In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 13‐3818
RAMON ALVARADO, et al.,
Plaintiffs‐Appellants,
v.
CORPORATE CLEANING SERVICES, INC., et al.,
Defendants‐Appellees.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 07 C 6361 — Edmond E. Chang, Judge.
____________________
ARGUED FEBRUARY 10, 2015 — DECIDED APRIL 1, 2015
____________________
Before POSNER, MANION, and TINDER, Circuit Judges.
POSNER, Circuit Judge. The plaintiffs in this suit under the
Fair Labor Standards Act, 29 U.S.C. §§ 201, et seq., are 24
window washers employed currently or formerly by Corpo‐
rate Cleaning Services, the defendant (along with a couple of
executives of the company, who need not be discussed sepa‐
rately). There is a procedural hurdle to our resolving the ap‐
peal, which is by the plaintiffs from an adverse judgment in
the district court. But we defer consideration of it to the end
2 No. 13‐3818
of our opinion because understanding the hurdle requires
acquaintance with some of the facts germane to the substan‐
tive issue presented by the appeal.
CCS, as the defendant is commonly referred to, is Chica‐
go’s largest provider of window‐washing service to high‐rise
commercial and apartment buildings (average height 30 to
40 stories), along with some governmental and other non‐
commercial, nonresidential buildings, such as hospitals and
museums; fewer than 1 percent of its customers are private
homeowners. See generally Corporate Cleaning Services,
www.corporatecleaning.com (visited March 30, 2015, as
were the other websites cited in this opinion). The company
employs about 100 window washers.
A provision of the Fair Labor Standards Act requires an
employer engaged in interstate commerce (as CCS is con‐
ceded to be) to pay its hourly workers at least one and a half
times their normal hourly wage for any hours they work in
excess of 40 hours a week, 29 U.S.C. § 207(a)(1), which CCS
has conceded it has not done for the plaintiffs in this case.
But there is an exception, pertinent to this case, that requires
satisfaction of three conditions: the worker’s regular pay ex‐
ceeds one and a half times the federal minimum wage (a
condition conceded to be satisfied by the plaintiffs, so we’ll
discuss it no further); “more than half his compensation for a
representative period (not less than one month) represents
commissions on goods or services”; and he must be em‐
ployed by “a retail or service establishment.” 29 U.S.C.
§ 207(i). So the issues presented by the appeal are whether
CCS’s window washers are paid mostly by commission and
whether CCS is a retail or service establishment. The district
court granted summary judgment in favor of CCS with re‐
No. 13‐3818 3
gard to its status as a retail or service establishment and, af‐
ter a three‐day bench trial, ruled in favor of CCS on the
commission requirement. And so the suit was dismissed,
precipitating this appeal.
When CCS receives a window‐washing order, it calcu‐
lates the number of “points” to assign to the job based on the
job’s complexity and the estimated number of hours that the
window washers will take to complete it; usually each
worker assigned to the job gets the same share of the points
allocated to it. CCS pays each window washer the number of
points allocated to him multiplied by a rate, specific to each
worker, that is specified in the company’s collective bargain‐
ing agreement with the union that represents the employees,
the Service Employees International Union (SEIU). CCS also
uses the number of points assigned to a job to determine the
price it charges to customers; naturally it uses a higher ratio
of dollars per point for setting its price for customers than
for compensating its employees, so that it can make a profit.
And CCS regularly makes price adjustments, such as adding
the costs of permits and equipment rentals, rounding the
price to the nearest $25 increment, and reducing the price
because of competition or a desire to maintain good relations
with customers. These adjustments cause the percentage of
the price attributable to window washers’ compensation to
vary from job to job.
The annual pay of those plaintiffs employed throughout
2007 (the year the suit was filed) ranged from approximately
$40,000 to $60,000. Although the collective bargaining
agreement contains a provision entitling the window wash‐
ers to be paid by the hour and thus (as hourly workers) to
receive overtime pay, apparently the union has never tried
4 No. 13‐3818
to enforce this provision, and—apparently content with the
company’s compensation system—has kept its hands off this
litigation. Apart from the plaintiffs, the window washers
employed by CCS appear to be content with the challenged
compensation system as well. CCS distributed written notice
to them that they were entitled to hourly and overtime pay‐
ment, yet except for a six‐month period (December 2007 to
June 2008) they chose the points‐based system of compensa‐
tion instead.
