Amicus Curiae Brief — AMN Services, LLC, Petitioner v. Verna Clarke, et al.

Supreme Court briefOct 18, 2021

Ask Donna

What actually matters in this document.

Text

No. 21-296

In the Supreme Court of the United States

AMN SERVICES, LLC,

Petitioner,

VERNA CLARKE, ET AL.,

Respondents.

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Ninth Circuit

BRIEF OF THE CHAMBER OF COMMERCE

OF THE UNITED STATES OF AMERICA

AS AMICUS CURIAE SUPPORTING PETITIONER

ANDREW R. VARCOE

STEPHANIE A. MALONEY

U.S. CHAMBER LITIGATION

CENTER

1615 H St. NW

Washington, DC 20062

(202) 463-5337

MICHAEL E. KENNEALLY

Counsel of Record

JAMES D. NELSON

MORGAN, LEWIS &

BOCKIUS LLP

1111 Pennsylvania Ave. NW

Washington, DC 20004

(202) 739-3000

michael.kenneally

@morganlewis.com

CORPORATE DISCLOSURE STATEMENT

The Chamber of Commerce for the United States of

America is a not-for-profit, tax-exempt organization. It

does not have a parent corporation, and no publicly held

company has a 10% or greater ownership interest in it.

TABLE OF CONTENTS

Page

Corporate disclosure statement ....................................... i

Table of authorities.......................................................... iii

Interest of amicus curiae ................................................. 1

Introduction and summary of argument ........................ 2

Argument ........................................................................... 5

The Court should grant review because

the Ninth Circuit’s decision rewrites clear

statutory and regulatory text............................ 5

A. The Ninth Circuit erroneously focused

on the statute’s catchall clause. ................. 7

B. The Ninth Circuit improperly relied

on the Department of Labor’s Field

Operations Handbook and on

supposed legislative purposes.................. 11

C. The Ninth Circuit fixed on random

details that are irrelevant under the

statute and regulation............................... 14

II. The Court should grant review because

the Ninth Circuit’s decision threatens

unwarranted litigation and liability across

many industries. ............................................... 18

Conclusion........................................................................ 23

iii

TABLE OF AUTHORITIES

Page

Cases:

Atkins v. Primoris Serv. Corp., No. 17-cv-454,

2017 WL 4697517 (W.D. La. Oct. 19, 2017) ...............19

Baouch v. Werner Enters., Inc., 908 F.3d 1107

(8th Cir. 2018) ...............................................................11

Benson v. Maxim Healthcare Servs., Inc., No.

17-cv-771, 2018 WL 5829312 (E.D. Cal. Nov. 7,

2018) ...............................................................................19

Berry v. Excel Grp., Inc., 288 F.3d 252 (5th Cir.

2002) ......................................................................... 17, 19

Carlino v. CHG Med. Staffing, Inc., 460 F.

Supp. 3d 959 (E.D. Cal. 2020) .....................................19

Christensen v. Harris Cnty., 529 U.S. 576 (2000) ........13

Chrysler Corp. v. Brown, 441 U.S. 281 (1979) ..............13

CSX Transp., Inc. v. Ala. Dep’t of Rev., 562 U.S.

277 (2011) ........................................................................9

Dalchau v. Fastaff, LLC, No. 17-cv-1584, 2018

WL 1709925 (N.D. Cal. Apr. 9, 2018) .........................19

Dittman v. Med. Sol., L.L.C., No. 17-cv-1851,

2019 WL 4302752 (E.D. Cal. Sept. 11, 2019) .............19

Encino Motorcars, LLC v. Navarro, 138 S. Ct.

1134 (2018).....................................................................12

Exelon Generation Co. v. Local 15, IBEW, 676

F.3d 566 (7th Cir. 2012) ...............................................13

FCC v. Fox Television Stations, Inc., 567 U.S.

239 (2012) ......................................................................14

Flores v. City of San Gabriel, 824 F.3d 890 (9th

Cir. 2016) .........................................................................7

Gagnon v. United Technisource, Inc., 607 F.3d

1036 (5th Cir. 2010) ................................................ 11, 20

Harrison v. PPG Indus., Inc., 446 U.S. 578

(1980) ...............................................................................8

Henson v. Santander Consumer USA Inc., 137

S. Ct. 1718 (2017) ..........................................................12

Hobbs v. Petroplex Pipe & Constr., Inc., 360 F.

Supp. 3d 571 (W.D. Tex. 2019) ....................................19

Howell v. Advantage RN, LLC, 401 F. Supp. 3d

1078 (S.D. Cal. 2019) ....................................................19

Howell v. Advantage RN, LLC, No. 17-cv-883,

2020 WL 5847565 (S.D. Cal. Oct. 1, 2020) ..................19

Hubbard v. RCM Techs. (USA), Inc., No. 19-cv6363, 2020 WL 6149694 (N.D. Cal. Oct. 20,

2020) ...............................................................................19

Kisor v. Wilkie, 139 S. Ct. 2400 (2019) .................... 12, 13

Loc. 246 Util. Workers Union of Am. v. S. Cal.

Edison Co., 83 F.3d 292 (9th Cir. 1996) .......................7

Madison v. Onestaff Med. Ltd. Liab. Co., No.

20-cv-1384, 2021 WL 3674736 (E.D. Cal. Aug.

