The United States Supreme Court has ruled in Helix Energy Solutions Group v. Hewitt that an employee who made in excess of $200,000 annually was eligible for overtime pay due to the fact that the employee was paid on a daily basis.
The Details:
The plaintiff, Michael Hewitt from 2015-2017 worked on an offshore oil rig for 28 days straight working 12 hours daily. He was paid $963 to $1341 per day and earned $248,053 in 2015 and $218,863 in 2016.
The employer (Helix) asserted that because Hewitt (1) was highly paid executive earning over $200,000 annually and (2) received the required weekly amount of pay at the time to be an exempt employee ($455 per week) that he was not eligible for overtime pay.
Hewitt argued that since he was paid on a daily basis and not on a salaried basis he should be eligible for overtime.
In its 6-3 decision, the Court ruled against Helix’s assertion that Hewitt was not eligible for overtime based on the “Executive Exemption.” One of the criteria necessary to be considered a bona fide executive is outlined in 29 CFR §541.100(a)(1) as follows:
“(a) The term “employee employed in a bona fide executive capacity” in section 13(a)(1) of the Act shall mean any employee:
(1) Compensated on a salary basis [emphasis added] pursuant to § 541.600 at a rate of not less than $684* per week…”
* The rate at the time of the plaintiff’s employment with Helix was $455 per week.
Salary basis is defined under 29 CFR § 541.602(a) in part as follows:
“General rule. An employee will be considered to be paid on a “salary basis” within the meaning of this part if the employee regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of the employee's compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed.”
The Court in its majority opinion stated in part as follows:
“Helix did not pay Hewitt on a salary basis as defined in §602(a). That section applies solely to employees paid by the week (or longer); it is not met when an employer pays an employee by the day, as Helix paid Hewitt. Daily-rate workers, of whatever income level, are paid on a salary basis only through the test set out in §604(b) (which, again, Helix’s payment scheme did not satisfy). Those conclusions follow from both the text and the structure of the regulations. And Helix’s various policy claims cannot justify departing from what the rules say.”
Next Steps:
Employers who pay their employees via daily rate (regardless of amount) should review this case with their legal advisor to ensure they are following the rules of Fair Labor Standards Act in relation to overtime pay eligibility as decided by the Court.
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