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Supreme Court Agrees to Hear Case Involving Need to Pay Highly Compensated Employee on Salaried Basis

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  • May 06, 2022

The Fair Labor Standards Act (FLSA) provides a number of exemptions from its overtime and minimum wage requirements for employees paid on a salaried basis. FLSA rules also allow certain highly compensated employees (currently at least $107,432 annually) to be considered exempt if they meet portions of the relevant exemption test. Last week, the U.S. Supreme Court agreed to hear an appeal involving whether a supervisor who made over $200,000 per year was entitled to overtime because he was not paid on a salaried basis.

The case, Hewitt v. Helix Energy Solutions Group, Inc., involves a supervisor who was paid on a daily rate basis yet never made below the $455 per week minimum salary then in effect. The district court dismissed the claim on summary judgment, finding that the plaintiff qualified as exempt under the highly compensated employee rule. The Fifth Circuit reversed this decision in an en banc ruling, holding that the highly compensated exemption does not apply to an employee who is not paid on a salary or fee basis.

Presumably, the Supreme Court will resolve a split among the federal appellate circuits on this issue. The relevant provisions of the FLSA date back almost 70 years. They were written at a time when the range of highly skilled and highly compensated jobs in the U.S. was nowhere near what they are today, including the methods of compensation. The Supreme Court will need to balance this statutory language against an outcome that could result in overtime payment to employees Congress probably never intended to cover within the FLSA’s requirements. No decision is expected in this case before next fall’s Court term.