The company doesn’t call its compensation system a
“commission” system, but instead a “piece‐rate” (or, equiva‐
lently, “piecework”) system, which is not subject to the sec‐
tion 207(i) exemption. See 29 U.S.C. § 207(g). But the nomen‐
clature is not determinative; the “word [‘commission’] need
not be used for the exemption to be applicable.” Yi v. Sterling
Collision Centers, Inc., 480 F.3d 505, 508 (7th Cir. 2007). There
are real differences between the two compensation systems
(commission and piecework), and the reality, which over‐
comes the nomenclature, is that CCS’s system is a commis‐
sion system. In a piece‐rate system a worker is paid by the
item produced by him: so much per scarf, for example, if his
job is to make scarves. In a commission system he is paid by
the sale—so if he works for a shoe store he’s paid a specified
amount per pair of shoes that he sells. Thus the scarf worker
is paid for making scarves even if they haven’t been sold—
that is, even if he’s producing for inventory—while the shoe
salesman is paid only when he makes a sale. In the present
case, as in the shoe‐store example, the window washers are
paid only if there’s been a sale, namely a sale of window‐
washing service to a building owner or manager.
No. 13‐3818 5
The parties’ briefs spill much ink over whether a com‐
mission system requires that the compensation bear an
“identifiable and consistent correlation” to the price charged
to customers or that the compensation just be “proportional
and correlated” to the price. The plaintiffs urge the former,
the defendant the latter, as the latter is a more accurate de‐
scription of CCS’s compensation system. Our decision in Yi,
cited earlier, which involved auto repair, supports CCS’s po‐
sition. As in this case, the employer in Yi made adjustments
to the price of its service for such things as differences in
costs of materials used. The adjustments made the percent‐
age of the price attributable to its auto mechanics’ compensa‐
tion vary from repair to repair. We held that this didn’t in‐
validate the compensation system as a commission system.
Yi v. Sterling Collision Centers, Inc., supra, 480 F.3d at 509–10.
The Third Circuit agreed. Parker v. NutriSystem, Inc., 620 F.3d
274, 283 (3d Cir. 2010) (“we decline to adopt a test that re‐
quires a commission, under § [20]7(i), to be strictly based on
a percentage of the end cost to the consumer”). We are una‐
ware of any contrary authority.
A more important consideration is that commission‐
compensated work involves irregular hours of work. See Yi
v. Sterling Collision Centers, Inc., supra, 480 F.3d at 510; Mech‐
met v. Four Seasons Hotels, Ltd., 825 F.2d 1173, 1176–77 (7th
Cir. 1987); Gieg v. DDR, Inc., 407 F.3d 1038, 1045–46 (9th Cir.
2005). An employee who is paid by the sale is not a commis‐
sion worker if his sales are made at a uniform rate (e.g., one
sale per hour), so that the ratio of his hours worked to his
pay is constant. For in that case his pay is effectively hourly.
That’s why piece‐rate workers are not within the commis‐
sion exception: because they keep producing even when no
sale is imminent, the relation between the hours they work
6 No. 13‐3818
and their output tends to be constant. But CCS’s employees
can work only when CCS is hired to wash a building’s win‐
dows. Employment necessarily is irregular (rather than the
standard eight‐hour workday) because of the peculiar condi‐
tions of the window‐washing business. Washing the outside
of windows of tall buildings while standing on scaffolds or
dangling from harnesses is dangerous work and CCS is just‐
ly proud of its excellent safety record. That record necessi‐
tates irregular work time by its employees. The largest
source of danger to high‐rise window washers is weather;
window washers do not wash the outside of windows (and
it is the outside that requires the most frequent washing) in
high winds, rain, snow, sleet, or freezing temperatures. An‐
other reason that work slackens off in the winter months is
that managers of residential buildings often will not allow
window washing before 9 a.m., in order to avoid disturbing
the residents; a late start, coupled with the early darkness on
winter days, shrinks the amount of time window washers
can work. And obviously there is no production of window
washing for inventory, which would allow CCS to smooth
out these fluctuations in working hours. There is so little
work during much of the winter than many of the workers
take long vacations in Mexico. (Oddly, most of CCS’s win‐
dow washers come from a single small town in Mexico—
Villa Garcia de la Cadena. See Vicki Cox, “Window Washer
Scrubs Chicago Skyline,” American Profile, July 25, 2012,
http://americanprofile.com/articles/chicago‐window‐w
asher—a colorful account of a Chicago window washer from
that Mexican town.)
