Sophia Serrao
Wed, 02/22/2023
On February 22, 2023, the Supreme Court of the United States held in Helix Energy Solutions Group Inc. v. Hewitt, that to be exempt from the requirement of being paid overtime after working over 40 hours a week, an employer must pay an employee their full salary in any week in which they perform work. Otherwise, the employee is entitled to overtime compensation regardless of their job duties or title.
In Helix, the Supreme Court was asked whether an overtime exemption under the Fair Labor Standards Act (“FLSA”) applied to a non-salaried high-earning employee. Specifically, the Supreme Court looked to “whether a high-earning employee is compensated on a ‘salary basis’ when his paycheck is based solely on a daily rate”. The Supreme Court affirmed long-standing FLSA and Department of Labor regulations and held that to be considered a salaried, overtime exempt employee, the employee must receive his full weekly salary in any week in which the employee performs any work.
The case involves a former offshore oil rig worker who earned more than $200,000 a year but who was never paid overtime pay under federal law despite working more than 40 hours in a week. The crux of the case involves the interpretation of the FLSA’s overtime exemption regulation that exclude highly compensated executives, administrative, and professional employees. According to the FLSA and DOL implementing regulations, for an employee to fall under any of those exemptions, they must be paid on a salaried basis. The Court held that this means their predetermined salary must be calculated on at least a weekly basis and not be tied to the hours worked per week. The employer has to pay a true salary that cannot vary week to week. The Supreme Court found that the employee here was paid on a daily basis, and typically worked seven days in a week. To provide for a guaranteed salary amount, the employer would have had to guarantee the amount of seven times the daily rate in any week in which the employee worked any time.
Notably, even salaried workers are also entitled to FLSA overtime pay for work time in excess of 40 hours a week unless their actual job duties fall within the administrative, professional, or executive exemptions. The decision will have a significant impact on industries, like the energy industry, who pay their employees at a daily rate or other rates that are less than the full salary amount that an employee receives if they work the typical full shift schedule in the week.
