 12

hours were recorded as “Holiday OT Pay (1.5 times),” 2.9

hours were recorded as “Sick Leave Pay,” and 9.1 hours

were recorded as “Sick Leave (Unpaid).” Dr. Fan and Dr.

Borhani acknowledged in the expert report that Silloway was

credited with 10 fewer hours during this pay period than her

normal full-time equivalency. They asserted that this

discrepancy was because Silloway “took paid sick leave[]

and had insufficient sick leave in her bank to cover the rest

of her FTE schedule.”

That explanation sounds like a proper invocation of the

public accountability principle, but it does not reconcile with

the payroll data. As noted, the graph shows that Silloway

took 9.1 hours of “Sick Leave (Unpaid)”. So if the graphed

payroll data show 9.1 hours of unpaid sick leave, it is

puzzling why there would be an additional 10 hours of

unpaid sick leave unrecorded in the accounting system. Dr.

Fan and Dr. Borhani did not investigate this discrepancy any

further, leaving it in dispute as to whether this discrepancy

was an improper deduction of Silloway’s compensation.

The experts did not investigate other discrepancies at all.

Plaintiff Analisa Ruiz had nine pay periods between

December 2017 and October 2021 in which the City’s

records credit her with fewer hours than her full-time

SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO 29

equivalency. The expert report did not acknowledge these

discrepancies. In its response brief, the City chalked them

up to “incomplete payroll data that the experts had not fully

investigated.” These nine unexplained discrepancies create

disputed factual issues as to whether Analisa Ruiz received

her predetermined compensation in these pay periods.

The experts’ uncorroborated and speculative

explanations leave the propriety of the 72 discrepancies

unknown. Perhaps there are permissible reasons for each

discrepancy, but the City has not provided evidence proving

them. Without such evidence, factual questions remain as to

whether the staff nurses were provided the opportunity to

work their full-time equivalencies in these pay periods and,

consequently, whether the staff nurses were paid their

predetermined amounts of compensation. Those factual

questions lie at the heart of the salary basis test and preclude

summary judgment in favor of the City.

2. Actual Practice

The City argues that even if the 72 discrepancies were

improper deductions from staff nurses’ compensation, the

City did not intend to make improper deductions, so it should

not lose the benefit of the professional-capacity exemption.

This argument is premised on another FLSA provision, 29

C.F.R. § 541.603(a).

Pursuant to § 603(a), an employer generally loses the

benefit of the professional-capacity exemption if “the facts

demonstrate that the employer did not intend to pay

employees on a salary basis.” An employer’s intent not to

pay employees on a salary basis can be demonstrated by an

“actual practice” of making improper deductions. § 603(a).

The provision lists five factors for determining if an

employer maintains such an actual practice: (1) the number

30 SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO

of improper deductions, particularly as compared to the

number of employee infractions warranting discipline;

(2) the time period during which the employer made

improper deductions; (3) the number and geographic

location of employees whose salary was improperly

reduced; (4) the number and geographic location of

managers responsible for taking the improper deductions;

and (5) whether the employer has a clearly communicated

policy permitting or prohibiting improper deductions. Id.

The City’s own expert report precludes it from meeting

its burden as the moving party to show that no material facts

remain in dispute as to whether the City maintained an actual

practice of making improper deductions. See In re Oracle

Corp. Sec. Litig., 627 F.3d 376, 387 (9th Cir. 2010) (“The

moving party initially bears the burden of proving the

absence of a genuine issue of material fact.”). Dr. Fan and

Dr. Borhani analyzed payroll records for 26 nurses across

140 two-week pay periods. Among all the sampled nurses,

the experts analyzed data from 2,251 employee pay periods.8

Plaintiffs assert that the expert report shows that staff nurses

worked or were credited with fewer hours than their full-

time equivalencies in 72 of these 2,251 employee pay

periods. Because staff nurses are paid according to the

number of hours they report, plaintiffs have presented

factual disputes as to whether the staff nurses received their

predetermined amounts of compensation in these 72

8

This figure does not include pay periods in which a nurse appears not

to have worked at all. Specifically, it does not include three pay periods

for Kristina Gusman from the pay period ending January 12, 2018 to the

one ending July 13, 2018, four pay periods for Nichole Solis from the

period ending March 23, 2018 to the one ending November 30, 2018,

and six pay periods for Nicole Kenyon from the period ending April 20,

2018 to the one ending September 20, 2019.

SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO 31

employee pay periods. And, as discussed above, the City

has not provided evidence that would conclusively resolve

those factual disputes. In reviewing the grant of summary

judgment, we must view these disputed facts in the light

most favorable to the plaintiffs and assume that the City paid

these staff nurses less than their predetermined amounts of

compensation in these pay periods.

Such a high number of improper deductions could

support a finding that the City maintains an actual practice

of making improper deductions. Plaintiffs identified

evidence showing that the City made improper deductions in

about 3.2% of employee pay periods. That rate is higher than

in other cases where isolated errors did not indicate an actual

practice. See Auer v. Robbins, 519 U.S. 452, 462 (1997)

(just one improper deduction occurring under “unusual

circumstances” did not show an actual practice); Childers v.

City of Eugene, 120 F.3d 944, 947 (9th Cir. 1997) (one

improper deduction over ten years was not an actual

practice); Ellis v. J.R.’s Country Stores, Inc., 779 F.3d 1184,

1189–90, 1194–96 (10th Cir. 2015) (one improper deduction

during employee’s more than four years of employment did

not show an actual practice); Kennedy v. Commonwealth

Edison Co., 410 F.3d 365, 372 (7th Cir. 2005) (three

improper deductions over 470,000 employee work weeks

did not show an actual practice); DiGiore v. Ryan, 172 F.3d

454, 457–58, 464–65 (7th Cir. 1999) (five improper

deductions over about three years did not show an actual

practice), overruled on other grounds by Whetsel v. Network

Property Servs., LLC, 246 F.3d 897, 904 (7th Cir. 2001);

Aiken v. City of Memphis, 190 F.3d 753, 762 (6th Cir. 1999)

(one improper deduction was not an actual practice);

Carpenter v. City & County of Denver, 115 F.3d 765, 767

(10th Cir. 1997) (two allegedly improper deductions under

32 SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO

unusual circumstances did not show an actual practice);

Ahern v. County of Nassau, 118 F.3d 118, 120–21 (2d Cir.

1997) (one instance of pay docked for violating employment

rules was not an actual practice); Rebischke v. Tile Shop,

LLC, 229 F. Supp. 3d 840, 852 (D. Minn. 2017) (concluding

that improper deductions in 0.5% of paychecks over about

three years was an “isolated” practice); Martinez v. Hilton

Hotels Corp., 930 F. Supp. 2d 508, 522 (S.D.N.Y. 2013)

(three improper deductions among five employees over four

years did not show an actual practice); Crabtree v. Volkert,

Inc., 2012 WL 6093802, at *9 (S.D. Ala. Dec. 7, 2012)

(improper deductions from 1% of checks issued to certain

employees over about four years showed an isolated

practice).

The 3.2% error rate precludes summary judgment. Not

only is it higher than in other cases where summary

judgment was granted, it also suggests that a flaw in the

City’s accounting process resulted in recurring improper

deductions. The data bear out this possibility. In the first 40

pay periods analyzed by the experts—from the period ending

June 3, 2016 to the one ending December 1, 2017—17.5%

of pay periods included a discrepancy.9 But those pay

periods analyzed data from no more than seven staff nurses.

Such a small sample size does not inspire confidence in the

statistics drawn from it. Once the sample size was expanded

to at least twelve nurses, the error rate jumped to 46%. In

other words, in the 100 pay periods from the period ending

December 15, 2017 to the one ending October 1, 2021, the

City recorded at least one staff nurse as working or being

9

This figure counts every pay period in which any sampled staff nurse

appears to have worked or been credited with fewer hours than her full-

time equivalency as a “discrepancy.”

SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO 33

credited with fewer hours than her full-time equivalency in

nearly half the pay periods. And that statistic takes into

account only a fraction of the staff nurses employed by the

City. A pattern reaching that level of consistency tends to

show a gap in the City’s accounting process.

Factoring these statistics into the § 603(a) analysis, the

City’s high error rate—making at least one improper

deduction in 46% of pay periods, affecting 3.2% of

paychecks—weighs in favor of finding that the City

maintained an “actual practice” of making improper

deductions. In fact, the City made improper deductions

more frequently than employers did in other cases where

courts have found actual practices to exist. See Klem, 208

F.3d at 1088, 1091, 1095–96 (affirming summary judgment

for employees where employer imposed 53 improper

disciplinary suspensions among 5,300 employees over six

years); Block v. City of Los Angeles, 253 F.3d 410, 416, 419

(9th Cir. 2001) (affirming summary judgment for employees

where employer imposed 13 improper suspensions over six

years); Takacs v. Hahn Automotive Corp., 246 F.3d 776,

781, 784 (6th Cir. 2001) (affirming summary judgment in

favor of employees where employer made seven improper

deductions in a year and a half).

