SCOTUS rules highly compensated day-rate employee is eligible for overtime

March 2023 employment law letter

Authors:

Michael P. Maslanka, UNT-Dallas College of Law

Is an employee who makes $200,000 per year eligible for overtime? In two words: You bet. The U.S. Supreme Court ruled a day-rate employee wasn’t exempt from the Fair Labor Standards Act’s (FLSA) overtime requirements in a case arising from Texas. Beware.

Facts

Michael Hewitt worked on an oil rig for Helix Energy Solutions Group, Inc., where he supervised 12 to 14 employees. He worked 28 days on and 28 days off. His compensation? He was paid daily in the range of $963 to $1,341 for a day’s work (12 hours, 7 days a week). Sweet deal, no?

No overtime was paid because he was classified as a “highly compensated employee“ (HCE). This is permitted by the Code of Federal Regulations (CFR), the governing rules promulgated by the Department of Labor (DOL).

But Hewitt believed he was entitled to overtime despite his high salary, and a smart lawyer in Houston thought so too. The pair’s claim was ultimately vindicated by the Court.

Rules

Under the FLSA, there are three tests an employee must meet to be exempt from overtime requirements. They are:

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