The United States Supreme Court recently made a ruling that affects how some employees are paid. In the case of Helix Energy Solutions Group, Inc. v. Hewitt, the Court decided that paying employees based on a “day rate” does not meet the requirements of the salary basis test under the Fair Labor Standards Act (FLSA). This means that even highly paid workers may now be entitled to overtime pay if they are only paid based on a day rate.
Let’s understand what happened in the Helix case. The person who filed the lawsuit, called the plaintiff, worked on an offshore oil rig from 2014 to 2017. He received a fixed amount of money each day, no matter how many hours he worked. This added up to a salary of over $200,000 per year. The plaintiff believed that he should have received overtime pay because he was misclassified as exempt. At first, the district court disagreed with the plaintiff and said he was correctly classified as exempt because he received more than the minimum required amount each week.
But the plaintiff appealed the decision to the Fifth Circuit, and they thought differently. They said that the salary basis test requires employees to be paid the same amount each week, regardless of the number of days worked. Since the plaintiff’s pay changed based on the number of days he worked, it didn’t meet the definition of a salary. The employer then took the case to the Supreme Court.
The Supreme Court agreed with the Fifth Circuit. They said that when an employee’s pay is solely based on a daily rate, it doesn’t count as being paid on a salary basis. As a result, those employees cannot be exempt from the FLSA’s rules about overtime pay. In simple terms, if employees are paid a day rate, they are usually entitled to overtime pay unless they meet some other exception.
The Court looked at the rules and regulations of the FLSA and found that the definition of a salary doesn’t include someone who is paid a daily rate only for the days they work. So, a day rate is not considered a salary under the FLSA.
In conclusion, the Supreme Court ruled that paying employees based on a day rate does not meet the salary basis test under the FLSA. This means that employees who are paid only a day rate might be entitled to overtime pay. Employers need to be careful and ensure that their payment arrangements meet the requirements set by the Supreme Court in the Helix case.