The Supreme Court recently found highly paid employees may be entitled to overtime pay.
In Helix Energy Solutions Group, Inc. v. Hewitt, which was decided on February 2, 2023, Michael Hewitt brought an action against his employer (Helix Energy Solutions Group), an oil and gas services company. Hewitt sought overtime pay under the Fair Labor Standards Act, which guarantees overtime pay to covered employees who work more than 40 hours a week. For a roughly three-year span, Hewitt worked on an oil rig for upwards of eighty (80) hours a week while on the rig. He was paid a daily rate, no overtime. Under the compensation package, he earned upwards of $200,000 annually. His employer argued he was exempt from earning overtime because he was “a bona fide executive.”
Under applicable federal regulations an employee is “a bona fide executive” and thus excluded from FSLA protections if the employee meets all three of the following tests: (1) the “salary basis” test, which requires that an employee receive a predetermined and fixed salary on a weekly or less frequently basis; (2) the “salary level” test, which requires that preset salary to exceed a specified amount; and (3) the job “duties” test, which requires the employee to have authority to exercise certain managerial control. The Secretary of Labor has implemented the bona fide executive standard under slightly different rules. One rule applies to employees making less than $100,000 in annual compensation and the other rule to employees making at least $100,000. Employees making less than $100,000 must be: (1) compensated on a salary basis (salary basis test); (2) at a rate of not less than $455.00 per week” (the salary-level test ); and (3) perform tasks to include managing the business and directing, hiring, and firing employees (duties test). The other rule relaxes only the duties test for employees making at least $100,000.
In Hewitt, the Court focused solely on whether or not Hewitt was paid on a salary basis. The Court concluded Hewitt was paid a daily rate. Therefore, the salary basis test was not met and Hewitt was entitled to overtime pay.
The information contained in this document does not constitute legal advice.