New Jersey Employment Lawyer Blog
Last week, the United States Supreme Court ruled that, no matter how much an employee earns per year, the primary exemptions to federal overtime pay requirement do not apply unless the employee is guaranteed to receive at least $455 per week for any week in which he or she performed any work for the employer.
Michael Hewitt worked for Helix Energy Solutions Group as a “toolpusher” on an offshore rig. Helix paid him a flat fee for each day he worked. Mr. Hewitt worked for Helix for four consecutive weeks, typically 12 hours per day for seven days per week, followed by four weeks off. Although Helix did not pay him for the four week periods when he was not working, Mr. Hewitt earned over $200,000 per year. Even though Mr. Hewitt regularly worked more than 40 hours per week, Helix never paid him an overtime premium.
Mr. Hewitt sued Helix under the Fair Labor Standards Act of 1938 (“FLSA”), a federal law that requires employers to pay covered employees receive overtime pay if they work more than 40 hours per week.
The FLSA has three main exemptions to its overtime: the executive, administrative and professional exemptions. For any of those exemptions to apply, the employer must pay the employee at least $455 per week on a salary basis. Applicable federal regulations make it clear that “salary” means the employee receives a “predetermined amount” that is “not subject to reduction because of variations in the quality or quantity of the work performed.” With limited exceptions, to be considered salaried an “employee must receive the full salary for any week in which the employee performs any work without regard to the number of days or hours worked.”
For an employee to fall within one of those three exemptions, the employee’s duties have to meet job criteria for the executive, administrative, or professional exemption. Alternatively, under the “highly compensated employee rule,” an employee who earns over $100,000 per year only has to meet one of the criteria under the executive, administrative or professional exemption. Under all four exemptions, the employee must receive a salary of at least $455 per week.
The regulations further indicate that employees who are paid on an hourly, daily or shift basis, rather than a salary basis, can fall within one of those exemptions if: (1) the employer guarantees the employee at least $455 per week in any week the employee worked, and (2) the guaranteed weekly pay is “roughly equivalent to the employee’s usual earnings at the assigned hourly, daily or shift rate for the employee’s normal scheduled workweek.” When those two conditions are met, the employee is, in effect, being paid a base salary.
In response to the lawsuit, Helix argued that Mr. Hewitt was not entitled to an overtime premium because he fell under the bona fide executive exemption. The trial court agreed, and dismissed his lawsuit. However, on appeal, the Fifth Circuit Court of Appeals disagreed, and instead concluded Mr. Hewitt did not fall within the executive exemption because Helix did not pay him on a salary basis.
On February 22, 2023, in Helix Energy Solutions Group, Inc., v. Hewitt, the United States Supreme Court agreed that Helix was not paying Mr. Hewitt on a salary basis since it did not guarantee him at least $455 per week regardless of how many hours, days, or shifts he worked. For example, he was not entitled to be paid for days when he did not work because he was sick or injured. As a result, the Supreme Court concluded that he did not fall within the executive exemption. In other words, it ruled that even though Helix paid Mr. Hewitt over $200,000 per year, he still was entitled to be paid time-and-a-half for his overtime hours.