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If you were told someone earns more than $200,000 annually, you might assume the person is a salaried employee who\u2019s ineligible for overtime pay. However, as demonstrated in the recent U.S. Supreme Court case of Helix Energy Solutions Group, Inc. v. Hewitt<\/em>, this isn\u2019t always a safe assumption.<\/p>\n The FLSA rules<\/strong><\/p>\n Under the Fair Labor Standards Act (FLSA), hourly \u201cnonexempt\u201d wage earners generally must receive overtime pay for hours worked beyond 40\u00a0hours per workweek. A workweek doesn\u2019t need to be a calendar week \u2014 for example, a Wednesday to Tuesday workweek would\u00a0qualify.<\/p>\n To be exempt from overtime (and minimum wage) regulations, most employees need to be paid at least $684 per week or $35,568 annually. This is known as the salary level test. An exempt employee must also pass the job duties test, the conditions for which vary by position. For instance, to qualify for the executive<\/em> exemption, the job duties test stipulates\u00a0that:<\/p>\n Case details<\/strong><\/p>\n In the aforementioned Supreme Court case, the employee involved was a \u201ctool-pusher\u201d whose duties included supervising other offshore oil rig workers. He was paid a daily rate ranging from $963 to $1,341 per day, resulting in earnings of more than $200,000 annually. Under the compensation scheme, the daily rate increased each consecutive day\u00a0worked.<\/p>\n The employee filed suit claiming his employer violated the FLSA\u2019s overtime provisions. In response, the company argued that he was exempt from overtime pay as a \u201cbona fide executive.\u201d<\/p>\n To qualify for such an exemption, an employee must meet the salary level and job duties tests as mentioned above. But the employee also needs to satisfy the salary basis<\/em> test. Under FLSA regulations, a bona fide executive may satisfy the salary basis test if the person is a highly compensated employee (HCE) \u2014 that is, one who earns at least $107,432 or more per year (or $100,000 per year before January\u00a01,\u00a02020).<\/p>\n The Court\u2019s decision<\/strong><\/p>\n The Supreme Court held in a 6-3 ruling that an HCE who\u2019s paid at a daily rate is not<\/em> considered to be paid a salary. Therefore, the employee in question wasn\u2019t exempt from receiving overtime\u00a0pay.<\/p>\n In its majority opinion, the Court reasoned that the HCE rule isn\u2019t only a \u201csimple income level\u201d test for the purposes of exemption. It noted that the employer could have satisfied the exemption if the daily rate was a weekly guarantee that satisfied applicable regulations, or if compensation had been a straight weekly\u00a0salary.<\/p>\n The Court wasn\u2019t swayed by the company\u2019s objection that paying a weekly guaranteed daily rate or straight weekly salary would have resulted in the employee receiving compensation for days he didn\u2019t work. According to the Court, this only further showed that the employee wasn\u2019t paid a salary and, thus, didn\u2019t meet the requirements for the exemption from overtime\u00a0pay.<\/p>\n Current and compliant<\/strong><\/p>\n The business in this case joined many others that have been tripped up by the FLSA\u2019s rules. If your company pays employees overtime, our firm can help you stay current and compliant with the latest applicable regulations.<\/p>\n Helix Energy Solutions Group, Inc. v. Hewitt<\/em>, No.\u00a021-984, February\u00a022, 2023 (U.S. Supreme\u00a0Court)<\/p>\n \u00a9 2023<\/em><\/p>\n <\/body> If you were told someone earns more than $200,000 annually, you might assume the person is a salaried employee who\u2019s ineligible for overtime pay. However, as demonstrated in the recent U.S. Supreme Court case of Helix Energy Solutions Group, Inc. v. Hewitt, this isn\u2019t always a safe assumption. The FLSA rules Under the Fair Labor […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,14,10],"tags":[8,11,12],"class_list":["post-16534","post","type-post","status-publish","format-standard","hentry","category-articles","category-business","category-news","tag-articles","tag-news","tag-updates"],"_links":{"self":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/16534","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/comments?post=16534"}],"version-history":[{"count":1,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/16534\/revisions"}],"predecessor-version":[{"id":16535,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/16534\/revisions\/16535"}],"wp:attachment":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/media?parent=16534"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/categories?post=16534"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/tags?post=16534"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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