19, 2021) .........................................................................19

Murphy v. Smith, 138 S. Ct. 784 (2018) ..........................7

Musgrove v. Jackson Nurse Pros., LLC, No. 17cv-6565, 2020 WL 6804510 (C.D. Cal. Sept. 27,

2020) ...............................................................................19

Nat’l Ass’n of Mfrs. v. Dep’t of Def., 138 S. Ct.

617 (2018) ........................................................................9

Newman v. Advanced Tech. Inc., 749 F.3d 33

(1st Cir. 2014)................................................ 6, 11, 12, 20

RadLAX Gateway Hotel, LLC v. Amalgamated

Bank, 566 U.S. 639 (2012)..........................................8, 9

Ross v. Blake, 136 S. Ct. 1850 (2016) ...............................7

Ruiz v. Masse Contracting, Inc., No. 18-cv-5721,

2019 WL 2451628 (E.D. La. June 12, 2019) ...............19

Rule v. S. Indus. Mech. Maint. Co., L.L.C., No.

16-cv-1408, 2017 WL 944217 (W.D. La. Mar. 6,

2017) ...............................................................................19

Schwendeman v. Health Carousel, LLC, No. 18cv-7641, 2019 WL 6173163 (N.D. Cal. Nov. 20,

2019) ...............................................................................19

Sharp v. CGG Land (U.S.) Inc., 840 F.3d 1211

(10th Cir. 2016) .............................................................20

Stone v. Troy Constr., LLC, 935 F.3d 141 (3d

Cir. 2019) .......................................................................19

Statutes, regulations, and rules:

Fair Labor Standards Act of 1938, 29 U.S.C. 201

et seq. .................................................................... passim

29 U.S.C. 207(e)(2) ........................................... passim

29 C.F.R.:

Section 778.217 ...............................................................4

Section 778.217(a) .........................................................10

Section 778.217(b)...........................................................6

Section 778.217(b)(3) ....................................................18

Section 778.217(c)(2) ................................................ 6, 18

Section 778.218(a) .........................................................10

Section 778.219(a) .........................................................10

Section 779.224 .............................................................10

S. Ct. Rule 37.6 ...................................................................1

Miscellaneous:

Antonin Scalia & Bryan A. Garner, Reading

Law (2012) .......................................................................8

Associated Builders & Contractors, The

Construction Industry Needs to Hire an

Additional 430,000 Craft Professionals in

2021 (Mar. 23, 2021, 4:25 PM), available at

https://www.abc.org/News-Media/NewsReleases/entryid/18636/abc-the-constructionindustry-needs-to-hire-an-additional-430-000craft-professionals-in-2021 ..........................................20

Black’s Law Dictionary (11th ed. 2019)..........................3

Heather Schlitz, The Construction Industry's

Labor Shortage Forced One Business Owner

to Raise Hourly Wages to $25 and Pay $250

Bonuses for Working at Least 30 Days,

Business Insider (July 8, 2021, 3:32 PM),

https://www.businessinsider.com/construction

-labor-shortage-raises-wages-and-benefits2021-7 .............................................................................20

vii

Levi Pulkkinen, Facing Skilled Worker

Shortage, U.S. Companies Try to Train Their

Own New Labor Pools, PBS News Hour (July

1, 2021, 5:58 PM EDT), https://www.pbs.org/

newshour/education/facing-skilled-workershortage-u-s-companies-try-to-train-theirown-new-labor-pools ....................................................21

Matt Rascon & Shelby Hintze, A Deeper Look

at “Where Are the Workers?,” KSL TV (Oct.

8, 2021, 1:35 PM), https://ksltv.com/474096/

ksl-a-deeper-look-at-where-are-the-workers/...........22

South Bay Constr., The California Labor

Shortage Explained, SBCI.com, https://

www.sbci.com/the-california-labor-shortageexplained .......................................................................21

U.S. Gen. Servs. Admin., Frequently Asked

Questions, Per Diem (Aug. 12, 2021), https://

www.gsa.gov/travel/plan-book/per-diemrates/frequently-asked-questions-per-diem;...............3

U.S. Skilled Trades Labor Shortage Heightens

as In-Demand Jobs Remain Unfilled the

Longest, Business Wire (Mar. 18, 2021, 6:00

AM EDT), https://www.businesswire.com/

news/home/20210318005265/en/U.S.-SkilledTrades-Labor-Shortage-Heightens-as-InDemand-Jobs-Remain-Unfilled-the-Longest ...........21

viii

Vanessa Yurkevich, America Desperately Needs

1 Million More Construction Workers, CNN

Business (July 11, 2021, 6:36 PM ET), https://

www.cnn.com/2021/07/08/economy/

construction-worker-shortage/index.html.................20

Wage & Hour Div., U.S. Dep’t of Labor, Field

Operations Handbook (Aug. 31, 2017), https://

www.dol.gov/agencies/whd/field-operationshandbook .......................................................................13

INTEREST OF AMICUS CURIAE1

The Chamber of Commerce of the United States of

America is the world’s largest business federation. It

represents approximately 300,000 direct members and

indirectly represents the interests of more than 3 million

companies and professional organizations of every size,

in every industry sector, and from every region of the

country. An important function of the Chamber is to

represent the interests of its members in matters before

Congress, the Executive Branch, and the courts. To

that end, the Chamber regularly files amicus curiae

briefs in cases, like this one, that raise issues of concern

to the nation’s business community.

