The U.S. Supreme Court sided 6-3 with an oil rig supervisor, who sued for overtime pay even though his daily rate already earned him up to a quarter-million dollars a year.
Michael Hewitt worked for Helix Energy Solutions Group as a “toolpusher” on an offshore oil rig. Reporting to the captain, Hewitt oversaw various aspects of the rig’s operations and supervised 12 to 14 workers. He typically, but not invariably, worked 12 hours a day, seven days a week – so 84 hours a week – during a 28-day “hitch.” He then had 28 days off before reporting back to the vessel.
Helix paid Hewitt on a daily-rate basis, with no overtime compensation. The daily rate ranged, over the course of his employment, from $963 to $1,341 per day. His paycheck, issued every two weeks, amounted to his daily rate times the number of days he had worked in the pay period. So if Hewitt had worked only one day, his paycheck would total (at the range’s low end) $963; but if he had worked all 14 days, his paycheck would come to $13,482. Under that compensation scheme, Helix paid Hewitt over $200,000 annually.
In 2017 Helix fired Hewitt for performance issues. Hewitt responded by filing an action against his employer seeking overtime pay under the Fair Labor Standards Act of 1938, which guarantees overtime pay to covered employees when they work more than 40 hours a week.
Helix claimed that Hewitt was exempt from the FLSA because he qualified as “a bona fide executive.” 29 U. S. C. §213(a)(1).
The District Court agreed with Helix’s view that Hewitt was compensated on a salary basis, and accordingly granted the company summary judgment. The Court of Appeals for the Fifth Circuit, sitting en banc, reversed that judgment, deciding that Hewitt was not paid on a salary basis and therefore could claim the FLSA’s protections.
The decision of the Court of Appeals was affirmed by the Supreme Court of the United States in the case of Helix Energy Solutions Group, Inc v Hewitt – No. 21-984 (February 2023)
The Fair Labor Standards Act of 1938 (FLSA) guarantees that covered employees receive overtime pay when they work more than 40 hours a week. But an employee is not covered, and so is not entitled to overtime compensation, if he works “in a bona fide executive, administrative, or professional capacity,” as those “terms are defined” by agency regulations.
The FLSA, however, exempts certain categories of workers from its protections, including the overtime-pay guarantee. The statutory exemption relevant here applies to “any employee employed in a bona fide executive, administrative, or professional capacity . . . (as such terms are defined and delimited from time to time by regulations of the Secretary [of Labor]).”
Under applicable regulations, an employee is considered a bona fide executive excluded from the FLSA’s protections if the employee meets three distinct tests: (1) the “salary basis” test, which requires that an employee receive a predetermined and fixed salary that does not vary with the amount of time worked; (2) the “salary level” test, which requires that preset salary to exceed a specified amount; and (3) the job “duties” test..
The Secretary of Labor has implemented the bona fide executive standard through two separate and slightly different rules, one “general rule” applying to employees making less than $100,000 in annual compensation, and a different rule addressing “highly compensated employees” (HCEs) who make at least $100,000 per year. 29 CFR §§541.100, 541.601(a), (b)(1).
The general rule considers employees to be executives when they are “[c]ompensated on a salary basis” (salary-basis test); “at a rate of not less than $455 per week” (salary-level test); and carry out three listed responsibilities – managing the enterprise, directing other employees, and exercising power to hire and fire (duties test). §541.100(a).
The HCE rule relaxes only the duties test, while restating the other two.As litigated in this case, whether Hewitt was an executive exempt from the FLSA’s overtime pay guarantee turns solely on whether Hewitt was paid on a salary basis.
The question here is whether a high-earning employee is compensated on a “salary basis” when his paycheck is based solely on a daily rate – so that he receives a certain amount if he works one day in a week, twice as much for two days, three times as much for three, and so on.
The Supreme Court concluded that Hewitt was not paid on a salary basis, and thus is entitled to overtime pay.
National Nurses United, with nearly 225,000 members nationwide, is the largest union and professional association of registered nurses in U.S. history. In 2009, California Nurses Association/National