Supreme Court Case - Overtime for Well-Paid Workers 2022 Supreme Court Preview

Not Working Nine to Five Who Gets Overtime Pay Under the FLSA

Helix Energy Solutions Group, Inc. v. Hewitt, No. 21-984, (en banc), cert. granted, 2021 WL 2742787 (U.S. July 2, 2021). Oral argument is scheduled for October 12, 2022. Issue: Whether employees with supervisory duties and generous compensation — one or both of which are characteristic of workers “exempt” from the overtime requirements of the — nevertheless are entitled to FLSA overtime and other protections because they were compensated based on daily earnings rather than on a weekly or other “salary basis.” Michael Hewitt began working for Helix Energy Solutions Group, Inc. (“Helix”), an oil and gas services firm, in 2014 as a “Tool Pusher” supporting Helix services for offshore oil wells. Hewitt supervised several employees and was responsible for ensuring safe and effective performance of company operations. Helix classified Hewitt’s position as “exempt” from FLSA overtime and other requirements, even though he routinely worked more than 40 hours per week, because of his supervisory duties and the high level of his pay. Exempt employees are not protected by FLSA overtime and other mandates. Until Helix terminated Hewitt in 2017, the company paid him biweekly based on a daily compensation rate — i.e., a rate applied to every day that he worked. Hewitt sued for unpaid overtime claiming that although he had been paid over $200,000 per year, he was paid on a daily rate and not a “salary basis” and, thus, was not “exempt” from entitlement to FLSA overtime protections. The district court granted Helix summary judgment on this claim, concluding that Hewitt was paid on a salary basis because his wages always amounted to more than the FLSA’s “salary level” of $455 for any week that he worked. Hewitt appealed and a panel of the Fifth Circuit reversed the trial court’s judgment, determining that Helix did not pay Hewitt on a “salary basis” according to the plain language of , which define “salary” as compensation paid “on a weekly, or less frequent basis . . . without regard to the number of days or hours worked.” FLSA regulations also provide that a highly compensated employee paid on a daily basis may be exempt from an entitlement to overtime if “the employment arrangement also includes a guarantee of at least the minimum weekly required amount paid on a salary basis regardless of the number of hours, days or shifts worked, and a reasonable relationship exists between the guaranteed amount and the amount actually earned.” . As the panel (and, later, the full Fifth Circuit) noted, “Helix could have easily complied with —for example, by offering a minimum weekly guarantee of $4,000 based on Hewitt’s daily rate of $963[,]” but Helix did not do so. 15 F.4th at 291 (citing (Ho, J., concurring), vacated on petition for rehearing en banc, ). Helix then petitioned for rehearing and rehearing en banc, which the Court of Appeals granted. By a vote of 12 to 8, the full Court reinstated the result reached by the panel. Judge Ho (who also wrote the panel majority opinion, as well as a concurrence at the panel stage) wrote that for an employer to meet the salary requirements for exemption of their daily and hourly wage earners under the FLSA, the employer must guarantee earnings of at least the required threshold amount, regardless of the time the employees in question actually work, and also must demonstrate that a “reasonable relationship” exists between the employee’s actual pay and the guaranteed pay. 15 F.4th at 294. Holding that Helix did not meet either standard, the en banc majority continued, “the plain text of the regulations is decisive[.]” Id. The majority also observed that “Congress has repeatedly rejected efforts to categorically exempt all highly paid employees from overtime requirements.” Id. at 290 (citing legislative history of the FLSA). “Accordingly,” the full Court also noted, “both the Secretary of Labor and the Supreme Court — as well as our court — have observed that “employees are not to be deprived of the benefits of the [FLSA] simply because they are well paid.” Id. (citations omitted). The Fifth Circuit’s approach is shared by the and Circuits. This case will resolve a possible circuit split because the and Circuits apply an interpretation of the FLSA that allows daily-rate workers to be exempt under a salary-basis test. While the full Fifth Circuit declared “there is no actual conflict here” since “ and involve pay calculated ‘on a weekly, or less frequent basis’ () — and not pay “computed on . . . a daily . . . basis[,]’” 15 F.4th at 297, the grant of certiorari indicates the Supreme Court sees a dispute warranting resolution. Helix’s petition to the Supreme Court alleged “a clear circuit split on an important and recurring question concerning whether supervisors making over $200,000 a year are entitled to significant additional overtime pay under the FLSA.” . WHAT’S AT STAKE The FLSA is one of the nation’s sturdiest guarantors of workers’ rights and, as construed by the full Fifth Circuit, this presents a clear case of regulatory interpretation. If the Supreme Court sets aside the regulations at issue in this case, many other FLSA protections — and, by analogy, those under other federal employment laws — may be in jeopardy. The possibility of further weakening of overtime-pay and other FLSA requirements is very troubling for workers generally, whether older or younger. After all, the FLSA not only mandates overtime pay for non-exempt workers, but also establishes prohibitions against child labor, dictates minimum wages, and governs classification of employees eligible for its protections, as compared to independent contractors ineligible for the same. Dan Kohrman

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