According to the United States Supreme Court, employees who are paid a day rate are entitled to overtime if they are not guaranteed certain compensation that is reasonably related to the amount earned. Last year, in Helix Energy Solutions Group, Inc. v. Hewitt, 589 U.S. 39 (2023), the Court determined that an employee who was paid a day rate and earned more than $200,000 annually was not paid on a “salary basis,” as required for the highly-compensated employee (HCE) exemption to apply. As a result, the Court determined that despite his high total yearly income, he was entitled to overtime compensation under the Fair Labor Standards Act (FLSA). This landmark decision means that thousands of highly paid day rate workers have been wrongly misclassified as exempt from the FLSA and thus, are entitled to unpaid overtime wages, attorney’s fees and expenses, and possibly liquidated damages.
In Helix, the employee claimed he had been denied overtime pay after being wrongly designated as exempt from the FLSA’s overtime requirements. He worked twenty-eight day “hitches” on an offshore oil rig, working up to 84 hours a week. He typically worked twelve-hour shifts every day, sometimes seven days a week. The plaintiff was paid on a daily rate basis, without overtime pay. His daily pay ranged from $963 to $1,341, or more than $200,000 annually.
His employer, Helix Energy, argued that the plaintiff was covered by 29 C.F.R. §541.601, the DOL’s exception for highly compensated employees. The highly compensated employee (HCE) exemption at the time applied to workers whose primary responsibilities included office or non-manual work; who regularly and customarily carried out at least one task associated with being an exempt executive, administrative, or professional employee; who received at least $455 per week on a “salary or fee basis”; and who made at least $100,000 annually. (Currently, the weekly pay threshold pay is $684 and the total compensation amount is $107,432.)
The Court ruled that, in accordance with 29 C.F.R. §541.602(a), whether the employee was paid on a “salary basis” constituted the “critical question.” According to that regulation, when an employee “regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of the employee’s compensation,” they are paid on a “salary basis.”
Helix had maintained that the worker’s compensation satisfied the salary basis test criteria because he was certain of receiving a sum exceeding the $455 weekly threshold for each workweek. The Court dismissed this claim, ruling that the standard is “not met when an employer pays an employee by the day” and that §541.602(a) “applies solely to employees paid by the week (or longer).” In order for the exemption to apply the employee must be guaranteed to earn at least the weekly threshold, as well as a reasonable relationship between the amount guaranteed and the amount earned.
The Court noted that the word “salary” generally refers to a “steady and predictable stream of pay.” The Court further declared that even a “high-earning employee” who is paid by 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” is “not paid on a salary basis, and thus entitled to overtime pay.”
Many business sectors, such as the oil and gas industry, construction, repair and maintenance, and nursing, have paid workers using a day rate with the mistaken belief that the daily payment is “salary” for FLSA purposes. This means that numerous workers were wrongfully denied overtime compensation and are entitled to back wages.
If you have been paid on a day-rate basis, you may be entitled to overtime compensation. Call the experienced attorneys at Bohrer Brady, LLC for a free, confidential initial evaluation at (800) 876-3911, or email info@bohrerbrady.com. You may also be entitled to liquidated damages, attorneys’ fees, and expenses.
