On Feb. 22, 2023, the U.S. Supreme Court weighed in on overtime exemptions under the Fair Labor Standards Act (FLSA) and held that a highly compensated employee was entitled to overtime pay because he was paid a day rate and not a guaranteed weekly salary.
In Helix Energy Solutions Group v. Hewitt, a rig worker filed suit against his former employer seeking retroactive overtime pay, arguing that he was not exempt from the FLSA’s overtime requirements based on his daily pay arrangement. The Supreme Court agreed. This case serves as a reminder to employers that high pay does not disqualify employees from the FLSA’s overtime requirements.
FLSA Exemptions
Under the FLSA, an employer generally must pay employees at least minimum wage for all hours worked and overtime pay at not less than time and one-half the regular rate of pay for all hours worked over 40 in a workweek unless an employee is exempt from these requirements.
An employee may qualify for an exemption when s/he works in a “bona fide executive, administrative, or professional capacity” as defined by Department of Labor (DOL) regulations.
These exemptions require an employer to satisfy three tests: (1) payment on a “salary basis”; (2) the “salary level” must meet at least a specified minimum; and (3) the employee must perform certain duties (executive, administrative, professional or outside sales work) as his or her “primary duties.”
“Salary Basis” Not Met By Daily Rate
In Helix, the Court found that the rig worker...
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