The decision below raises several issues of concern

to the Chamber’s members. First, many of those members are subject to the Fair Labor Standards Act

(FLSA) and are directly affected by the methods that

courts use to calculate employees’ regular rate of pay.

The Ninth Circuit’s unduly restrictive approach to the

FLSA’s exclusion of traveling-expense reimbursements

threatens significant overtime liability for Chamber

members who depend on a traveling workforce. In addition, the Chamber’s members have a strong interest

In accordance with Supreme Court Rule 37.6, amicus curiae

states that no counsel for any party authored this brief in whole or

in part and no entity or person, aside from amicus curiae, its members, or its counsel, made any monetary contribution intended to

fund the preparation or submission of this brief. The parties received timely notice of amicus’s intent to file this brief, and the parties have consented in writing to the filing of this brief.

in how courts weigh federal agencies’ nonbinding statements about statutory and regulatory requirements—

not just in the wage-and-hour context but across a wide

range of subject areas. Regulated parties are ill served

when courts, like the Ninth Circuit below, undermine

the predictability and clarity of statutory and regulatory

requirements based on stray comments in nonauthoritative administrative documents. The Chamber thus

has a strong interest in this Court’s review and reversal

of the Ninth Circuit’s flawed approach.

INTRODUCTION AND

SUMMARY OF ARGUMENT

To calculate an employee’s regular rate of pay,

which is in turn the basis for overtime premiums, the

FLSA excludes “reasonable payments for traveling expenses, or other expenses, incurred by [the] employee in

the furtherance of his employer’s interests and properly

reimbursable by the employer.” 29 U.S.C. 207(e)(2).

This provision, by its plain terms, asks three questions:

Were the payments for traveling or other expenses that

the employee incurred while furthering the employer’s

interests? Were the payments reasonable in amount?

And were the expenses properly reimbursable? If the

answer to all three questions is yes, the payments are

not considered wages and can be excluded from the regular rate.

Here, however, the Ninth Circuit ruled that certain

per diem payments were not excluded under this provision. A per diem is a daily allowance for lodging, meals,

and other incidental expenses, and the per diems here

were set below the amounts that the General Services

Administration (GSA) establishes for federal travel

within the lower 48 continental United States (“CONUS” amounts).2 Even so, the Ninth Circuit counted

petitioner’s per diems as wages because it asked an altogether different question: Were the payments “functioning as compensation rather than reimbursement”?

Pet. App. 10. The court decided that under a “function

analysis,” certain facts about petitioner’s payment practices collectively implied that the disputed per diems

should count as wages. Id. at 11; see also id. at 16-20.

But the Court never claimed that its focus on function,

and a few of petitioner’s per diem practices, flows from

the language of the FLSA’s traveling-expense exclusion. On the contrary, it relied on Ninth Circuit precedent construing different statutory language and a

handful of cases that applied nonbinding U.S. Department of Labor guidance and judicial intuitions about the

FLSA’s purposes.

The Court should grant review and reverse. The

Ninth Circuit’s displacement of the statutory text

through a vague and atextual framework oversteps

courts’ proper role and denies parties’ right to rely on

the laws that Congress has enacted. See Pet. App. 10U.S. Gen. Servs. Admin., Frequently Asked Questions, Per

Diem (Aug. 12, 2021), https://www.gsa.gov/travel/plan-book/perdiem-rates/frequently-asked-questions-per-diem; see also Black’s

Law Dictionary 1372 (11th ed. 2019) (defining “per diem,” in relevant part, as “[a] monetary daily allowance, usu. to cover expenses;

specif., an amount of money that a worker is allowed to spend daily

while on the job, esp. on a business trip”).

11. It also conflicts with an on-point Department of Labor regulation. 29 C.F.R. 778.217. Yet the Ninth Circuit

gave more weight to its reading of the agency’s admittedly nonauthoritative guidance than to the agency’s

duly promulgated regulations.

This doubly flawed approach calls out for swift correction. By departing from statute and regulation, the

decision creates uncertainty, threatens employers with

significant unanticipated overtime liabilities, and guarantees much future litigation over the nuances of different travel-reimbursement practices.

After all, it did not matter to the court’s ruling that

petitioner’s per diem payments satisfied all three requirements imposed by the statutory text. The payments were made because respondents and similarly situated coworkers incurred travel expenses to further petitioner’s business, the payments were reasonable in

amount, and they covered properly reimbursable expenses.

What mattered to the Ninth Circuit, instead, were

assorted details of petitioner’s per diem practices that

the Ninth Circuit chose to single out for criticism—like

the fact that traveling employees who miss work receive

reduced per diems and the fact that nontraveling employees receive per diems as part of their regular wages.

Pet. App. 16-20. But unlike the court below, the statute

and regulations do not evaluate whether an employer

should have paid greater per diems to some traveling

employees who missed work. They do not ask whether

the employer should have paid less compensation to

some nontraveling employees who are not parties to the

litigation. The Ninth Circuit found such details to be

“central to this case.” Id. at 4. But nothing in the statute

or regulation warns employers that such details make a

difference. The FLSA does not obligate employers to

fully reimburse all traveling expenses or prohibit employers from raising the wages of employees who incur

no traveling expenses. And in the next case, who knows

what other details will prove decisive?

Because of its murkiness and lack of foundation, the

Ninth Circuit’s approach is sure to foster a whole cottage industry of per diem litigation. Litigants and

judges will spill much ink debating the true metaphysical “function” of different per diem arrangements. The

harm will be felt, and is already being felt, across many

industries—not just healthcare. And the harm will not

be limited to employers. It will also hurt employees.

