SCOTUS SAYS OVERTIME DUE FOR EMPLOYEE MAKING MORE THAN $200K
The United State Supreme Court (SCOTUS) issued a 6-3 ruling that an offshore oil rig worker making more than $200,000 a year was not exempt from the Fair Labor Standards Act’s (FLSA) overtime pay requirements.
Michael Hewitt worked for Helix Energy Solutions as a tool pusher, which the company classified as a highly compensated worker exempted under Part 541 of the FLSA. Hewitt made more than $200,000 annually and regularly worked more than 84 hours in a workweek.
A highly compensation employee is exempt from the overtime requirements of the FLSA if:
- The employee earns total annual compensation of $107,432 or more, which includes at least $684 per week paid on a salary or fee basis.
- The employee’s primary duty includes performing office or nonmanual work.
- The employee customarily and regularly performs at least one of the exempt duties or responsibilities of an exempt executive, administrative, or professional employee.
The case centered on the issue of whether Hewitt was paid on a salary basis.
Salary basis means an employee regularly receives a predetermined amount of compensation each pay period on a weekly or less frequent basis. The predetermined amount cannot be reduced because of variations in the quality or quantity of the employee’s work.
SCOTUS, in its majority opinion, held that Hewitt’s pay did not meet that definition because he was paid on a daily basis, not on a salary basis. While Hewitt’s daily rate exceeded the weekly salary minimum (which at the time was $455), his biweekly salary just amounted to his daily rate multiplied by the number of days worked in the pay period. That doesn’t meet the definition of being paid on a weekly or less frequent basis.
Read the full decision here.
This decision is an important reminder for employers to review their employee classifications to ensure they meet all of the requirements for exemption from the FLSA’s overtime requirements. NAE has a Questionnaire on Exempt Status under the FLSA available for download on our Member Portal to assist members in making that determination.
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