A recent Supreme Court ruling has upheld a 2021 Fifth Circuit decision which held that despite earning well over minimum wage , if an employee is not paid a set salary by its employer, they may be eligible to earn overtime pay when working over 40 hours per week. This is a huge win for employees across all industries. Under the Fair Labor Standards Act (“FLSA”), a worker is entitled to overtime pay as long as they do not fall under one of several exemptions, most of which consider in part whether an employee was paid a set salary for all of their hours worked. In the oil industry wage case of Helix Energy Solutions Group, Inc., et al v Hewitt, the affected worker, Hewitt, claimed that because his pay was structured as a day rate (or “daily rate”) with his wages dependent on days worked as opposed to a set salary, he should be entitled to overtime.
Hewitt looked to recover unpaid overtime for oil rig workers consistently working over 80 hours per week. Putting in significant weekly hours is not uncommon in this industry where workers will often work long arduous hours for weeks at a time until jobs at certain sites are completed. Despite being paid a day rate, defendants considered Hewitt exempt from overtime due to being classified as a “bona fide executive” because he earned over $200,000 annually. However, the FLSA has overtime protections for many workers if they can pass a three-prong test:
• the employee cannot be paid a set salary that remains unchanged regardless of the hours worked
• that employee cannot receive a set salary above a specific amount
• that employee’s job duties cannot include a managerial role, such as hiring and firing, or directing others
In this matter, the recent Supreme Court ruling zeroed in on the fact that Hewitt was not paid a set salary for his work but instead a day rate. His pay was affected by the amount of days worked, and so, fluctuated showing he did not fit the criteria to be considered exempt from overtime. Due to the FLSA being created to eliminate both “substandard wages” and “oppressive working hours”, the Supreme Court’s consensus was that the overtime provision of time and a-half pay for hours worked over 40 hours should be granted to low wage and high wage earners alike. Employees should not be deprived of the benefits of overtime pay simply because they are well paid.
If you work in the oil and gas industry, are scheduled for long hours and are paid a day rate, or a combination of pay structures, ensure you’re getting paid for all of your hours worked at the correct rate. Companies often use a variety of tactics to avoid having to pay additional benefits such as overtime that include misclassifying you as exempt for overtime. If you have any questions about being overtime eligible, regardless of if you’re a highly paid or have a lower wage income, speaking to an employment attorney is highly recommended. Our firm, Fitapelli & Schaffer, LLP, offers a free and confidential consultation to see if you may have a claim. You can reach us at (212)300-0375 or visit our website here.