By Jenna Asarese, Law Clerk
On February 22, 2023, the Supreme Court of the United States (SCOTUS) issued a ruling clarifying the Fair Labor Standards Act (FLSA). Specifically, SCOTUS offered guidelines for the “salary basis test” and overtime requirements.
In Helix Energy Sols. Group, Inc. v. Hewitt, 143 S. Ct. 677 (2023), an oil rig worker, Hewitt, brought a claim against Helix, his employer, for unpaid overtime. Hewitt was paid based on a daily rate and made over $200,000 annually.1 SCOTUS looked at whether Hewitt was considered exempt from overtime pay based on the FLSA’s salary basis test.2
The FLSA requires companies to pay “at least one and one-half times the employee’s regular rate of pay for each hour worked in a workweek in excess of the maximum allowable in a given type of employment” (usually 40 hours).3 There are, however, exceptions to receiving overtime. One of these exceptions, which is at issue in Helix, applies to “any employee employed in a bona fide executive, administrative, or professional capacity.4 The determining test has three parts: the “salary basis” test; “salary level” test, and the “duties” test.5
The salary basis test looks at whether the employee makes a “predetermined and fixed salary.”6 The salary level test looks at whether the employee meets the salary threshold of $684 per week.7 Lastly, the “duties” test looks at whether the employee’s duties fall within five defined categories: bona fide executive, administrative, professional, computer, or outside sales.8
If an employee meets all three tests, they are exempt from overtime. Additionally, an employee who is considered a “highly compensated employee” is also exempt from overtime – to be considered “highly compensated,” the employee must make at least $107,432 annually (the same weekly threshold is required) and “perform[s] any one or more of the exempt duties” mentioned above.9
In their decision, the Court held that daily-rate workers can qualify as paid on a salary basis only under the “special rule” of Section 604,10 which requires a guarantee of “at least the minimum weekly required amount paid.”11 SCOTUS found that the plaintiff in this case, Hewitt, failed to meet the salary basis test because he was not guaranteed to earn $684 each week, despite making over $200,000 annually.12
What does this all mean? In sum, if you are a daily-rate worker, you could be entitled to overtime pay even if you are highly compensated. If you are a daily rate worker who has not been paid overtime, look over your employment contract to see if it provides for a minimum weekly guarantee of $684. If it does not, even if you fall into one of the exempted duties, you are still entitled to overtime pay. If this relates to you, you may want to bring it to your employer’s attention and/or contact an attorney as soon as possible. The FLSA has a statute of limitations of two years; however, there is an extended statute of limitation of three years for willful violations.13 All violations of unpaid overtime wages brought after that time will be barred.
1 Helix Energy Sols. Group, Inc. v. Hewitt, 143 S. Ct. 677, 684 (2023)
2 Id. at 685
3 Handy Reference Guide to the Fair Labor Standards Act, Dept. of Labor, (2016) https://www.dol.gov/agencies/whd/compliance-assistance/handy-reference-guide-flsa#1
4 29 U. S. C. §213(a)(1)
5 Helix Energy Sols. Group, Inc. v. Hewitt, 143 S. Ct. 677, 682-83 (2023)
6 Id.
7 29 CFR § 541.100
8 29 CFR § 541.0
9 29 C.F.R. § 541.601
10 Helix Energy Sols. Group, Inc. v. Hewitt, 143 S. Ct. 677, 692 (2023)
11 29 C.F.R. § 541.604(b)
12 Helix Energy Sols. Group, Inc. v. Hewitt, 143 S. Ct. 677(2023)
13 29 U.S. Code § 255