Employers may forgo nontaxable per diem benefits that

employees would otherwise enjoy rather than deal with

the threat of potential overtime litigation and liability.

The Court should end the confusion here and enforce the

letter of the law.

ARGUMENT

The Court should grant review because the Ninth

Circuit’s decision rewrites clear statutory and

regulatory text.

Petitioner invokes the FLSA exclusion for “reasonable payments for traveling expenses, or other expenses, incurred by an employee in the furtherance of

his employer’s interests and properly reimbursable by

the employer” from that employee’s regular rate of pay.

29 U.S.C. 207(e)(2). By regulation, the Department of

Labor has long recognized that this exclusion encompasses “[t]he actual or reasonably approximate amount

expended by an employee, who is traveling ‘over the

road’ on his employer’s business, for transportation

(whether by private car or common carrier) and living

expenses away from home, other travel expenses, such

as taxicab fares, incurred while traveling on the employer’s business.” 29 C.F.R. 778.217(b). And the Department even underscored that the GSA’s CONUS

rates for federal travelers are “per se reasonable, and

not disproportionately large.” 29 C.F.R. 778.217(c)(2).

As petitioner explains (Pet. 18-20), the per diems that it

paid to respondents and their traveling coworkers readily satisfy the plain language of these provisions.

But the Ninth Circuit brushed past this statutory

and regulatory text in favor of an approach that asks

how the payments “function.” Pet. App. 9. It rooted that

framework not in the statutory or regulatory text, but

two other sources: Ninth Circuit precedent interpreting

a different clause in Section 207(e)(2), and cases that follow the Department of Labor’s nonbinding Field Operations Handbook and the FLSA’s purported “animating

concern.” Pet. App. 12 (quoting Newman v. Advanced

Tech. Inc., 749 F.3d 33, 39 (1st Cir. 2014)); see also Pet.

App. 9-16.

The Court should grant certiorari to make clear that

glosses on different statutory provisions, nonauthoritative sub-regulatory guidance, and abstract legislative

purpose cannot displace statutory and regulatory text.

A. The Ninth Circuit erroneously focused on

the statute’s catchall clause.

“Statutory interpretation * * * begins with the

text.” Ross v. Blake, 136 S. Ct. 1850, 1856 (2016). The

Ninth Circuit’s statutory interpretation did not. Rather

than dive into “the specific statutory language in dispute,” Murphy v. Smith, 138 S. Ct. 784, 787 (2018), it

immediately turned to two earlier Ninth Circuit cases

interpreting different language in Section 207(e)(2). See

Pet. App. 9.

The specific language in dispute is sandwiched between two other clauses. The first clause excludes payments for temporary nonworking periods (like vacation,

holiday, or illness). 29 U.S.C. 207(e)(2). Next, the key

language here excludes reasonable payments for

properly reimbursable travel expenses. Ibid. Finally, a

third clause excludes “other similar payments to an employee which are not made as compensation for his

hours of employment.” Ibid. In two earlier cases, the

Ninth Circuit construed the third category for “other

similar payments” by analyzing the “function” or “character” of the relevant payment. Loc. 246 Util. Workers

Union of Am. v. S. Cal. Edison Co., 83 F.3d 292, 295 (9th

Cir. 1996); Flores v. City of San Gabriel, 824 F.3d 890,

899 (9th Cir. 2016).

The court below admitted that Local 246 and Flores

both addressed the “other similar payments” category,

not the traveling-expenses category. Pet. App. 10. But

without explanation, it declared that their “conclusion

that a payment’s function controls” applies here too.

Ibid.

As petitioner explains (Pet. 20-21), this ipse dixit is

untenable. The “other similar payments” clause is a residual or catchall provision. As such, its generalized description cannot trump the more specific language that

precedes it. The Ninth Circuit’s contrary assumption violates multiple canons of statutory construction:

The General/Specific Canon. To start, granting priority to the “other similar payments” clause violates the

“commonplace of statutory construction that the specific

governs the general.” RadLAX Gateway Hotel, LLC v.

Amalgamated Bank, 566 U.S. 639, 645 (2012) (citation

omitted). This canon reflects the commonsense thought

that “the specific provision comes closer to addressing

the very problem posed by the case at hand and is thus

more deserving of credence.” Antonin Scalia & Bryan

A. Garner, Reading Law 183 (2012) (Scalia & Garner).

And the canon applies not just when “a general permission or prohibition is contradicted by a specific prohibition or permission,” but also when “a general authorization and a more limited, specific authorization exist sideby-side.” RadLAX, 566 U.S. at 645. In such a case, the

general language “must be taken to affect only such

cases * * * as are not within the provisions of the particular” language. Id. at 646 (citation omitted); see also

Harrison v. PPG Indus., Inc., 446 U.S. 578, 589 n.6

(1980) (“[T]he general language of the catchall phrase,

‘any other final action,’ must obviously give way to specific express provisions in the Act.”). It was error, then,

to apply the standard for the general “other similar payments” clause to resolve this dispute over travel expenses.