None of the other § 603(a) factors excuse the City’s high

error rate. Regarding the third factor, geography of

employees, neither party presented evidence showing that

staff nurses worked outside of the San Francisco area. As

for the fourth factor, the number of responsible managers,

there is no evidence suggesting that individual people bore

responsibility for the City’s improper deductions. The City

used a centralized accounting system through which it

calculated and distributed compensation for all staff nurses,

34 SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO

and the improper deductions could have been made at any

step in that accounting process.

Finally, regarding the fifth factor, the parties dispute

whether the City had a policy that prohibited improper

deductions. The City contends that it did have such a policy

and cites provisions from the Memorandum of

Understanding that it claims guaranteed staff nurses the

opportunity to work at least the hours associated with their

full-time equivalencies. The plaintiffs disagree, arguing that

far from prohibiting improper deductions, the Memorandum

of Understanding explicitly permitted them. Plaintiffs cite

provisions that purportedly authorized the City to cancel

shifts without pay for reasons of “inclement weather

conditions, shortage of supplies, traffic conditions, or other

unusual circumstances.” Plaintiffs argue that these

provisions violate § 602(a)(2), which specifies that

employers cannot take deductions from compensation for

absences occasioned by the employer.

In response, the City contends that these provisions were

merely “boilerplate language” lifted from other contracts the

City has made. The City also asserts that these provisions

were never invoked against staff nurses. In support of that

assertion, the City cites an email from Steven Ponder,

Classification and Compensation Director, to the

Department of Public Health’s Human Resources Director

and Payroll Manager in December 2019, saying that the

provisions permitting the City to cancel shifts did not apply

to staff nurses. Plaintiffs attack the credibility of this email,

noting that it was sent almost a year after Litvinova filed suit.

Aside from convenient timing, plaintiffs also argue that the

content of the email was never communicated to staff nurses

or other relevant employees as required by the fifth element.

See § 603(a) (instructing courts to consider “whether the

SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO 35

employer has a clearly communicated policy permitting or

prohibiting improper deductions” (emphasis added)).

As one last piece of evidence in support of its argument,

the City cites deposition testimony from multiple staff nurses

saying that the City has never exercised these provisions

against them. All of the deposed staff nurses testified that

they could not recall an instance in which the City denied

them the opportunity to work a shift as a staff nurse.

Plaintiffs respond by arguing that even if the deposed staff

nurses could not recall an instance in which they had a shift

cancelled, the City does not audit its payroll data to ensure

that staff nurses actually received their guaranteed hours.

And, as the 72 discrepancies show, plaintiffs have evidence

that staff nurses sometimes worked or were credited with

fewer than their guaranteed hours without receiving their

regular salaries.

Suffice it to say, each side has marshaled evidence in

support of its interpretation of the Memorandum of

Understanding. The plaintiffs cite two provisions that seem

to allow the City to make improper deductions. The City

cites deposition testimony indicating that, as a matter of

practice, those provisions have never been applied to staff

nurses. This factor does not weigh in favor of either side.

In sum, the district court erred in concluding that no

material factual questions remain in dispute as to whether the

City maintained an actual practice of making improper

deductions. In considering summary judgment, the number

of discrepancies in the payroll data cannot be dismissed as

mere isolated incidents. Nor can they be swept under the rug

as the misdeeds of a single rogue manager. The

Memorandum of Understanding includes provisions from

which a reasonable person could conclude that the City

36 SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO

retained the ability to cancel shifts. The possibility that those

provisions could lead the City to make improper deductions

caused the City’s Compensation Director to clarify that those

provisions cannot be exercised against staff nurses.

We offer no definitive answer as to whether the 72

discrepancies showed actual improper deductions from staff

nurses’ predetermined amounts of compensation. All we

decide is that the answer depends on disputed factual

questions.

3. Window of Correction

The City also contends that even if the 72 discrepancies

were improper deductions, they were merely “isolated or

inadvertent” errors fixable through a correction process.

This argument relies on 29 C.F.R. § 541.603(c), known as

the “window of correction” provision. Ellis, 779 F.3d at

1189 (citation omitted). It provides that an employer does

not lose the benefit of the professional-capacity exemption

for “isolated or inadvertent” deductions so long as the

employer reimburses employees for any improper

deductions. § 603(c).