The window washers make up for this slack by often
working more than eight hours a day during spring, sum‐
mer, and fall, though even in those months there are times
No. 13‐3818 7
when they can’t work eight hours a day, whether because of
other work being done on the building, the manager’s fail‐
ure to notify residents of the window washing, a slowdown
in demand for CCS’s services by building owners or manag‐
ers, or, most exotically, attacks on the window washers by
peregrine falcons. Formidable predators whose speed of
flight can exceed 200 miles an hour, these birds build nests,
for breeding and taking care of their fledglings, on the roofs
of tall buildings in Chicago. When a nesting falcon sees win‐
dow washers high on its building, near its nest, it may attack
them, thus preventing them from completing their work. For
a live video of such an attack, see “Falcons Attack Window
Washers 2,” YouTube, www.youtube.com/watch?v=e2Mvg
GA8Q7I.
The result of these impediments to steady work is that a
window washer can’t count on working 40 hours each week
for an entire year. This is the reason for exempting his em‐
ployer from the requirement of paying the worker time and
half for overtime. Suppose the hourly wage in two separate
businesses is an identical $15. In one business the work is
steady and the worker works 2000 hours a year ($15 per
hour x 40 hours x 50 weeks = $30,000). There is no overtime,
so no requirement of time and a half pay ($22.50) per over‐
time hour. In the other business the worker also works 2000
hours a year, but he does no work at all for 10 weeks of the
year and in the remaining 40 weeks (we’re assuming that
both workers take a two‐week unpaid vacation) he works 50
hours a week. Were he entitled to overtime for 10 hours each
week for the 40 weeks he works, his total wages for the year
would be $15 per hour x 40 hours (= $600) + $22.50 x 10
hours (= $225), a total of $825 a week, which times 40 weeks
equals $33,000. In this example, both workers work the same
8 No. 13‐3818
number of hours a year, at the same job, but the one who
works irregular hours is paid 10 percent more. That doesn’t
make any sense. The anomaly, which we said in Yi is “the
rationale for the commission exemption from the FLSA’s
overtime provision,” Yi v. Sterling Collision Centers, Inc., su‐
pra, 480 F.3d at 508, is avoided by recognizing that the sec‐
ond set of workers, corresponding to our window washers,
are commission workers and therefore have no statutory en‐
titlement to overtime pay.
But to prevail CCS must show not only that its employ‐
ees are paid by commission, but also that the company is a
retail or service establishment, terms not defined in the stat‐
ute. A “retail establishment” sounds like a store, which CCS
is not; “service establishment” is much broader. CCS is sell‐
ing a service, not goods, and that as we’ve seen is supportive
of the exemption. Demand for services often varies, and
when demand drops the seller cannot make up for it, as a
maker of goods can do, by producing for inventory rather
than for immediate sale.
As a service establishment CCS meets the “retail or ser‐
vice establishment” requirement in section 207(i). If that
weren’t enough (though it is), CCS is probably best de‐
scribed as a retail service establishment. It sells its window‐
cleaning services to building owners and managers; they are
the ultimate customers; they do not resell the window clean‐
ing, and therefore CCS is not a wholesaler. No doubt the
building owners and managers pass on (so far as market
conditions allow) the cost of window cleaning to the occu‐
pants of the building. But that is not resale. It would be ab‐
surd to suggest that a dealer in motor vehicles, when it sells
a truck to a moving company, is “wholesaling” the truck be‐
No. 13‐3818 9
cause the buyer will doubtless try to recover the cost of the
purchase in the price he charges for his moving services,
which utilize the truck. The opinions cited to us as being
contrary—Gray v. Swanney‐McDonald, Inc., 436 F.2d 652, 653–
54 (9th Cir. 1971); Goldberg v. Furman Beauty Supply, Inc., 300
F.2d 16, 18–19 (3d Cir. 1962); Goldberg v. Warren G. Kleban
Engineering Corp., 303 F.2d 855, 857–59 (5th Cir. 1962); Mitch‐
ell v. Sherry Corine Corp., 264 F.2d 831, 834–35 (4th Cir.