The Surplusage Canon. Relatedly, giving primacy

to the general provision improperly makes the specific

one superfluous. See RadLAX, 566 U.S. at 645. On the

Ninth Circuit’s reading, Section 207(e)(2) should have

had one clause rather than three, excluding “payments

to an employee which are not made as compensation for

his hours of employment.” If the “function” test for the

“other similar payments” clause is also the test for the

more specific clauses, the latter serve no purpose. But

“[a]s this Court has noted time and time again, the Court

is ‘obliged to give effect, if possible, to every word Congress used.’ ” Nat’l Ass’n of Mfrs. v. Dep’t of Def., 138 S.

Ct. 617, 632 (2018) (citation omitted); see also Scalia &

Garner 176 (“If a provision is susceptible of (1) a meaning that gives it an effect already achieved by another

provision * * * and (2) another meaning that leaves

both provisions with some independent operation, the

latter should be preferred.”). Here, one gives effect to

all Congress’s words by confining the “other similar

payments” test to that category alone.

The Ejusdem Generis Canon. Another canon yields

the same conclusion from another direction. “The

ejusdem generis canon applies when a drafter has

tacked on a catchall phrase at the end of an enumeration

of specifics.” Scalia & Garner 199. The specific language appropriately “limits” the scope of the catchall “to

ensure that a general word will not render specific

words meaningless.” CSX Transp., Inc. v. Ala. Dep’t of

Rev., 562 U.S. 277, 295 (2011) (citation omitted). There

is no authority for applying the canon in reverse—allowing the catchall to override the specific language. On the

contrary, doing that would create precisely the superfluity problem that ejusdem generis aims to avoid.

Under these settled principles, courts considering

the first two Section 207(e)(2) categories should not ask

whether the payments are “made as compensation for

* * * hours of employment.” For the first two statutory

categories, that is the answer, not the question. If payments fit within either of the first two excluded categories, the statute tells us that they are not compensation

for hours of employment.

And unsurprisingly, that is how the Department of

Labor regulations understand the statute. A payment

that meets the traveling-expense requirements is, by

that very fact, “not compensation for services rendered

by the employees during any hours worked in the workweek.” 29 C.F.R. 778.217(a). The same conclusion follows for payments that fit within the first statutory category. See 29 C.F.R. 778.218(a), 778.219(a). Rather

than look to these regulations, however, the Ninth Circuit turned to a regulation that interprets the “other

similar payments” clause. Pet. App. 14 (citing 29 C.F.R.

779.224). That regulation, like the clause it interprets,

is not pertinent here. The regulations in fact confirm

that the Department of Labor does not read Section

207(e)(2) the way that the Ninth Circuit does. The

agency instead recognizes that two specific statutory

clauses identify distinct categories of payment that Congress judges not to be compensation for work. The

Ninth Circuit erred by not giving effect to Congress’s

judgment.

B. The Ninth Circuit improperly relied on the

Department of Labor’s Field Operations

Handbook and on supposed legislative purposes.

The court of appeals claimed additional support for

its “function” analysis in rulings from three other circuits and the Department of Labor’s Field Operation

Handbook. Pet. App. 11-16. But they do not provide

valid support for the Ninth Circuit’s approach.

As petitioner explains (Pet. 22-23), the Ninth Circuit’s cited cases root their holdings in the Field Operations Handbook, which criticizes calculating per diem

payments based on the number of hours worked. Two

of the three cases offer no real explanation besides the

Handbook for following that atextual principle. See

Gagnon v. United Technisource, Inc., 607 F.3d 1036,

1041 & n.6 (5th Cir. 2010) (citing the Handbook for the

claim that “[t]he Department of Labor has recognized

that when, as here, the amount of per diem varies with

the amount of hours worked, the per diem payments are

part of the regular rate in their entirety”); Baouch v.

Werner Enters., Inc., 908 F.3d 1107, 1117 (8th Cir. 2018)

(citing the Handbook to support that “it is the method of

calculating the per diem—the measuring unit used—

that informs a determination regarding whether or not

the Payment is treated as a wage included in the regular

rate”).

The one case that devotes more attention to the

statute and regulations does not provide a persuasive

justification, either. In Newman, the First Circuit

veered off course thinking that FLSA exclusions should

“be interpreted narrowly against the employer.” 749

F.3d at 36 (citation omitted). But this Court subsequently rejected this way of thinking because it rests

“on the flawed premise that the FLSA pursues its remedial purpose at all costs.” Encino Motorcars, LLC v.

Navarro, 138 S. Ct. 1134, 1142 (2018) (cleaned up).

Without overt textual cues to the contrary, all provisions

in the FLSA deserve a “fair reading” rather than a narrow one. Ibid.3

The First Circuit also appealed to the “animating

concern of the FLSA statutes, regulations, and DOL

Handbook.” Newman, 749 F.3d at 39. But this approach likewise violates basic norms of interpretation.

Courts should not presume “that whatever might appear to further the statute’s primary objective must be

the law.” Encino Motorcars, 138 S. Ct. at 1142 (quoting

Henson v. Santander Consumer USA Inc., 137 S. Ct.

1718, 1725 (2017)). They should presume “that the legislature says what it means and means what it says.”

Henson, 137 S. Ct. at 1725 (cleaned up).

All these courts, like the Ninth Circuit below, err by

citing the Department’s Handbook as though it were a

legal authority that can affect the meaning of the statute

and regulations. This Court recently made clear, however, that only an “agency’s ‘authoritative’ or ‘official position’ ” deserves a court’s deference. Kisor v. Wilkie,

The Ninth Circuit paid lip service to the Court’s instruction in

Encino Motorcars. Pet. App. 8. But faithful adherence to Encino

Motorcars would have led the court to view Newman’s analysis

more skeptically. Instead, the Ninth Circuit repeatedly cited Newman as support for its approach. Id. at 8, 11-12, 16.

