US Supreme Court rules ‘daily-rate’ oil rig employee qualifies for overtime News
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US Supreme Court rules ‘daily-rate’ oil rig employee qualifies for overtime

The US Supreme Court Wednesday issued a 6-3 opinion ruling that Michael Hewitt, an oil rig employee making over $200,000 annually, qualified for overtime under the Fair Labor Standards Act (FSLA). The court held that Hewitt, a daily-rate employee, was not an executive exempt from the FSLA’s overtime pay guarantee. The court further stipulated that “daily-rate workers, of whatever income level, qualify as paid on a salary basis only if the conditions set out in 29 CFR §541.604(b) are met.”

Hewitt worked for Helix Energy Solutions Group on an offshore oil rig. The company paid Hewitt his daily rate times the number of days he worked every two weeks. Under 29 CFR §541.604(b), daily-rate workers are exempt from overtime if they satisfy two conditions. First, a weekly minimum must be guaranteed to the employee no matter the number of days worked. Second, the weekly minimum must have a “reasonable relationship” to the amount actually earned during the employee’s normal work week.

Writing for the majority, Justice Elena Kagan repudiated Helix Energy Solutions Group’s position, writing:

The question here is whether a high-earning employee is compensated on a ‘salary basis’ when his paycheck is based solely on a daily rate—so that he receives a certain amount if he works one day in a week, twice as much for two days, three times as much for three, and so on. We hold that such an employee is not paid on a salary basis, and thus is entitled to overtime pay.

During oral arguments, counsel for Helix Energy Solutions Group Paul Clement sought to persuade the court that Hewitt’s compensation scheme met the minimum weekly salary requirement as an executive. However, multiple justices took issue with Hewitt’s classification as an executive at all. Under the relevant statute, an employee qualifies as an executive if, among other things, they are paid a salary. Justices repeatedly emphasized the fact that Hewitt did not receive compensation for days he did not work during a week, while salaried workers would.

The court instead inquired whether Hewitt’s potential exemption falls under 29 CFR §541.604(b). Clement answered no, but the justices rebuffed him again. In a moment of brevity, Justice Neil Gorsuch opened his questioning of Clement by telling him, “You’re not going to like these questions any better than those.”