SCOTUS to Hear FLSA Overtime Claim From Worker Who Earned $200K a Year

The U.S. Supreme Court will hear an appeal of the 5th U.S. Circuit Court of Appeals’ decision that Helix Energy Solutions Group, an oil and gas company, owed overtime pay to a former supervisor whom the court deemed non-exempt under the Fair Labor Standards Act (Helix Energy Solutions Group, Inc. v. Hewitt, No. 21-984 (U.S. May 2, 2022)).

In its petition for a writ of certiorari, the company said it paid the supervisor more than $200,000 each year between 2015 and 2016, at least $963 for each day he worked, paid out every two weeks. Helix classified the supervisor as a highly-compensated employee — and therefore exempt from the FLSA’s overtime requirements — but the 5th Circuit held en banc that the supervisor’s pay structure meant he did not fit the exemption’s criteria.

Because Helix computed the supervisor’s pay on a daily basis, rather than on a weekly, monthly or annual basis, this pay structure could not be considered a “salary” for the purposes of the exemption, the 5th Circuit said. The petitioners called the decision a “counterintuitive conclusion” that conflicted with prior rulings by the 1st and 2nd Circuits.

Splits between circuit courts have precipitated high-profile Supreme Court decisions in the past, such as Bostock v. Clayton County, Georgia, in which the court held that Title VII of the 1964 Civil Rights Act prohibits employment discrimination on the basis of sexual orientation or gender identity.

Helix involves a circuit split over interpretations of the FLSA’s minimum wage and overtime provisions. Highly-compensated employees may be exempted from these provisions, according to the U.S. Department of Labor, if the following three conditionals are met:

  • The employee earns total annual compensation of $107,432 or more, which includes at least $684 per week, paid on a salary or fee basis.
  • The employee’s primary duty includes performing office or non-manual work.
  • The employee customarily and regularly performs at least one of the exempt duties or responsibilities of an exempt executive, administrative or professional employee.

In Helix, neither the employer nor the supervisor disputed that the supervisor met the duties requirements and income thresholds of the exemption, the 5th Circuit said. But the court held that Helix’s practice of computing the supervisor’s pay on a daily basis could only have satisfied the salary-basis test of the FLSA’s highly-compensated employee exemption if it met certain criteria outlined in section 541.604(b) of the FLSA.

Namely, an exempt employee’s earnings may be computed on an hourly, daily or shift basis if the employment arrangement includes “a guarantee of at least the minimum weekly required amount paid on a salary basis regardless of the number of hours, days or shifts worked, and a reasonable relationship exists between the guaranteed amount and the amount actually earned,” according to the law.

“Helix does not even purport to meet these conditions,” the 5th Circuit wrote. “Instead, Helix asks us to ignore them altogether. But respect for text forbids us from ignoring text. As a matter of plain text, we hold that, when it comes to daily-rate employees like [the supervisor], Helix must comply with § 541.604(b).”

The 5th Circuit said its application of section 541.604 to highly-compensated employees follows similar interpretations of the law by the 6th and 8th Circuits, as well as the Department of Labor. The employer, meanwhile, argued that this approach rejected the opposing conclusions of the 1st and 2nd Circuits, which held that section 541.604 does not apply to highly-compensated employees.

“The split implicates an important question regarding whether highly compensated white-collar employees making over $200,000 a year and nearly $1,000 a day are entitled to substantially more,” the petitioners said. “High day-rates like Respondent’s are routine in a wide variety of industries and have long been the industry standard in resource exploration. If allowed to stand, the decision below would give rise to massive retroactive liability, especially given the ability to file nationwide collective actions in the Fifth Circuit.”

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