139 S. Ct. 2400, 2416 (2019) (citation omitted). Deference is not proper when an agency has itself “disclaimed

the use of regulatory guides as authoritative.” Id. at

2417 (quoting Exelon Generation Co. v. Local 15,

IBEW, 676 F.3d 566, 577 (7th Cir. 2012)). That aptly describes the Handbook. According to the Department,

the Handbook guides the agency’s “investigators and

staff ” but is not “a device for establishing interpretative

policy.” Wage & Hour Div., U.S. Dep’t of Labor, Field

Operations Handbook (Aug. 31, 2017), https://

www.dol.gov/agencies/whd/field-operations-handbook.

Because the Department “itself has disclaimed” using

the Handbook as a source of “authoritative or binding

interpretations of its own rules,” courts should not defer

to its provisions. Exelon Generation, 676 F.3d at 577.

Courts should be extremely reluctant to defer to administrative materials that the agency developed outside the procedures of notice-and-comment rulemaking.

See Christensen v. Harris Cnty., 529 U.S. 576, 587

(2000) (“[I]nterpretations contained in policy statements, agency manuals, and enforcement guidelines, all

of which lack the force of law[,] do not warrant Chevronstyle deference.”). Those procedures embody Congress’s “judgment that notions of fairness and informed

administrative decisionmaking require that agency decisions be made only after affording interested persons

notice and an opportunity to comment.” Chrysler Corp.

v. Brown, 441 U.S. 281, 316 (1979). When the legislative

and rulemaking processes work well, they give stakeholders a chance to weigh in with their own experiences,

information, and arguments, improving the ultimate result and promoting regulated parties’ compliance with

the regulatory requirements. These procedures also reinforce the “fundamental principle in our legal system

* * * that laws which regulate persons or entities must

give fair notice of conduct that is forbidden or required.”

FCC v. Fox Television Stations, Inc., 567 U.S. 239, 253

(2012). Courts defeat these objectives when they give

weight to policies that administrative agencies develop

outside an open and transparent regulatory process. It

is even worse when those policies are not even meant to

be authoritative statements of the agency’s legal interpretation. And worse still when those policies have no

basis in the applicable statutory or regulatory text.

Employers and employees benefit when laws are

clear and predictable. Courts should resist any temptation to let informal, nonauthoritative agency views override statute and regulation.

C. The Ninth Circuit fixed on random details

that are irrelevant under the statute and regulation.

All that is bad enough, but the Ninth Circuit’s decision did not simply stop with the Handbook’s idea that

per diem amounts should not be based on the number of

hours worked. That is because not even the Handbook

adheres to such a simplistic approach. Everyone agrees

that there is nothing inherently wrong about reducing a

traveling-expense reimbursement if the employee’s

nonperformance of work means that the employee is not

incurring reimbursable travel expenses “in the furtherance of his employer’s interests.” 29 U.S.C. 207(e)(2).

As petitioner describes (Pet. 25-27), this practice can

align the FLSA with applicable federal tax law.

Because of this wrinkle, the Ninth Circuit understood it could not categorically condemn all per diem reductions when employees miss shifts. So it flyspecked

petitioner’s per diem practices through a totality-of-thecircumstances lens and concluded that, in “combination,” several details made the per diems problematic.

Pet. App. 19.

But the details that the court highlighted do not

place these per diems outside the statutory exclusion.

Consider, first, the Ninth Circuit’s observation that petitioner may pay a full week’s worth of per diems even

when traveling clinicians work three twelve-hour shifts.

Pet. App. 16. The Ninth Circuit acknowledged, however, that this practice is “justifiable because the clinicians are scheduled to work away from home for a prolonged period” and thus continue to incur travel expenses throughout the week. Id. at 16-17. Still, even

though this part of petitioner’s practices was justifiable,

the Ninth Circuit transformed it into an obligation that

petitioner also pay traveling clinicians for nonworking

days if they have good enough reasons for missing work.

Id. at 17. Being “too ill to work” was a good reason, and

so the Ninth Circuit decided that sick days should not

jeopardize any part of the clinician’s weekly per diem.

Ibid. That may be a good policy, and an employer could

reasonably distinguish between traveling employees

who miss work because of illness and those who miss

work because of personal preference. But the FLSA’s

traveling-expenses exclusion does not require that distinction. It does not forbid treating payments to Employee A as reimbursement for travel expenses just because the employer has reduced payments to Employee

B. The exclusion confines reimbursement to employees

who incur traveling expenses; it does not penalize employers who under-reimburse such expenses.

The Ninth Circuit next expressed dissatisfaction because petitioner did not reduce per diem payments to

employees who missed work in one week but had

worked more than the required amount in another week.

Pet. App. 17. Here too, though, the Ninth Circuit’s reasoning finds no support in the statutory or regulatory

language. If the employees are still incurring travel expenses in the employer’s interest, if the amount is reasonable, and if the expenses are properly reimbursable,

the payments are still excluded from the regular rate of

pay. 29 U.S.C. 207(e)(2). In any event, the Ninth Circuit

erred in thinking that the only reason an employer

would have this “banking” system would be to compensate employees for total hours worked. Pet. App. 17.