Regarding the second part of that provision, the City has

a process in place for making corrections. Once an error is

discovered, the payroll department works with nurses and

their supervisors to rectify the issue. The City presented

evidence showing that this process works in practice, at least

some of the time. For example, it was discovered that

Kristen Silloway was not “paid up to [her] FTE due to short

education credits” during the pay period ending on October

16, 2020. The payroll team worked with Silloway to create

a Problem Description form to track the issue and resolve it.

In that instance, Silloway chose to use 10 hours of accrued

SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO 37

vacation leave and ended up receiving her full predetermined

amount of compensation.

The resolution of that issue, however, raises questions as

to why the error correction process was not used to remedy

the other 72 discrepancies. The expert report shows that

after the correction was made, Silloway’s reported hours for

the pay period ending October 16, 2020 matched her full-

time equivalency. In other words, this pay period was not

one of the 72 discrepancies identified by the plaintiffs, but it

would have resembled those discrepancies if the correction

had not been made.

The City failed to show that corrections were made for

the other 72 discrepancies. Again, because these appeals

come to us from a grant of summary judgment, we construe

the facts in the light most favorable to the plaintiffs and

assume that each of the 72 instances of underreported time

resulted in an improper deduction of compensation. Just as

the City did not provide evidence showing that the

employees received their predetermined compensation in

these pay periods, the City also has provided no evidence

that it reimbursed the employees for any improper

deductions. Without that evidence, the City cannot make use

of § 603(c).

Facts also remain in dispute concerning the first element

of § 603(c), which requires showing that any improper

deductions were “isolated or inadvertent.” This element can

be satisfied through two alternative paths—an employer may

make use of the “window of correction” defense by showing

that the improper deductions were either “isolated” or

“inadvertent.” Ellis, 779 F.3d at 1203–05; Rebischke, 229 F.

Supp. 3d at 850–56. Based on the evidence before us, the

38 SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO

City has not shown conclusively that it has satisfied either

path.

a. “Isolated” Improper Deductions

The Department of Labor explained that the same factors

for determining whether an employer maintains an “actual

practice” determine whether improper deductions were

“isolated.” Defining and Delimiting the Exemptions for

Executive, Administrative, Professional, Outside Sales and

Computer Employees, 69 Fed. Reg. 22122, 22181 (Apr. 23,

2004) (commentary on revisions to § 603). As discussed

above, material facts remain in dispute as to whether the City

maintains an “actual practice” of taking improper deductions

from pay. Those same disputed facts preclude summary

judgment on the “isolated” issue.

b. “Inadvertent” Improper Deductions

Material facts are also in dispute as to whether the

improper deductions were “inadvertent.” The same

Department of Labor commentary defines “inadvertent

deductions” as “those taken unintentionally, for example, as

a result of a clerical or time-keeping error.” 69 Fed. Reg. at

22181. Perhaps that is true of the apparent errors here. A

supervisor reviewing time records might have forgotten to

make a necessary correction before sending a timesheet to

payroll. Or, while manually entering the timesheets into the

City’s accounting system, a payroll employee could have

accidentally entered the wrong time in the payroll software,

causing the employee’s records to show a lower-than-normal

number of hours. However, the City has not provided

evidence explaining what caused hours to be underreported

in these pay periods. Without that evidence, whether these

deductions were inadvertent remains a disputed factual

issue.

SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO 39

VI. Conclusion

We reverse the judgment of the district court. Material

factual questions remain in dispute as to whether the plaintiff

staff nurses received predetermined amounts of

compensation on a weekly or less frequent basis during the

relevant time. We remand for those factual issues to be

resolved consistent with this opinion.

REVERSED AND REMANDED.

BEA, Circuit Judge, concurring in part and dissenting in

part:

The district court’s grant of summary judgment in favor

of the City and County of San Francisco (City) should be

reversed. On that, the majority and I agree. But rather than

remand for further discovery on whether the Plaintiffs-

Appellants (Nurses) are salaried under the Fair Labor

Standards Act (FLSA), I would hold that there is no genuine

dispute of fact as to that question. The Nurses are not salaried

under that statute because the City does not pay the Nurses a

predetermined amount of compensation each week that is

independent of the number of hours they work. I would

therefore remand with instructions to grant the Nurses’

cross-motion for summary judgment on their claim for

overtime pay under the FLSA.