1959)—involve a different statutory exemption from the
commission exemption. See 29 U.S.C. § 213(a)(2); Idaho Sheet
Metal Works, Inc. v. Wirtz, 383 U.S. 190, 192–94 (1966). Section
213(a)(2) is an exemption for intrastate businesses from the
Fair Labor Standards Act’s overtime and wage requirements.
Although two congressional reports discussing the amend‐
ment that added the commission exemption to the Act said
that “retail or service establishment” is defined in section
213(a)(2), S. Rep. 145, 87th Cong., first session, p. 27; H.R. 75,
87th Cong., first session p. 9, the reports are not the law and
don’t explain why a definition meant for the intrastate busi‐
ness exemption should also apply to the commission exemp‐
tion; the two provisions serve different.
An additional reason to classify CCS as a retailer is that it
sells its service to building owners and managers by the
building; it doesn’t make a new contract for each window on
each building. Judged by the unit of sale recognized in the
industry, then, CCS is a retailer. Consider by way of analogy
a small jeweler selling pearl necklaces to consumers. The
jeweler would not be considered a wholesaler of pearls just
because each necklace contains more than one pearl.
The plaintiffs argue that the sale of window‐washing
services to managers of tall buildings “lacks a retail con‐
10 No. 13‐3818
cept,” whatever that might mean. The phrase is found in a
Department of Labor regulation, 29 C.F.R. § 779.317, which
states that
There are types of establishments in industries where it
is not readily apparent whether a retail concept exists
and whether or not the exemption can apply. It, there‐
fore, is not possible to give a complete list of the types
of establishments that have no retail concept. It is pos‐
sible, however, to give a partial list of establishments
to which the retail concept does not apply. This list is
as follows:
Accounting firms.
Adjustment and credit bureaus and collection agencies
Advertising agencies including billboard advertising.
Air‐conditioning and heating systems contractors.
Aircraft and aeronautical equipment; establishments
engaged in the business of dealing in.
Airplane crop dusting, spraying and seeding firms.
Airports, airport servicing firms and fixed base
operators.
Ambulance service companies.
Apartment houses.
Armored car companies.
Art; commercial art firms.
Auction houses
Auto‐wreckersʹ and junk dealersʹ establishments
Automatic vending machinery; establishments
engaged in the business of dealing in.
No. 13‐3818 11
(Citations omitted.) The list goes on and on. We’ll stop with
the A’s. There is no reference to window washing (though
“loft buildings or office buildings, concerns engaged in rent‐
ing and maintenance of” is included), and, more important,
no explanation for the choice of which firms to describe as
lacking a retail concept. Most of them sell goods and services
to the actual user of the service or product, rather than
wholesaling them to a retailer who will resell them to the ac‐
tual user. We have seen that allowing CCS to claim the ex‐
emption for commission sales fits the rationale for the ex‐
emption.
The Department of Labor, in an amicus curiae brief that
it has filed in this case, embraces the plaintiffs’ argument
that the building managers who buy CCS’s cleaning services
“resell” them to the building’s occupants, as if the managers
were buying mops that they planned to resell to the occu‐
pants. The Department accuses the district court of
“declin[ing] to defer to the Department’s list of businesses
lacking a retail concept,” found in the regulation, but as we
said window washing is not in the list. The brief states that
sale to the “general public” is “a fundamental characteristic
of a retail or service establishment,” but many retailers sell
to narrow segments of the public: think of sellers of hospital
supplies, or of judges’ robes, or of body bags.
