On February 22, 2023, the U.S. Supreme Court issued its opinion in Helix Energy Solutions Group, Inc. v. Hewitt, clarifying that, in order to qualify for the highly compensated employee (HCE) exemption from the Fair Labor Standard Act’s overtime mandate, the employee must be paid on a salary basis, and the payment of a daily rate does not constitute a salary.
The FLSA’s HCE Exemption. The FLSA provides exemptions to its minimum wage and overtime requirements for certain executive, professional and administrative employees (i.e. the “white-collar” exemptions), as well as for highly compensated employees meeting relaxed requirements. Specifically under the HCE exemption, the employee must regularly perform at least one exempt administrative, executive or professional duty, and must receive a total annual compensation of at least $107,432, including at least $684 per week paid on a salary basis.
At issue in this case was the definition of “salary basis.” As set forth in FLSA regulation 29 C.F.R. §541.602(a),
An employee will be considered to be paid on a “salary basis” . . . 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. Subject to [certain exceptions], an exempt employee must receive the full salary for any week in which the employee performs...
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