Director, Center for Supreme Court AdvocacyNational Association of Attorneys General
This Report summarizes opinions issued on April 28 and May 2, 2022 (Part I); and cases granted review on April 25 and May 2, 2022 (Part II).
Case Granted Review: Helix Energy Solutions Group, Inc. v. Hewitt, 21-984
Helix Energy Solutions Group, Inc. v. Hewitt, 21-984. This case considers whether a supervisor earning at least $100,000 annually is eligible for retroactive overtime pay under the Fair Labor Standards Act (FLSA). Respondent Michael Hewitt worked as a “toolpusher” for petitioner Helix on an offshore oil and gas rig. The “toolpusher” position is supervisory, “largely administrative,” and “typically second-in-command on the entire vessel.” Helix paid Hewitt bi-weekly at a daily rate of at least $963. After the company fired Hewitt, he filed a putative class action seeking retroactive overtime pay. Hewitt alleged that he could not be deemed exempt from (i.e., ineligible for) overtime pay without satisfying 29 C.F.R. §541.604(b), because his pay was “computed” on a daily basis and not a “salary basis.” Helix argued that §541.604 was not relevant because Hewitt was “employed in a bona fide executive, administrative, or professional capacity” and exempt as a “highly compensated employee” under 29 C.F.R. §541.601 because his daily rate of pay exceeded the minimum weekly amount needed to qualify as a salaried employee. The district court agreed with Helix, but a divided en banc Fifth Circuit reversed, holding that §541.604 applies and that Helix failed to satisfy the regulation. 15 F.4th 289.
The FLSA “establishes a standard 40-hour workweek and requires employers to pay covered employees ‘one and one-half times the regular rate’ for any additional time worked” (i.e., overtime pay). 29 U.S.C. §207(a). Congress exempts “highly compensated” employees from overtime pay if they (1) earn at least $100,000 per year; (2) are paid a minimum predetermined amount of at least $455 per week on a salary basis as set forth in 29 C.F.R. §541.602; and (3) perform duties of an executive, administrative, or professional employee, as defined by the FLSA. 29 C.F.R. §541.601(a)-(b). Under 29 C.F.R. §541.602(a), an employee is paid on a “salary basis” if he “’ regularly receives each pay period on a weekly, or less frequent basis,  a predetermined amount constituting all or part of the employee’s compensation,  which amount is not subject to reduction because of variations in the quality or quantity of the work performed.” Under subsection (b) of §541.604, an employee is non-exempt (i.e., eligible for overtime) if (1) he earns the minimum weekly amount paid on a salary basis, and (2) for an employee whose pay is calculated on an hourly, daily, or per-shift basis, there is “a reasonable relationship . . . between the amount guaranteed and the amount actually earned.”
In a 12-6 decision the en banc Fifth Circuit held that Hewitt was not paid on a salary basis and thus was not entitled to overtime pay notwithstanding his high compensation. The court applied the two-part test in §541.604(b) and concluded that Helix failed both elements. The court rejected Helix’s theory that the daily rate paid to Hewitt is the minimum weekly guaranteed amount for salaried employees because, as the court said, “a daily rate, by definition, is paid with regard to―and not ‘regardless of’―‘the number of . . . days . . . worked.’” (Citation omitted.) The court also held that Helix did not pass the reasonable-relationship test in §541.604(b) because “Helix pays Hewitt orders of magnitude greater than the minimum weekly guaranteed amount theorized by Helix (Hewitt’s daily rate).” The court mentioned but did not clearly analyze the facts under the more general rule in §541.602(a), requiring a regular predetermined amount paid on a weekly or less frequent basis, regardless of the number of days or hours worked.
The question presented by Helix is “[w]hether a supervisor making over $200,000 each year is entitled to overtime pay because the standalone regulatory exemption set forth in 29 C.F.R. §541.601 remains subject to the detailed requirements of 29 C.F.R. §541.604 when determining whether highly compensated supervisors are exempt from the FLSA’s overtime-pay requirements.” Helix argues that a win for Hewitt would result in a windfall to an already highly compensated (former) employee, and asserted that the analysis into whether Hewitt was exempt should have started and ended with a review of §541.601, without any consideration of §541.604. According to Helix, Hewitt satisfies the “salary basis” test because (1) Hewitt received paychecks on a bi-weekly (i.e., less frequent than weekly) basis; (2) as long as Hewitt worked one day, he was guaranteed to make a predetermined amount that always exceeded the minimum salary of $455/week; and (3) the predetermined amount of at least $963 paid to Hewitt was not subject to reduction or variations in the quality or quantity of the work performed. Helix also argues that §541.604 does not apply to highly compensated employees and should be reserved “for employees making far less than” the annual threshold of $100,000 for highly compensated employees. Helix additionally claims that reading §541.601 as a standalone provision “give[s] employers certainty and streamline[s] the process with respect to highly compensated employees. Their high salary moots the need to undertake some of the more detailed regulatory inquiries appropriate for workers making one-fourth as much.”