I

The FLSA requires public and private employers to pay

their workers time-and-a-half “for work over 40 hours a

week.” Helix Energy Sols. Grp., Inc. v. Hewitt, 598 U.S. 39,

44 (2023). But the statute also “exempts certain categories

of workers” from this overtime compensation requirement.

40 SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO

Id. Under § 13(a)(1) of the FLSA, “bona fide . . .

professional” employees “ha[ve] no right to overtime

wages,” and Congress has authorized the Labor Secretary to

pass rules “for determining when an employee” falls within

that statutory category. Id. Under the Secretary’s rules, a

worker must meet three criteria to qualify as a bona fide

professional employee. Id. at 44–45. As the majority notes,

the parties here dispute only whether the Nurses meet one of

those criteria—the “salary-basis” requirement. Maj. Op. at

10. The parties agree that the Nurses meet the other two

criteria to be classified as salaried.

Two “pathways” exist for meeting the salary-basis

requirement under the Secretary’s rules. Hewitt, 598 U.S. at

57. The first is set forth in 29 C.F.R. § 541.602(a). Under

§ 602(a), “[a]n employee will be considered to be paid on a

‘salary basis’” if he “regularly receives” a “predetermined

amount” of compensation on “a weekly, or less frequent

basis” that “is not subject to reduction because of variations

in the quality or quantity of the work performed.” In Hewitt,

the Supreme Court recently held that an employee is paid on

a salary basis under § 602(a) only if the “unit or method used

to calculate [the employee’s] earnings” is a “weekly” or

“less frequent basis” (e.g., monthly, yearly, and so on). 598

U.S. at 53. If an employee, for example, normally “works

seven days a week” at a rate of $1,000 a day, but he receives

only $2,000 for a given week because he took off work for

sickness or personal reasons on five out of seven of those

days, then he is paid on a daily basis, not a “weekly or less

frequent basis” as § 602(a) expressly requires. See id. at 51.

It does not matter that he worked only for two of the seven

days for that week. Hewitt holds that “[w]henever an

employee works at all in a week,” § 602(a) requires that “he

must get his ‘full salary for [that] week,’” or what § 602(a)

SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO 41

“calls the ‘predetermined amount’” of compensation. Id. at

51 (emphasis added).

While § 602(a) thus “pertains only to employees paid by

the week (or longer)” and “excludes [hourly- and] daily-rate

workers,” id. at 57, 58, “[t]hat is not to say that an hourly or

daily rate [employee] can never meet the salary-basis test”

under the Secretary’s rules, Hewitt v. Helix Energy Solutions

Group, Inc., 15 F.4th 289, 291 (5th Cir. 2021) (emphasis in

original). They can—but only through the “second route”

laid out in 29 C.F.R. § 541.604(b). Hewitt, 598 U.S. at 55.

Under § 604(b), an employer “may . . . compute[]” its

employees’ pay “on an hourly” or “daily . . . basis,

without . . . violating the salary basis requirement,” id., if

(but only if) “two conditions are met,” Hewitt, 598 U.S. at

47. First, the employer, on top of paying the worker for the

days or hours that he works, “must ‘also’ guarantee the

employee” a minimum weekly required amount of

compensation paid on a salary basis “regardless of the

number of hours, days, or shifts worked.” Id. at 47 (quoting

§ 604(b)). Second, “that promised amount . . . must be

‘roughly equivalent to the employee's usual earnings at the

assigned hourly[] [or] daily . . . rate.” Id. Together,

§ 604(b)’s two requirements “create a compensation system

functioning much like a true salary” to which weekly-rate

employees are entitled under § 602(a). Id.

Finally, while § 602(a) and § 604(b) lay out the two

divergent pathways for meeting the salary-basis

requirement, the rules are joined at the hip by § 600. By its

terms, § 600 provides that “[t]o qualify as an

exempt . . . professional employee . . . an employee must be

compensated on a salary basis at a rate” of not less than $684

42 SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO

per week. Id. § 600(a).1 Section 600’s requirement thus sets

the salary floor that an employee must receive to count as

salaried under either § 602(a) or § 604(b) as $684 per week.

Whether we are talking about the “predetermined amount”

of compensation for a weekly-rate employee under § 602(a),

or the “minimum weekly required amount” of pay for an

hourly- or daily-rate employee under § 604(b), those

earnings must, at a minimum, equal $684 per week or they

do not count as a “salary” under the Secretary’s rules.

