By: Khorri Atkinson and Chris Marr
A former offshore oil rig worker earning more than $200,000 a year is eligible for overtime pay under federal law, the US Supreme Court ruled.
The high court’s Wednesday ruling upheld a US Court of Appeals for the Fifth Circuit September 2021 decision that former Helix Energy Solutions Group Inc. worker Michael Hewitt wasn’t exempt from the Fair Labor Standards Act’s overtime requirement because the company paid him a day rate and not a guaranteed weekly salary.
The day-rate basis on which Hewitt was paid, “so that he receives a certain amount if he works one day in a week, twice as much for two days, three times as much for three, and so on” doesn’t count as a salary basis to exempt him from the FLSA’s overtime protections, Justice Elena Kagan wrote for the 6-3 majority.
The case has significant implications for the energy industry because of its use of day rates instead of salary rates to compensate workers, including highly paid employees on oil-field or offshore jobs.
The heart of the case comes down to the relationship between the FLSA’s implementing regulations governing overtime pay exemptions for highly compensated executives, administrative, and professional employees.
To be exempt, executives must be paid on a salary basis, meaning their predetermined pay must be “calculated on a weekly, or less frequent basis” and not tied to the hours worked per week. They also must earn at least $100,000 annually and have a minimum pay threshold of $684 per week.
The regulations also say workers paid on an hourly, daily, or shift basis can be classified as salaried, and thus overtime exempt, as long as their employer guarantees “at least the minimum weekly-required amount” despite the number of hours, days, or shifts worked.
Helix argued that, because Hewitt was an executive who received more than the minimum weekly pay and whose compensation never changed, the case should end there.
But Hewitt said Helix never offered him a minimum weekly guaranteed pay, so his day rate earnings can’t be classified as a salary.