U.S. Supreme Court Rules in Employee’s Favor in FLSA Claim

Federal and New Jersey employment laws require employers to pay minimum wage and overtime compensation to workers, subject to numerous exemptions. This includes employees who work in an “executive” capacity. While the federal Fair Labor Standards Act (FLSA) does not define this term, regulations provide a working definition that includes a baseline weekly rate of pay. The U.S. Supreme Court recently ruled on a dispute between an employer and an employee who earned significantly more than this amount. The parties disagreed over whether the exemption for executives applied to him. The court ruled in the employee’s favor in Helix Energy Solutions Group, Inc. v. Hewitt, finding that he is entitled to overtime compensation.

Section 7 of the FLSA requires employers to pay non-exempt employees one-and-a-half times their regular wage for hours worked over forty in a week. Section 13(a)(1), however, exempts employees who work “in a bona fide executive…capacity.” Regulations issued by the Wage and Hour Division (WHD) of the U.S. Department of Labor provide a four-part definition of an “employee employed in a bona fide executive capacity”:
1. Weekly pay of at least $684 per week on a “salary basis”;
2. Management as a “primary duty”;
3. Authority to “direct[] the work of two or more other employees”; and
4. Authority or influence over decisions regarding hiring and firing.

The regulations define “salary basis,” in essence, as payment of a predetermined amount no more frequently than once a week. At the time of the events at issue in Helix Energy, the minimum weekly pay amount was $455. The WHD amended the regulation in 2019 to raise it to $684.

The plaintiff worked for the defendant as a “toolpusher” on an offshore oil rig. His job, according to the court, involved “overs[eeing] various aspects of the rig’s operations and supervis[ing] 12 to 14 workers.” While he was on the rig, the plaintiff typically worked 84 hours per week for 28 days, followed by 28 days off. This resulted in annual pay of more than $200,000. The defendant paid him every two weeks. It did not pay him overtime, claiming that he worked in a “bona fide executive capacity.” The plaintiff disagreed and filed suit under the FLSA.

The trial court granted the defendant’s motion for summary judgment, but the appellate court reversed that ruling. In a 6-3 decision, the Supreme Court ruled in the plaintiff’s favor. It found that the key question was whether the defendant paid the plaintiff on a “salary basis.” Under the WHD’s definition, an employee is paid on a “salary basis” if their pay does not vary based on “the quality or quantity of the work performed.” This excludes workers whose pay is based on a daily rate.

The court found that the defendant calculated the plaintiff’s pay on a daily basis, even if it only paid him every two weeks. As a result, the “bona fide executive” exemption did not apply to him. The court affirmed the appellate court’s en banc ruling remanding the case to the trial court.

When their employers violate federal or state employment laws, workers in New Jersey and New York have rights. An experienced and knowledgeable employment attorney can help you assert a claim for damages against your employer. Please contact the Resnick Law Group today at 973-781-1204, 646-867-7997, or online to schedule a confidential consultation to see how we can help you.

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