In April 2020, a three-judge panel of the U.S. Court of Appeals for the Fifth Circuit held that paying an worker a set quantity for every day that he works (i.e., on a “day rate” foundation) doesn’t fulfill the “salary basis” element required to qualify as overtime-exempt below the Truthful Labor Requirements Act (FLSA), no matter whether or not the worker earns the weekly minimal wage (presently, $684) required for the exemption. The total Fifth Circuit subsequently heard the case and, in a 12-6 opinion, reached the identical conclusion. Hewitt v. Helix Power Sols. Group, Inc., 15 F.4th 289 (fifth Cir. 2021), cert. granted, No. 21-984 (U.S. Could 2, 2022). The Sixth and Eighth Circuit Courts of Enchantment beforehand had arrived on the similar conclusion. The U.S. Supreme Court has now granted certiorari and, presumably throughout subsequent Fall’s time period, will decide whether or not the evaluation of Fifth, Sixth, and Eighth Circuits concerning the FLSA’s salary-basis requirement was sound.
The FLSA Regulation
The related U.S. Division of Labor (DOL) regulation offers:
[A]n worker can be thought of to be paid on a “salary basis” inside the which means of this half if the worker recurrently receives every pay interval on a weekly, or much less frequent foundation, a predetermined quantity constituting all or a part of the worker’s compensation, which quantity isn’t topic to discount due to variations within the high quality or amount of the work carried out.
29 C.F.R. § 541.602(a). The regulation additional offers that “an exempt employee must receive the full salary for any week in which the employee performs any work without regard to the number of days or hours worked.” Id. § 541.602(a)(1). Moreover,
[a]n exempt worker’s earnings could also be computed on an hourly, a day by day or a shift foundation, with out shedding the exemption or violating the wage foundation requirement, if the employment association additionally features a assure of no less than the minimal weekly required quantity paid on a wage foundation whatever the variety of hours, days or shifts labored, and an inexpensive relationship exists between the assured quantity and the quantity truly earned. The affordable relationship check can be met if the weekly assure is roughly equal to the worker’s typical earnings on the assigned hourly, day by day or shift price for the worker’s regular scheduled workweek.
29 C.F.R. § 541.604(b) (emphasis added).
In Hewitt, the plaintiff labored on an offshore oil rig for intervals of a couple of month at a time, often called “hitches.” The corporate paid the plaintiff a set quantity for every day that he labored, and he acquired bi-weekly paychecks. Regardless of incomes over $200,000 throughout every of the 2 years he was employed, and admittedly being paid no less than $455 for every week through which he labored (the minimal wage required for exempt standing below the FLSA in the course of the time of his employment), the plaintiff filed go well with, claiming he was entitled to extra time for every week he labored in extra of 40 hours.
Citing the DOL’s laws, the en banc Fifth Circuit concluded that “respect for text forbids us from ignoring text. As a matter of plain text, we hold that, when it comes to daily-rate employees like Hewitt, Helix must comply with § 541.604(b).” As a result of the Firm admitted that it paid the plaintiff strictly on a day-rate foundation with out a weekly assure, it failed to fulfill the “salary basis” requirement of the FLSA’s extra time exemption provisions. The Court of Appeals added that Helix simply may have complied with this requirement by guaranteeing the plaintiff $4,000 or so weekly, which moderately would have equated to the $963 day by day price it truly paid. The Fifth Circuit famous that the Sixth and Eighth Circuit Courts of Enchantment, in addition to the U.S. Division of Labor and most federal district courts, likewise have concluded that Part 541.604(b)’s weekly assure should be glad, even for extremely paid staff just like the plaintiff.
As a result of “day rate” pay is a longstanding frequent observe within the power trade, the Supreme Court’s resolution on this problem is especially necessary.