Supreme Court Decides Helix Energy Solutions Group, Inc. v. Hewitt

On February 22, 2023, the United States Supreme Court issued a decision in Helix Energy Solutions Group, Inc. v. Hewitt, No. 21-984, holding that a “daily rate worker” was not exempt from the FLSA’s overtime guarantees notwithstanding his purported status as a “highly compensated employee,” because the employee’s compensation did not satisfy the “salary basis test,” which required compensation at a predetermined amount per week (or less frequently) regardless of the number of hours the employee actually worked during the pay period. There were, however, two separate dissents that set forth the positions of three justices.

The Supreme Court affirmed a divided Fifth Circuit panel, which held an employee who worked on an offshore oil rig could avail himself of the FLSA’s overtime guarantees because the employee was not paid on a salary basis pursuant to 29 C.F.R. §§ 541.602(a), 604(b). The plaintiff-respondent had challenged the company’s failure to pay him overtime, even though he averaged 84 hours in a workweek. Helix argued that the employee was not owed overtime because he was a “bona fide executive.” The District Court agreed, but the Fifth Circuit Court of Appeals reversed and held that the plaintiff could not be considered an exempt executive, regardless of his income level, because his compensation structure did not satisfy the plain text of Section 602(a), nor the “special rule” of Section 604(b), both of which defined daily-rate workers as salaried employees under certain circumstances.

The only question raised to the Supreme Court was whether the “daily rate” of pay satisfied the salary-basis requirement under Section 602(a). The Court observed that, as a matter of “common parlance,” a salary provided “the stability and security of a regular weekly, monthly, or annual pay structure.” Even though pay was distributed on a bi-weekly basis, it was calculated using the number of days actually worked; if there were days he was not working, he was not paid for them. Accordingly, Helix’s policy violated the principle that an employee be paid either a true salary or overtime.

The opinion was authored by Justice Kagan, joined by Chief Justice Roberts, and Justices Thomas, Sotomayor, Barrett, and Jackson. Justice Gorsuch filed a dissenting opinion. Justice Kavanaugh filed a dissenting opinion in which Justice Alito joined.