Nowhere does the Department engage with the primary
reason for treating CCS’s window washers as commission
workers—their irregular work hours. Nowhere does it sug‐
gest that the window washers will be better off if paid over‐
time, which could induce the company to reduce its hourly
wage (for that wage is far above the minimum wage). The
Department seems obsessed with its incomplete, arbitrary,
12 No. 13‐3818
and essentially mindless catalog of sellers lacking “a retail
concept”—a catalog that, to repeat, despite its inordinate
length does not include window washing. The brief cites de‐
partmental regulations that attempt to define a “retail or
service establishment” by listing factors of dubious rele‐
vance, such as that “75 per centum of [its] annual dollar vol‐
ume of sales of goods or services (or of both) is not for resale
and is recognized as retail sales or services in the particular
industry,” 29 C.F.R. § 779.312, or that the establishment
“serves the everyday needs of the community in which it is
located.” 29 C.F.R. § 779.318. We don’t see the connection
between these criteria and the reasons for excusing certain
employers from the overtime provision of the Fair Labor
Standards Act. But nor does CCS fail to satisfy these criteria.
It’s no surprise, by the way, that there is no connection.
The Department’s definition comes from section 213(a)(2),
which as we’ve noted was the intrastate business exemption.
This definition made sense in that context: if Congress’s
purpose was to exempt local mom and pop stores from
wide‐sweeping federal labor legislation (and not just from
the overtime requirement), courts would want to ensure that
most of the local stores’ output would remain within the
state—in other words that they are operating on a small
scale in the community. The Department of Labor and some
courts, see Gieg v. DDR, Inc., supra, 407 F.3d at 1047–49; Reich
v. Delcorp, Inc., supra, 3 F.3d at 1183 (8th Cir. 1993); Martin v.
The Refrigeration School, Inc., 968 F.2d 3, 6–8 (9th Cir. 1992),
have woodenly ported the definition from section 213(a)(2)
to the commission exemption with no sensitivity to the very
different purpose of that exemption.
No. 13‐3818 13
The plaintiffs make other arguments, but what all their
arguments have in common is that they are decoupled from
any plausible concern with the welfare of CCS’s window
washers. They point out that one purpose of the overtime
provision of the FLSA is to encourage employers to spread
out full‐time work among different employees. Fair enough;
but giving CCS’s window washers overtime pay wouldn’t
further that purpose because it hasn’t been shown that they
are on average working more than 2,000 hours a year (50 40‐
hour work weeks). A second purpose of requiring added
pay for overtime is, by discouraging employers from requir‐
ing their workers to work overtime, to reduce workplace in‐
juries stemming from fatigue. But CCS has achieved an ad‐
mirable safety record without paying its workers for work‐
ing overtime. Finally the requirement of paying extra for
overtime is said to be a boon to low‐wage workers. But the
plaintiffs aren’t low‐wage workers; their yearly income, as
we said, is between $40,000 and $60,000.
So the window washers are well paid. And because of
their skills, strength, and daring, and CCS’s concern with
safety (not only the workers’ safety, but the safety of pass‐
ersby on the sidewalks far beneath the workers and thus far
beneath their scaffolds and equipment), their dangerous jobs
are actually safe; and their irregular hours of work enable
them to enjoy warmth and family in Mexico when it is win‐
ter in Chicago. It is no surprise that most of the workers, and
their union, want nothing to do with the plaintiffs’ case.
It remains to consider the procedural hurdle that we
mentioned at the outset of this opinion. Ten days after the
appeal was argued, the parties filed a joint stipulation to
dismiss it pursuant to Rule 42(b) of the appellate rules.
14 No. 13‐3818
Normally such stipulations are accepted and the appeal
dismissed, though we can decline to do so if necessary to
avoid an injustice, and especially to “protect the rights of
anyone who did not consent to the dismissal.” Safeco Ins. Co.
of America v. American Int’l Group, Inc., 710 F.3d 754, 755 (7th
Cir. 2013); see also Noatex Corp. v. King Construction of Hou‐
ston, L.L.C., 732 F.3d 479, 487 (5th Cir. 2013); Suntharalinkam
v. Keisler, 506 F.3d 822, 827 (9th Cir. 2007) (en banc)
(Kozinski, J., dissenting); American Automobile Manufacturers’
Association v. Massachusetts Department of Environmental Pro‐
tection, 31 F.3d 18, 22 (1st Cir. 1994).
