Imagine this scenario: You pay an employee a substantial daily rate — which works out to more than $200,000 a year. Still, the employee claims they’re entitled to overtime pay because they were paid a daily — rather than weekly — rate. Is such a highly compensated employee eligible to receive overtime premiums under the Fair Labor Standards Act (FLSA)? That’s exactly what the Supreme Court was asked to decide in a case involving a worker who was paid a guaranteed daily rate of at least $963, which is higher than the FLSA’s weekly salary threshold. At the heart of this case are a few fairly simple questions: When does an employee earn enough money that the law simply does not require the employer to pay overtime? Does it really matter how the employee is paid if they earn more than $200,000 a year? The federal appellate courts are divided on the answers, and a SCOTUS ruling awarding OT pay could be extremely costly — even if the employer thought its practices were compliant with the FLSA. A decision in favor of the employer, however, could give you more flexibility in determining the pay models that work best for your business. How will SCOTUS rule? Read on for a discussion of the case and our predictions in light of recent oral arguments.
What is This Case About?
Here’s a quick review of the relevant overtime rules: Generally, employees must be paid 1.5 times their regular rate for all hours worked beyond 40 in a workweek. To qualify for a “white-collar” exemption to the...
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