II

It is undisputed that—on paper and in practice—the City

pays the Nurses by the hour with no promise of “a preset and

non-reducible” amount of pay. See Hewitt, 598 U.S. at 52.

The City’s own charter prohibits public employees from

receiving compensation for hours they do not work. See San

Francisco Charter § A8.400(g). The Memorandum of

Understanding between the City and the Nurses—which

outlines the Nurse’s compensation scheme—provides that

the Nurse’s “[s]alaries . . . shall be calculated . . .

proportionate to the hours actually worked.” The City’s own

expert and Director of Compensation admitted at deposition

that the Nurses’ “compensation . . . [is] based on [the] hours

they worked.” And to calculate the Nurses’ paychecks, the

City’s payroll system relies solely on the hours that the

Nurses work. There is simply no dispute that the Nurses are

hourly-rate employees under the City’s compensation

scheme.

1

After submission of this case, the Secretary raised the baseline salary

required under § 600 from $684 to $844. See Defining and Delimiting

the Exemptions for Exemptions for Executive, Professional, Outside

Sales, and Computer Employees, 89 Fed. Reg. 32842 (Apr. 26, 2024).

SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO 43

With facts like these, the City does not pay the Nurses on

a salary basis under a plain English reading of either § 602(a)

or § 604(b). Rather than pay the Nurses a weekly

“predetermined amount” of money of at least $684 per week

“without regard to the number of . . . hours worked” as

§ 602(a) requires, the City pays the Nurses “precisely with

regard to that number,” see Hewitt, 598 U.S. at 51 (emphasis

in original), or (as the majority puts it) “in direct correlation

to the amount of time worked,” Maj. Op. at 20. While that

makes the Nurses hourly rate employees who “may qualify

as paid on [a] salary [basis] only under § 604(b),” the City

“d[oes] not meet § 604(b)’s conditions” either. See Hewitt,

598 U.S. at 61–62. The City “compute[s]” the Nurses’ pay

“on an hourly . . . basis” as § 604(b) allows but without the

follow-up “guarantee of at least the minimum” $684-per-

week baseline salary that § 604(b) requires.

In holding that the Nurses can nevertheless be considered

salaried under the FLSA, the majority revises key parts of

the Secretary’s rules and practically writes out others

altogether. For example, § 604(b)—arguably the only

relevant rule here because it is the only one to speak about

the salaried status of hourly-rate employees—makes only a

brief appearance in the majority’s analysis before it is

“cart[ed] . . . off the stage.” Hewitt, 598 U.S. at 56; see Maj.

Op. at 11. The majority also concludes that § 600’s

requirement that the Nurses be paid at least $684 per week

under either pathway to be considered salaried is not at issue

because “[u]ndisputed facts show that even the lowest-paid

plaintiff nurses were paid well above that $684 floor.” Maj.

Op. at 10 n.1. But it is also “undisputed” that the Nurses were

not paid a predetermined amount of at least $684, as

§ 602(a)—the majority’s chosen “pathway”—expressly

requires. Section 602(a) instead takes on an entirely different

44 SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO

meaning under the majority’s reading of the rule. Rather than

entitle them to a “predetermined amount” of money

“regularly receive[d],” id., my colleagues tell us that

§ 602(a) guarantees the Nurses only the “opportunity” to

work the hours needed “to earn” that “predetermined” pay,

Maj. Op. at 20–21—a reading that makes the Nurses look a

lot more like “wage” earners and a lot less like “salaried”

employees. See Hewitt, 598 U.S. at 51–52 (“Take away that

kind of paycheck security and the idea of a salary also

dissolves.”).

To justify this remodeling of the regulatory text, the

majority relies on § 602(a)’s neighbor many doors down—

§ 710—a lesser known, rarely litigated regulation found in

the backpages of the Secretary’s implementing regulations.2

That provision, nestled among the “Definitions and

Miscellaneous Provisions” of the Secretary’s rules, allows

public employers to reduce an employee’s pay “for

absences . . . of less than one work-day” where paid leave is

not sought or is exhausted. Id. § 710(a). Because § 710

applies solely to public employers, and because it allows

them to make partial-day deductions for hours not worked,

the majority reasons that public employers may calculate an

2

The majority recounts a bit of statutory history to make the point that

§ 710 was not an “afterthought” but rather an intentional addition to the

regulatory scheme as a means of “allow[ing] public employers to

continue paying employees consistent with public accountability

principles.” Maj. Op. at 22-24. I do not disagree with my colleagues that

§ 710 was intended to give public employers more leeway to make

deductions. And it does just that, by allowing public employers, unlike

private employers, to make partial-day deductions for partial-day

absences for personal reasons. But I would not read § 710’s protections

for public employers so broadly as to allow public employers to evade

almost completely the otherwise clear requirements of § 602(a) to pay

“salaried” workers a predetermined amount.

SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO 45

employee’s pay at an hourly rate without converting him into

a non-salaried employee, while private employers cannot.

Contra § 604(b) (permitting all employers, public or private,

to calculate pay by the hour, but subject to certain

conditions). As my colleagues describe it, public employers

can calculate pay by the hour “top-down”—by starting with

the full salary the employee would have earned had he

worked the full week and then “making any necessary

deductions” under § 710. Maj. Op. at 21. Or they can

calculate pay from a “bottom-up” angle—where they simply

compute pay based only on the hours worked. Id. at 21–22.

Whatever the accounting technique, it makes no difference

“as a practical matter” according to my colleagues. Id. at 20.

Because § 710 allows public employers to deduct pay “in

direct correlation to the amount of time worked,” the

majority concludes that § 602(a)’s key requirement—that

employers pay their workers a “predetermined amount”

“without regard to . . . hours worked”—does not apply to

public employers such as the City. Maj. Op. at 20. Only

private employers must obey this mandate. See id.

The problem with the majority’s “public vs. private”

employer distinction is that it does not hold up under closer

scrutiny. As my colleagues concede, public employers are

not the only ones who may permissibly deduct pay under the

Secretary’s rules. Maj. Op. at 12. Section 602(b), in

particular, allows private employers to deduct pay for full-

day absences due to personal reasons. 29 C.F.R.

§ 541.602(b). Thus, following the majority’s logic, a private

employer could just as easily claim exemption from

§ 602(a)’s “predetermined amount” requirement by relying

on its own ability to dock a worker’s pay for time not

worked.

46 SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO

To see how this could play out in practice, consider a

slightly tweaked version of the majority’s own hypothetical.

In the case of a privately employed nurse who works at a rate

of $60 an hour for 40 hours a week, assume that he misses

four full workdays for personal reasons instead of one

“partial day” of work. Maj. Op. at 21–22; see Hewitt, 598

U.S. at 51. If his average workweek is divided into five

eight-hour workdays (totaling 40 hours), what is the

“predetermined amount” of compensation that the hospital

“must pay” the nurse under § 602(a) for him to be considered

salaried under that rule?

Taking the majority’s reasoning to its logical conclusion,

the answer would be $480. The private hospital “is not

obliged to pay the staff nurse for the” four workdays that he

missed because those days count as “full-day absences”

under § 602(b). See Maj. Op. at 21–22; § 602(b)(2). The

only “amount” of pay that the hospital owes the nurse, in

other words, is for the amount that he actually worked that

week (one eight-hour workday x $60 hourly rate = $480).

But that would allow the private employer to evade

§ 602(a)’s “predetermined amount” requirement in at least

two ways. For one, that $480 weekly salary would fall below

the $684 weekly-salary baseline that sets the floor of

§ 602(a)’s “predetermined amount.” See § 600. And second,

nothing about that “amount” would be “predetermined.” It

would instead be “a function of how many days [the

nurse] . . . labored” for that week, “not, as § 602(a)

requires,” a “predetermined amount” that is paid “without

regard” to that number. Hewitt, 598 U.S. at 51; § 602(a)(1).

To get around this problem, my colleagues explain that

their reasoning is limited to § 710(a)’s rules for public

employers and does not affect the rules governing private

employers in § 602(b) because the latter’s requirements are

SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO 47

“more demanding.” Maj. Op. at 24 n.5. How so? A reading

of the two sets of exceptions does not reveal such a

distinction—if anything, § 710(a) imposes more

requirements on public employers to make partial-day

deductions than it does on private employers to make full-

day deductions. Compare § 602(b)(1) (allowing private

employers to deduct pay “when an exempt employee is

absent from work for one or more full days for personal

reasons”), with § 710(a) (allowing public employers to make

partial-day deductions “on the basis . . . [of] a pay system

established by statute, ordinance or regulation, or by a policy

or practice established pursuant to principles of public

accountability, under which the employee accrues personal

leave . . . and which requires the public agency employee’s

pay to be reduced . . . for absences for personal reasons . . .

of less than one work day when accrued leave is not used by

an employee because” one of three conditions is met).

