A New Wage and Hour Ruling from the U.S. Supreme Court and Its Potential Impact on Some High-Earners in Georgia

In an important new ruling, the U.S. Supreme Court recently clarified the standards under which a worker does (or does not) qualify as a salaried exempt employee for purposes of overtime compensation. The 6-3 decision in favor of an oil rig worker clarifies that just because an employee earns a very high income, that does not automatically mean that he/she is an exempt employee. Regardless of how much you make, if you think that you meet the legal standards for a non-exempt employee, then you may be entitled to overtime pay and if your employer didn’t compensate you accordingly, you potentially can, with the aid of the right Atlanta unpaid overtime lawyer, win compensation in a Fair Labor Standards Act lawsuit.

The worker, M.H., worked as a tool pusher on an offshore oil rig. That job typically entailed the employee working 12-14 hours per day, seven days per week for a stint of four weeks, followed by four weeks off. The employer paid the pusher a daily rate of $963. All totaled, the worker earned more than $200,000 annually.

Neither the worker nor the employer argued that 29 CFR 541.604(b) applied to the pusher’s circumstance. That’s the federal regulation that says that if a worker receives extra pay based on his/her work hours, he/she can still be an exempt employee so long as there was a “reasonable relationship” between the worker’s periodic salary and the amount the worker actually earned each period.

The employer did, however, assert that another federal regulation — 29 CFR 541.602(a) — applied and made the pusher an exempt employee. This regulation imposes a “salary basis” test that requires that a qualifying worker “receive a predetermined and fixed salary that does not vary with the amount of time worked.”┬áThe employer had a major problem with that argument, though, as it specifically paid M.H. $963 per day and Section 541.602(a) explicitly excludes day-rate workers.

The court’s decision spotlights some basic concepts about the purpose of the FLSA and entitlement to overtime compensation. The Supreme Court has been clear — going all the way back to 1945 — that workers “are not deprived of the benefits of overtime compensation simply because they are well paid.”

Additionally, the courts have also highlighted the fact that the FLSA’s overtime standards exist not only to discourage employers from overworking their workers but also to spread available work among more workers. To that end, “Congress has repeatedly rejected efforts to categorically exempt all highly paid employees from overtime requirements.”

Ways to Avoid the Pitfall that Ensnared the Employer in This Case

M.H.’s employer could have met the salary-basis test if it had simply done a few things differently, according to the court. The employer could have added a weekly guarantee to the pusher’s pay that met the requirements of Section 541.604(b). Alternatively, it could have paid the pusher on a “straight weekly salary” based on the time the pusher spent on the rig. It did neither, however, so M.H. was not exempt and was entitled to overtime compensation.

This oil rig worker’s success is a reminder that people often can form misconceptions about wage and hour law, such as mistakenly believing (or being persuaded) that you automatically must be an exempt employee (and ineligible for overtime compensation) if you make above a certain dollar threshold.

If you have questions about the way you’re being paid and its legality under the FLSA, the skilled Atlanta wage and hour attorneys at the law firm of Parks, Chesin & Walbert are here to give you the knowledge-based and experience-driven answers upon which you can confidently rely. Contact us through this website or at 404-873-8048 to schedule a consultation.

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