By Charlotte Garden
October 14, 2022
at 5:28 p.m.
On Wednesday, the Supreme Court heard oral arguments in Helix Energy Solutions Group, Inc. v. Hewitt, a case about which very well paid employees can claim overtime. Specifically, the judges considered the meaning of Department of Labor regulations that define who qualifies as a “highly paid” “executive” employee; these employees are exempt from the usual requirement that workers be entitled to overtime when working more than 40 hours per week. The stakes are high for workers who, like plaintiff Michael Hewitt, earn six figures but are paid by the day or by shift; Hewitt was an oil rig “tool pusher”, although workers in other professions, such as nurses, will also be affected by the move.
The argument focused primarily on the relationship between various Department of Labor regulations that enforce the Fair Labor Standards Act overtime exemption as it applies to “highly paid” “managerial” employees. This exemption applies to employees who hold at least one managerial position and earn more than $107,432 per year ($100,000 when Hewitt worked for Helix), including “at least $684 per week”. [$455 at the relevant time] paid on the basis of salary or fees. The parties agree that Hewitt held an executive position and earned over $200,000 a year. The dispute centers on whether Hewitt, who received a daily wage of at least $963, nevertheless earned a “salary.”
Two other provisions shed light on this question. First, a regulation called “602” at pleading tells us that payment on a “salary basis” means that the employee “regularly receives[…]on a weekly or less frequent basis, a predetermined amount constituting all or part of the employee’s remuneration. ” And 604 states that an employee paid on an hourly, daily or shift basis can still be considered a salaried employee if his employer guarantees “at least the minimum weekly amount required”, provided that the guaranteed amount has a “reasonable ratio with the amount actually won.
Helix, represented at oral argument by Paul Clement, argues that because Hewitt’s daily rate was over $455, his compensation structure met the literal definition of 602. According to Helix, that should have been the end of the matter. , because 604 does not apply to employees in place of Hewitt. Hewitt, represented by Edwin Sullivan, argued that the daily payment cannot be considered “salary” unless the arrangement falls within the safe harbor provision of 604. (Helix does not claim that he met the “reasonable relationship” requirement of 604.) Anthony Yang, an aide to the Solicitor General, also participated in the argument, supporting Hewitt’s position.
Several judges questioned Helix’s premise that a daily rate could be a salary. Judge Ketanji Brown Jackson led the questioning on this point, focusing in part on the practical importance of a salary. She pointed out, for example, that “the regularity of a predetermined amount is how people pay mortgages.” Along the same lines, Judge Sonia Sotomayor pointed out that being paid generally means more control over one’s schedule, so that a “salaried employee who wanted to take a Friday afternoon off would not not penalized” in his salary.
But questions from other judges implied that they conceptualized salary differently. For example, Judge Clarence Thomas remarked to Sullivan that “surely you don’t normally think of someone making $200,000 a year as a day laborer.” Similarly, Judge Samuel Alito suggested that “ordinary people when the FLSA was enacted” would have thought an executive was someone who was paid as well as Hewitt and who supervised other employees – although Sullivan replied that it was. was “almost universally recognized” at that time. the time that executives earn a salary.
The judges were also interested in other aspects of the regulatory text. For example, Judge Elena Kagan questioned whether Helix truly satisfied 602’s requirement that workers “receive” a predetermined amount on a weekly or less frequent basis simply by issuing Hewitt’s paychecks every two weeks: “If you tell a client, Mr. Clement, that he must pay you on an hourly basis, are you referring to your billable hourly rate, or are you saying that the client must give you a check every hours?” But later Judge Brett Kavanaugh suggested that 602 was just “simple,” unless “received in context doesn’t really mean actual physical reception.”
A few judges also asked about the political implications of the case. For example, Alito asked both “the effect of this on low-income workers” and “how…the energy industry should structure the pay of these people who work on oil rigs. “. And Sotomayor asked Clement how his reading of the law would affect nurses, citing an amicus brief which, as Sotomayor put it, argued “your view would fundamentally destroy the health care industry because that nurses are already maintained for more than 12 hours … days at the end, because there is a shortage of them.
Finally, several judges expressed doubts about the conformity of the regulations with the legislative language. Normally, that would have been good news for Helix — except the judges also seemed to think that argument had been dropped. But the exchange was still telling for two reasons. First, it seems likely that the judges who raised the legislative argument did so because they were unconvinced by Helix’s regulatory argument. For example, Judge Neil Gorsuch told Clement that “I actually think you probably have a pretty good point about the law,” before asking him if he would prefer a decision that “responds[ed] the [regulatory] unfavorable question,” or for the court to dismiss cert’s motion as granted by shortsightedness. In other words, while it seemed like a majority of the court leaned towards Hewitt’s position, this case is unlikely to be the final word on when highly paid employees are exempt from overtime.