Thus, the limiting principle that supposedly reins in the

majority’s public-private distinction does not exist. If we

follow my colleagues’ reading of “the interplay” between

§ 602(a)’s requirements and an employer’s ability to make

permissible pay deductions, Maj. Op. at 19, then private

employees are no more entitled to § 602(a)’s promise of a

“fixed compensation” than are public employees, Hewitt,

598 U.S. at 51. That is because private and public employers

can use the same “top-down” accounting method to “reduce

staff . . . compensation in direct correlation to the amount of

time worked.” Maj. Op. at 20. The only difference is one of

degree: public employers may deduct pay by the hour, § 710,

private employers by the day, § 602(b). But the bottom line

is the same in both scenarios under the majority’s reasoning

because § 602(b) and § 710, when read in a vacuum, appear

to allow for either employee’s pay to rise or fall depending

48 SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO

on the amount of time he worked for that week—not whether

he worked that week at all. Neither employee is entitled to a

“‘full salary for [that] week’” of at least $684, or “what

§ 602(a) . . . calls the ‘predetermined amount.’” Hewitt, 598

U.S. at 51.

What is left of § 602(a)’s text in future cases such as this

one, where an employer, calculating pay “top-down,”

reduces its workers’ compensation to an hourly- or daily-rate

under § 710 or § 602(b)? Not much it seems. “Every part”

of § 602(a) that describes when an employee can be

considered salaried works “hand in hand” with § 602(a)’s

predetermined-amount requirement to ensure “that [the]

employee receive[s] a fixed amount for a week no matter

how many days [or hours] he has worked.” Id. at 51, 54. The

predetermined amount must be paid on a “weekly basis,”

§ 602(a), meaning “the unit of time used to calculate

pay . . . must be a week or less frequent measure,” not a “day

or, or other more frequent measure,” Hewitt, 598 U.S. at 52.

Thus, an employee’s pay cannot be “subject to reduction

because of variations in . . . quantity of the work performed”

within that week. § 602(a). The employee, the rule drives

home, “must ‘receive [his] full salary for any week’ in which

he works at all.” Hewitt, 598 U.S. at 54 (quoting

§ 602(a)(1)). Because nothing about this language “fits” the

daily- or hourly-rate employee whose pay is calculated “top

down”—since “by definition [he] is paid for each day [or

hour] he works and no others”—the majority must “power

past” all this regulatory text to hold that § 602(a) covers such

workers. Id. at 51, 54 n.5.

“The broader regulatory structure” at play also suffers a

blow with the majority’s holding today. Id. at 55. As

mentioned earlier, my colleagues all but read out § 600’s

$684 salary basis floor requirement. But recall also the role

SILLOWAY V. CITY & CNTY. OF SAN FRANCISCO 49

that § 604(b) is supposed to play alongside § 602(a).

Together, the two rules “offer non-overlapping paths to

satisfy the salary-basis requirement.” Id. at 56. While

§ 602(a) “pertains . . . to employees paid by the week” and

thus “excludes [hourly- and] daily-rate workers,” § 604(b)’s

“explicit function” is to describe how that second category

of workers may qualify as salaried. Id. at 56–57. A worker’s

pay “may be computed on an hourly” or “daily . . . basis,

without . . . violating the salary basis requirement,” § 604(b)

says, so long as he is “also” guaranteed a “minimum weekly”

amount of pay that approximates his usual earnings for that

week but is no less than $684. One would think that these

textual hints all point to § 604(b) as the only proper pathway

for evaluating whether the Nurses—as “top down” hourly-

rate employees—are salaried under the Secretary’s rules.

Yet in holding (at least implicitly) that § 602(a)—not

§ 604(b)—applies to such workers, the majority “subvert[s]

§ 604(b)’s strict conditions on when th[ose] [employees’]

pay counts as a ‘salary.’” Id. at 56; see id. (“[I]t is anomalous

to read § 602(a) as covering daily-rate workers when that is

§ 604(b)’s explicit function.”).

***

The City is free to pay the Nurses solely by the hour, but

that does not satisfy the salary-basis test under the

Secretary’s rules. Until the City guarantees them a fixed

amount of pay that does not depend on the days or hours they

work, the Nurses are not salaried under the FLSA, and the

City must pay them overtime under that statute. For these

reasons, the district court entered summary judgment for the

wrong party. I would reverse and remand with instructions

to grant summary judgment in favor of the Nurses on their

claim for overtime compensation under the FLSA.