Employers could easily conclude that a degree of scheduling flexibility is best for business and best for employees.

Finally, the Ninth Circuit found it significant and

“perhaps most telling[]” that petitioner pays per diems

as regular wages to employees who live near work and

thus do not incur traveling expenses. Pet. App. 18. But

again, it is impossible to find textual support for the idea

that payments to nontravelers affect whether the payments to travelers satisfy the statutory criteria. For the

traveling employees, the per diems are still reasonable

in amount and still pay for traveling expenses that are

incurred for the employer’s benefit and properly reimbursable. Any payments to other employees are irrelevant.

In fact, another court of appeals has rejected this

very argument. See Berry v. Excel Grp., Inc., 288 F.3d

252, 253-254 (5th Cir. 2002). The plaintiff there insisted

that per diems were not excludable reimbursements because the employer “offered the same per diem to all

electricians, no matter where they lived.” Id. at 253. In

other words, and as here, some employees receiving per

diems did not incur travel expenses. Even so, the Fifth

Circuit recognized that those employees’ payments

could not change the fact that the “per diem paid to [the

plaintiff ] was reasonable and appropriate” under “the

language of the FLSA itself and the related regulations.” Id. at 254. The Ninth Circuit’s approach here

conflicts with the Fifth Circuit’s approach in Berry.

Such inter-circuit disagreement heightens the need for

this Court’s review.

The Ninth Circuit’s willingness to stray from the

statutory and regulatory text will cause much mischief.

Under the court’s decision, other employers (and employees) are left to guess at the particular features of

their expense-reimbursement arrangements that might

sway a future court in one direction or another. One

point of contention is likely to be whether employees

must submit paperwork attesting to their expenses,

which the Ninth Circuit listed as another important consideration. Pet. App. 11. But that too is a requirement

that lacks support in the statutory and regulatory

scheme. After all, the whole reason for using per diem

allowances is that they are “reasonably approximate”

amounts of what an employee would spend while traveling, 29 C.F.R. 778.217(b)(3), and obviate the need for

documentation. And the Department of Labor presumably treats the federal government’s CONUS rates as

“per se reasonable” for similar reasons. 29 C.F.R.

778.217(c)(2). Requiring receipts or other attestation

defeats the point of these arrangements.

In the end, the Ninth Circuit’s “function” framework functions an awful lot like an “I know it when I see

it” test. For those who must operate and live within the

FLSA’s framework, such a test is no test at all. Employers large and small will be left with uncertainty over

whether their practices comply with the law or leave

them open to litigation and liability. Employers, like

everyone else, must be able to depend on the plain terms

of the governing statutes and regulations.

II. The Court should grant review because the Ninth

Circuit’s decision threatens unwarranted litigation and liability across many industries.

The effects of the Ninth Circuit’s flawed approach

will not be confined to this case or industry. Petitioner

and amicus National Association of Travel Healthcare

Organizations detail how the decision below upends

common practices in the healthcare industry, which extensively depends on the services of traveling professionals. And there has indeed been a wave of overtime

litigation over per diem practices within the healthcare

industry.4

But the healthcare industry will not be the only industry harmed by the Ninth Circuit’s ruling. Countless

businesses depend on the ability to recruit nonpermanent workers from other geographic areas. The construction-related fields, for example, have long recruited skilled talent to work for defined periods at particular jobsites, and unsurprisingly they have faced their

own overtime litigation based on per diem practices.5

See, e.g., Madison v. Onestaff Med. Ltd. Liab. Co., No. 20-cv1384, 2021 WL 3674736 (E.D. Cal. Aug. 19, 2021); Hubbard v. RCM

Techs. (USA), Inc., No. 19-cv-6363, 2020 WL 6149694 (N.D. Cal.

Oct. 20, 2020); Howell v. Advantage RN, LLC, No. 17-cv-883, 2020

WL 5847565 (S.D. Cal. Oct. 1, 2020); Musgrove v. Jackson Nurse

Pros., LLC, No. 17-cv-6565, 2020 WL 6804510 (C.D. Cal. Sept. 27,

2020); Carlino v. CHG Med. Staffing, Inc., 460 F. Supp. 3d 959, 961

(E.D. Cal. 2020); Schwendeman v. Health Carousel, LLC, No. 18cv-7641, 2019 WL 6173163 (N.D. Cal. Nov. 20, 2019); Dittman v.

Med. Sol., L.L.C., No. 17-cv-1851, 2019 WL 4302752, at *1 (E.D. Cal.

Sept. 11, 2019); Howell v. Advantage RN, LLC, 401 F. Supp. 3d

1078, 1081 (S.D. Cal. 2019); Benson v. Maxim Healthcare Servs.,

Inc., No. 17-cv-771, 2018 WL 5829312 (E.D. Cal. Nov. 7, 2018); Dalchau v. Fastaff, LLC, No. 17-cv-1584, 2018 WL 1709925, at *12

(N.D. Cal. Apr. 9, 2018).

See, e.g., Stone v. Troy Constr., LLC, 935 F.3d 141 (3d Cir.