After initially accepting the stipulation, we became con‐
cerned about whether it had received the actual consent of
all 24 plaintiffs. Remember that the plaintiffs consist of 24
former and present employees of CCS, that many (maybe all,
for all we know) come from the same small town in Mexico,
and that they return there—the ones not yet retired mainly
in the winter, when the window washing business in Chica‐
go is slow (this winter in Chicago was savage)—to visit with
family. We wondered whether they had all been consulted
about, and agreed to, the stipulation. We therefore ordered
the mandate recalled and the parties ordered to verify to us
that each of the 24 plaintiffs had consented to the stipulation
and to any settlement underlying it.
The parties have now filed statements in response to our
order. The defendant expresses no opinion on whether the
plaintiffs consented to the stipulation to dismiss their appeal.
It states: “There is no written settlement agreement among
the parties. [CCS] agreed to the proposed stipulation to dis‐
miss conditioned upon the payment of certain costs incurred
in connection with the appeal, which were in fact paid.”
No. 13‐3818 15
This, if true, means that the plaintiffs not only received noth‐
ing in exchange for abandoning their suit, but that they paid
the defendant “certain costs.” The plaintiffs’ statement in re‐
sponse to our order says that “the agreement between the
Parties provided that Defendants would receive payment of
a compromised amount of litigation costs and that the case
would be dismissed. There was no written settlement
agreement between the Parties.” There is also no indication
that the Department of Labor was consulted, despite its hav‐
ing filed an amicus curiae brief in support of the plaintiffs.
The statement goes on to say that the plaintiffs’ lawyer
“communicated with and obtained authority from each of
the 24 Plaintiffs.” However, it is apparent from the statement
that the only communications were by telephone and that
there is no record of what was said by either party to any of
the telephone calls—no record either of what the plaintiffs
were told or what they said in reply.
Although the plaintiff’s attorneys, in paying to dismiss
their own case (for remember their agreeing to pay some of
the defendants’ costs), may be thinking that they might do
better re‐trying the issue in a new case, that’s a type of stra‐
tegic behavior that we do not encourage. As Judge Kozinski
explained in Suntharalinkam v. Keisler, supra, 506 F.3d at 828,
the fact “that petitionerʹs counsel has filed a motion that can
do his client zero good, and possibly great harm, for no ap‐
parent reason other than to avoid an adverse ruling that
would affect other parties in other cases, militates strongly
against exercising our discretion in favor of granting the mo‐
tion at this late date.”
Recently, in a parallel situation, we denied a joint motion
to dismiss an appeal pursuant to Rule 42(b), concluding that
16 No. 13‐3818
“it would be irresponsible to dismiss th[e] case without re‐
view.” Americana Art China Co., Inc. v. Foxfire Printing &
Packaging, Inc., 743 F.3d 243, 246 (7th Cir. 2014). And so it
would be here, where we are asked to endorse a most un‐
professional way of attempting to end a litigation. But little
purpose would be served by our instituting a proceeding to
determine whether the plaintiffs gave meaningful consent to
the dismissal of their case and to payment of some of the de‐
fendant’s costs. True, we don’t know whether those costs
were actually borne by the plaintiffs. They may have been
borne by the plaintiffs’ attorneys, who, anticipating an ad‐
verse opinion, may have concluded that paying the defend‐
ant’s costs was the lesser evil compared to having to
acknowledge an adverse ruling on their appeal. For it is
plain from the analysis in this opinion that the plaintiffs’ ap‐
peal must fail on the merits. Having recalled the mandate,
we retain jurisdiction and can decide the merits, and the is‐
suance of our opinion (which was on the verge of comple‐
tion when the stipulation was filed) provides the cleaner
method of disposing of the case. We remain troubled, how‐
ever, by the unexplained provision regarding compensation
of some of the defendant’s costs. We therefore order the
stipulation dissolved, but the judgment of the district court
AFFIRMED.