The U.S. Supreme Court on Monday agreed to decide whether a supervisor of offshore oil rig workers is entitled to overtime pay under federal law even though he earns more than $200,000 a year, with potentially costly implications for the oil and gas industry and other employers.
The justices granted certiorari to Helix Energy Solutions Group Inc, which says the employee, Michael Hewitt, qualifies as a "highly compensated executive" who is exempt from overtime pay under the Fair Labor Standards Act.
The en banc 5th U.S. Circuit Court of Appeals in a 12-6 ruling last year said that despite his high pay, the FLSA exemption did not apply to Hewitt because he was paid a daily rate and not a salary. A three-judge 5th Circuit panel had also sided with Hewitt in a 2020 decision.
Helix in a January petition told the Supreme Court that the 5th Circuit's rigid reading of the FLSA undermined the law's purpose of protecting rank-and-file blue-collar workers.
In an amicus brief backing the company, the American Petroleum Institute and other oil and gas trade groups said paying highly skilled supervisors daily rates has been common practice in the industry for decades. Upsetting that standard would be costly for businesses and could open them up to a flood of lawsuits from highly paid workers, the groups said.
The company's petition was also backed by six Republican-led states.
Helix and its lawyer, former U.S. solicitor general Paul Clement of Kirkland & Ellis, did not immediately respond to requests for comment. Neither did Edwin Sullivan of Oberti Sullivan, who represents Hewitt.
The FLSA says an employee is paid on a salary basis if he "regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount," and without regard to the number of days or hours worked.
Hewitt in a 2017 lawsuit claimed that the definition did not apply to him even though he was paid more than $1,000 a day, because he did not know ahead of time how much money he would earn in a given pay period.
A federal judge in Houston dismissed the case, saying that because Hewitt knew his daily rate, his wages were "predetermined" under the FLSA. But the 5th Circuit said the law requires a guaranteed minimum weekly wage.
The case is Helix Energy Solutions Group Inc v. Hewitt, U.S. Supreme Court, No. 21-984.
For Helix: Paul Clement of Kirkland & Ellis
For Hewitt: Edwin Sullivan of Oberti Sullivan
(Reuters report by Daniel Wiessneer)