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It is hard to imagine an employee earning over $200,000 per year and still being eligible for overtime pay. Yet, this is exactly what the U.S. Supreme Court held when it decided Helix Energy Solutions Group, Inc. v. Hewitt, last week.
Michael Hewitt worked for Helix Energy (and a sister company) as an offshore oil rig Toolpusher, supervising a dozen or so employees. He was paid a daily rate for each day he worked. During the course of his employment, Hewitt’s pay ranged from $963 to $1,341 per day. Hewitt worked long hours but received no extra pay when he worked more than 40 hours each week. So he sued for overtime pay.
The issue was whether Hewitt was exempt from receiving overtime pay as a highly compensated executive employee. His daily pay was well above the minimum required salary for the FLSA’s executive and administrative exemptions (which was $455 and now is $684/week). However, Hewitt’s weekly earnings depended on how many days he worked. The issue before the Court was whether this compensation structure satisfied the salary basis test, which is the first step to analyzing whether the FLSA overtime pay exemption for executive and administrative employees even applies.
Helix Energy conceded that the amount Hewitt received each week would depend on the number of days he worked. Nevertheless, Helix Energy argued that such a compensation structure still satisfied the salary requirement as Hewitt regularly received more than the minimum weekly-required salary even for just one day of work each week. Essentially, Helix Energy claimed the analysis should focus on the amount Hewitt actually received, not the method used to calculate that amount.
Unfortunately, for Helix Energy, the Court said not so fast. The Court looked at the FLSA regulations, which require that Hewitt must receive a predetermined or guaranteed amount for every week worked regardless of the number of days actually worked. The Court noted that Hewitt was a daily-rate worker who was paid only for the days he worked and no others. This was a hurdle his employer could not overcome; no matter how much Hewitt was actually paid.
You might be thinking that this case does not affect your company because you do not use daily rates to pay any of our employees. But, keep in mind that this analysis applies equally to other compensation structures in which exempt employees are paid in forms other than a set salary. It would not matter if the employee may otherwise be exempt from overtime due to their duties. Therefore, if you have any exempt employees who are not receiving a set salary, now may be the time to make some changes in order to prevent a windfall for already high earning workers.
Special thanks to Jaclyn Sanchez who assisted in drafting this post. Jaclyn is a Third Year Juris Doctor Candidate at the University of Miami School of Law.