2019); Berry, 288 F.3d 252; Hobbs v. Petroplex Pipe & Constr., Inc.,

360 F. Supp. 3d 571 (W.D. Tex. 2019), aff ’d, 946 F.3d 824 (5th Cir.

2020); Ruiz v. Masse Contracting, Inc., No. 18-cv-5721, 2019 WL

2451628 (E.D. La. June 12, 2019); Atkins v. Primoris Serv. Corp.,

No. 17-cv-454, 2017 WL 4697517 (W.D. La. Oct. 19, 2017), report &

recommendation adopted, 2018 WL 11239722 (W.D. La. Mar. 21,

2018); Rule v. S. Indus. Mech. Maint. Co., L.L.C., No. 16-cv-1408,

Similar litigation has also targeted employers who recruited traveling engineers, Newman, 749 F.3d 33, airplane painters, Gagnon, 607 F.3d 1036, and seismicmapping specialists, Sharp v. CGG Land (U.S.) Inc., 840

F.3d 1211 (10th Cir. 2016).

This trend of relying on nonlocal talent shows no

sign of reversing course. On the contrary, skilled workers are increasingly scarce in the current labor market.

The construction industry, as just one example, “lost one

million workers” at the start of the pandemic and “has

yet to win back a fifth of the workers who left or were

laid off.”6 This industry alone must “hire more than

430,000 workers this year to meet demand.”7 And it

must hire “1 million more over the next two years”—all

at a time when more skilled workers are leaving the

market than entering it.8 Other industries that depend

2017 WL 944217 (W.D. La. Mar. 6, 2017), report & recommendation

adopted, 2017 WL 1483342 (W.D. La. Apr. 24, 2017).

Heather Schlitz, The Construction Industry’s Labor Shortage

Forced One Business Owner to Raise Hourly Wages to $25 and

Pay $250 Bonuses for Working at Least 30 Days, Business Insider

(July 8, 2021, 3:32 PM), https://www.businessinsider.com/constructionlabor-shortage-raises-wages-and-benefits-2021-7.

Ibid.; see also Associated Builders & Contractors, The Construction Industry Needs to Hire an Additional 430,000 Craft Professionals in 2021, ABC.org (Mar. 23, 2021, 4:25 PM), https://

www.abc.org/News-Media/News-Releases/entryid/18636/abc-theconstruction-industry-needs-to-hire-an-additional-430-000-craftprofessionals-in-2021.

Vanessa Yurkevich, America Desperately Needs 1 Million

More Construction Workers, CNN Business (July 11, 2021, 6:36

on skilled labor face similar problems. There is a “broad

consensus” right now “that some sectors of the economy—technology, health care and tech-adjacent businesses such as insurance—face a genuine dearth of qualified talent.”9

In this environment especially, per diems and similar reimbursements for traveling expenses are increasingly important recruitment tools. Companies simply

cannot count on being able to find skilled labor within

the same state.10 But consultants advise such companies

PM ET), https://www.cnn.com/2021/07/08/economy/constructionworker-shortage/index.html.

Levi Pulkkinen, Facing Skilled Worker Shortage, U.S.

Companies Try to Train Their Own New Labor Pools, PBS News

Hour (July 1, 2021, 5:58 PM EDT), https://www.pbs.org/newshour/

education/facing-skilled-worker-shortage-u-s-companies-try-totrain-their-own-new-labor-pools; see also U.S. Skilled Trades

Labor Shortage Heightens as In-Demand Jobs Remain Unfilled

the Longest, Business Wire (Mar. 18, 2021, 6:00 AM EDT),

https://www.businesswire.com/news/home/20210318005265/en/

U.S.-Skilled-Trades-Labor-Shortage-Heightens-as-In-DemandJobs-Remain-Unfilled-the-Longest (“[T]he number of skilled trade

jobs in the U.S. is far outpacing the supply of qualified workers to

fill them.”).

South Bay Constr., The California Labor Shortage Explained, SBCI.com, https://www.sbci.com/the-california-laborshortage-explained (noting that even before the pandemic, construction “companies have been bringing in workers from out-ofstate to meet demand.”).

that being “willing to pay workers a per diem to travel

from home” can help them attract that needed talent.11

For such businesses, the Ninth Circuit’s decision

comes at the worst time and puts them in an impossible

position. Even amid industry-wide labor shortages,

there is no reasonable way to make a cost-benefit determination about whether to resort to per diems and traveling-worker recruitment without a confident prediction

about whether doing so increases those workers’ regular rate of pay for overtime purposes or opens the employer to overtime litigation. Employers who want to

comply with the FLSA and compete for out-of-state talent simply must guess at the level of legal risk that

comes with their recruitment strategy. And the Ninth

Circuit’s malleable and ungrounded multifactor standard gives prediction-makers little cause for confidence.

Facing this predicament, some employers will

choose simply to eliminate per diems or treat them as

taxable wages to avoid legal risk. That result is not good

for anyone, as it limits employers’ ability to fill vacancies

and limits employees’ ability to receive nontaxable benefits to cover temporary relocation expenses. See Pet.

3, 34.

This Court should end this harmful uncertainty

now. It should reaffirm the primacy of the legal texts

enacted into law through bicameralism and presentment and regulations duly promulgated through notice

See, e.g., Matt Rascon & Shelby Hintze, A Deeper Look at

“Where Are the Workers?,” KSL TV (Oct. 8, 2021, 1:35 PM), https://

ksltv.com/474096/ksl-a-deeper-look-at-where-are-the-workers/.

and comment. The Ninth Circuit strayed from the governing legal texts here, and this Court should grant review and reverse.

CONCLUSION

The Court should grant the petition for a writ of certiorari.

Respectfully submitted,