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Can High-Earning Supervisors Be Eligible for Overtime Pay?

The U.S. Supreme Court has granted certiorari in a case that will determine whether an unsalaried, highly paid worker is eligible for overtime pay according to the Fair Labor Standards Act (FLSA).

The case centers around a toolpusher (supervisor) on offshore oil rigs for Helix Energy Solutions Group, Inc. The employee, Michael Hewitt, was paid a flat daily rate, typically working 28-day shifts. After being fired in 2017, Hewitt filed a class-action lawsuit against the company, claiming he was denied overtime pay to which he was entitled.

FSLA’s Overtime Requirements

As a general rule, the FSLA requires employers to pay employees overtime (time and a half) for time worked in excess of 40 hours per week. Executive, administrative, or professional (EAP) employees are exempt from the overtime requirement.

EAP employees are exempt if they meet these criteria:

  • They are paid above a minimum threshold, currently $684 per week ($455 at the time Hewitt worked for Helix).
  • They are paid on a salary basis. An employee regularly receives a predetermined amount of compensation each pay period (weekly or less frequent). The predetermined amount cannot be reduced because of variations in the quality or quantity of the employee’s work.
  • The job duties must also meet certain standards. An executive must direct the work of two or more full-time employees and have the authority to hire or fire employees. Administrative employees must perform office or non-manual work related to the management of the business. A professional must have advanced knowledge acquired through a prolonged course of specialized intellectual instruction.

Beyond EAP employees, another category exempt from overtime rules is a highly compensated employee (HCE). An HCE must be paid at least $107,432 annually ($100,000 at the time Hewitt worked for Helix) on a salary or fee basis and perform non-manual work, including at least one of the duties of an exempt EAP employee.

Hewitt Argued He Was Not Paid on a Salary Basis

Helix, a Houston-based oil and gas company, paid Hewitt a day rate of at least $963. Hewitt worked 12-hour days for 28 straight days. He typically worked six hitches (time spent offshore on the rig) each year. While he made around $200,000 per year, that pay did not include overtime pay.

When Hewitt’s overtime lawsuit came before the U.S. District Court for the Southern District of Texas, Hewitt conceded that he was highly compensated and performed at least one executive duty. However, Hewitt asserted that he was not paid on a salary basis and therefore was not exempt from the FSLA overtime laws. He argued that his predetermined pay rate of $963 was a daily rate. The law requires a minimum predetermined rate on at least a weekly basis.

Helix told the court that HCEs are exempt as long as they perform relevant job functions and meet earning minimums. The requirement regarding a guaranteed minimum weekly pay did not apply.

The district court in 2018 agreed with the employer, Helix, saying Hewitt was not entitled to overtime pay. Hewitt appealed to the U.S. Court of Appeals for the Fifth Circuit.

Appeals Court Reverses District Court Ruling

The appellate court saw the case differently and reversed the lower court’s summary judgment in 2020. A three-judge panel determined that Hewitt was eligible for overtime because he was paid a daily rate and not paid on a salary basis under 9 C.F.R. 541.602(a). Upon losing on appeal, Helix asked for the appellate court to rehear the case “en banc.” The entire circuit court bench determined whether the three-judge panel ruled appropriately.

The en banc ruling also favored Hewitt, 12-6, and remanded the case to the lower court for further proceedings.

U.S. Supreme Court’s Role in Overtime Case

On Jan. 7, 2022, Helix filed a petition for a writ of certiorari. The U.S. Supreme Court granted certiorari on May 2 and heard oral arguments on Oct. 12.

Amici curiae (friends of the court) filed on behalf of Helix included the following:

  • Texas Oil and Gas Association
  • American Petroleum Institute
  • U.S. Chamber of Commerce

Amici curiae filed on behalf of Hewitt included the following:

  • American Federal of Labor and Congress of Industrial Organizations (AFL-CIO)
  • Massachusetts Nurses Association
  • National Nurses United

While the high court has not issued its opinion as of this writing, the result will have lasting impacts on the oil and gas industry and potentially others, including nursing, construction, creative services, and other industries that pay their employees daily rates.

Understand Your Compensation Rights & Responsibilities

Employers who pay their workers a guaranteed day rate should proactively discuss your payment structure with a skilled attorney at Shellist Lazarz Slobin. It may be beneficial to devise a new payment plan if the Supreme Court determines that day-rate workers – even highly paid supervisors – are not exempt from receiving overtime compensation.

Employees should review how they are being paid. If you believe you are not exempt from overtime but are being denied the additional earnings, contact us about your case.

Schedule a consultation with Shellist Lazarz Slobin by calling (713) 352-3433 or completing our online form.

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