Friday, February 24, 2023

Divided Supreme Court says high-earner is entitled to overtime pay under FLSA

Under the Fair Labor Standards Act, you get overtime if you work more than 40 hours per week. There are many exceptions to this rule. One exception is that a "bona fide executive" is not entitled to overtime. This case from the U.S. Supreme Court examines the executive exception and finds the plaintiff is not exempt and can get his overtime pay.

The case is Helix Energy Solutions Group v. Hewitt, issued on February 22. Plaintiff worked about 84 hours a week on an offshore oil rig but got no overtime. He was a high earner, however. Paid on a "daily rate" basis, he earned anywhere from $963 to $1,341 a day, amounting to more than $200,000 annually. Under the daily rate, plaintiff got paid a certain amount if he worked one day in a week, twice as much for two days, and so on. But not a set, weekly or annual salary. Under the regulations, you are classified as an executive under the FLSA if you are paid on a "salary basis." Does plaintiff get his overtime?

The 6-3 majority rules for the plaintiff. In dissent, Justice Kavanaugh says that plaintiff seeks hundreds of thousands of dollars in lost overtime. Generally, you are classified as an executive under the FLSA if you perform executive duties and earn at least $100,000 per year with a predetermined weekly salary of at least $455 for any week that you work. Your instincts would suggest that plaintiff falls within the exception and does not get overtime. But FLSA exception rulings are more complicated than that. 

The employer did not pay plaintiff on a salary basis as defined under the statute. He got paid on a daily rate, for days that he actually worked. In contrast, other employees who might get paid even for days they do not work, such as if they are out sick, do not get overtime under the bona fide executive exception. The latter employee is a salaried worker under the dictionary definition, which is distinguished from "wages" which is "pay given for labor" at "short stated intervals." Again, these definitions derive from a standard dictionary, including one published in 1949, a decade after the FLSA was enacted. 

The 6-3 lineup mixes conservative with liberal justices. Justice Kagan wrote the decision. Joining her were Justices Roberts, Thomas, Sotomayor, Barrett and Jackson. Justice Gorsuch dissents, with Kavanaugh and Alito joining in dissent. While three conservative justices (Roberts, Thomas and Barrett) voted with the majority, this would be regarded as a "liberal" result since it allows the plaintiff to recover overtime and thus expands the rights of employees. See? Liberals don't always lose in the Supreme Court.

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