UPDATE: Supreme Court Holds That Highly Compensated Employee Is Entitled to Overtime Pay

As previously discussed here, the U.S. Supreme Court heard argument a few months ago in Helix Energy Solutions Group Inc. v. Hewitt, one of the more notable employment law cases headlining the Court’s October 2022 Term.  The Court recently ruled in favor of Hewitt, finding that he is entitled to overtime compensation despite being paid a salary well into the six figures—clarifying that, even for highly compensated employees, overtime must be paid strictly in accordance with the letter of federal wage-and-hour regulations under the Fair Labor Standards Act (“FLSA”).

By way of background, Helix Energy Solutions Group Inc. v. Hewitt centers around Michael Hewitt, a foreman on an offshore oil rig.  Helix paid Hewitt at a rate ranging from $963 to $1,341 per day throughout his employment.  Given that Hewitt worked roughly seven days per week (followed by 28-day periods of time off before his next one-week stint of work), this already provided him with a nice chunk of change.  Indeed, Hewitt’s annual compensation exceeded $200,000.  While this would typically place Hewitt firmly within the FLSA’s overtime exemption for highly compensated employees, Hewitt argued that he was, in fact, entitled to overtime.  Hewitt’s typical workweek included seven 12-hour days, for a total of 84 hours.  As such, he  argued that he was entitled to 44 hours of overtime compensation, paid at an effective hourly rate of well over $100.

And Hewitt won.  Ruling in his favor, the Court reasoned that Hewitt was entitled to overtime because he was paid based on a daily rate, rather than an annual salary—relying upon language in an FLSA regulation stating that, for the highly compensated employee exemption to apply, the employee must be “paid on a salary or fee basis.”  29 C.F.R. § 541.601.

Hewitt’s win makes sense, as the regulation cited by the Court is clear and unambiguous.  Nevertheless, the ruling comes as a surprise given countless recent decisions by the Court that have restricted rather than expanded workers’ rights.  Indeed, even while workers’ rights are in many ways under attack, this decision serves as an important reminder that the FLSA’s protections are broader than they may seem.  Employees—regardless of their compensation structure or how much they are paid—should make sure they fully understand the rate, manner, and timing of their pay to ensure it complies with the letter of the law.

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About Alex Hartzband

Alex Hartzband's practice is focused on employment litigation. Alex is a Partner in the firm's New York office.

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