Article Summary

In Helix Energy Solutions Group Inc. v. Hewitt, the Supreme Court confirms the difference between a salary and an hourly or daily wage — and it decides that, under the most common rule, wage workers must get time-and-a-half for overtime even if their overall paycheck is already very high. The 6-3 opinion is striking for ordering overtime for an oil-rig worker who already earned more than $200,000 annually, but it also offers several important lessons.

This expert analysis by TELG principal & general counsel Nicholas Woodfield was published by Law360 on February 24, 2023.

Originally published in:

Takeaways from the Supreme Court’s Big Overtime Case

By Nicholas Woodfield

Writing on Wednesday for a 6-3 U.S. Supreme Court majority in Helix Energy Solutions Group Inc. v. Hewitt, Justice Elena Kagan refused to treat an oil rig worker’s high daily wage as the legal equivalent of a salary for the simple reason that a salary under the Fair Labor Standards Act of 1938 is described as a “predetermined” weekly (or less frequent) amount that’s paid “without regard to the number of days or hours worked.”

At first blush, the Helix decision seems remarkable for its determination that an oil rig worker who makes $200,000 a year can still be entitled to overtime. Court watchers and FLSA practitioners will note, however, that the decision also offers two more important takeaways.

First, textualism is a double-edged sword: Here a liberal justice wielded it to usher three conservatives to an employee-friendly outcome, leaving Justice Brett Kavanaugh to complain in dissent that the text of the U.S. Department of Labor’s FLSA regulations may simply be wrong, inviting future litigants to challenge the regulation itself “as inconsistent with the Act.”

And second, the Supreme Court wants federal courts to apply the FLSA’s provisions broadly to all workers, regardless of pay level, even where the outcome might seem out of step with a New Deal statute that’s best known for creating a minimum wage to protect the lowest-paid.

Here Helix, the employer, paid Michael Hewitt based purely on the number of days he worked during a period, so it didn’t pay him “on a salary basis,” according to Justice Kagan. Meanwhile, even Helix conceded that it didn’t meet an alternative FLSA standard that allows employers to guarantee its wage workers a minimum weekly payment that approximates a salary.

The employer’s main backup argument was policy-based: requiring overtime for high earners would hurt business.

Justice Kagan wrote in rebuff: “As this Court has explained, ‘even the most formidable policy arguments cannot overcome a clear’ textual directive.” And in any case, she said, depriving Mr. Hewitt of overtime in this case could threaten lower-paid workers, too:

Some nurses working on a per-day or per-shift ba­sis are likely to meet [the standard urged by Helix for losing overtime]; and their employers would assure them [a token weekly payment] in a heartbeat if doing so eliminated the need to pay overtime. And nurses … are not alone: They “are just one of the many examples” of workers paid less than $100,000 a year who would, if Helix prevailed, lose their entitlement to overtime compensation.

Thus the court’s unambiguous instruction to the federal bench: Don’t second-guess the plain meaning of permissive FLSA regulations. As long as employees aren’t deemed as salaried and don’t fall under any other FLSA exemption, their pay rate is irrelevant and they’re entitled to be paid for the overtime they work.

What ‘Salary’ Means Under the FLSA

The FLSA’s overtime provisions serve multiple purposes: to discourage excessive workloads generally; to incentivize employers to hire multiple people rather than pushing individuals too hard; and to compensate workers fairly for unusual burdens.

The statute applies to all employees unless they’re specifically exempted — and the most common exemption is for workers in “bona fide executive, administrative, or professional” positions. The FLSA leaves it to the Labor Department to define those terms via regulations.

As relevant to the Helix case, the regulations say that employees are exempt from overtime requirements if they meet three criteria:

  • They are paid on a salary basis;
  • The salary exceeds a certain amount, which at the relevant time was about $24,000 a year; and
  • They perform certain duties.

The qualifying duties vary between lower- and higher-paid employees, but in this case everyone agreed that Mr. Hewitt, who worked as a so-called tool pusher in two-week stints on an offshore rig, was paid far above the threshold amount and also that he performed the requisite duties.

They clashed, however, on whether his daily rate of $963 to $1,341 counted as a salary, as required. Two regulations, 29 C.F.R. §§ 541.602(a) and 604(b), might have applied.

Under 602(a), employees are salaried if they “receive each pay period on a weekly or less frequent basis, a predetermined amount [that] is not subject to reduction because of variations in the quality or quantity of work performed.”

Under 604(b), meanwhile, employees are deemed to pass the “salary basis” test even if they’re paid by the hour, shift, or day, as long as they’re paid a weekly guarantee that’s over a threshold and bears a “reasonable relationship” to their earnings for a “normal scheduled workweek,” which the Labor Department has interpreted as requiring at least two-thirds of a typical paycheck.

Justice Kagan didn’t delve deeply into 604(b), as Helix agreed that it didn’t provide Mr. Hewitt with such a guarantee in any case — though she established that 604(b) could, in theory, allow a high-earning daily worker to be deemed as salaried.

Instead, she focused on 602(a), the operative regulation.

It’s Not About the Amount

In Christopher v. SmithKline Beecham Corp., which was decided by the Supreme Court in 2012 and concerned a different FLSA exemption, Justice Samuel Alito’s then-majority opinion described salespeople who earned “well above the minimum wage” as “hardly the kind of employees that the FLSA was intended to protect.”[1]

Justice Kagan was a dissenter then, and more than a decade later she mustered a majority for the proposition that the FLSA’s overtime rule isn’t triggered by raw paycheck amounts, nor does it rely on an Ivy Leaguer’s intuition about who counts as working class. Rather, 602(a) offers an exemption only to salaried employees — and even a sky-high wage isn’t the same as a salary.

In this regard the FLSA and its implementing regulations reflect “the statutory choice not to set a simple income level as the test for exemption,” she wrote. “Some might have made a different choice, but that cannot affect what this Court decides.”

Via dictionary citations and other textual tools, Justice Kagan concluded that 602(a)’s salary requirement “just reflects what people ordinarily think being ‘salaried’ means” — that is, being paid in units of a week or more. It is the “very opposite” of being paid a day rate, as Mr. Hewitt was, she said, citing approvingly to and affirming the decision of the U.S. Court of Appeals for the Fifth Circuit.

Writing for a six-justice majority that included originalist and textualist Justice Clarence Thomas, the majority denied the putative logic of Justice Kavanaugh’s dissent, joined by Justice Alito, which opened by highlighting Mr. Hewitt’s generous pay rate and then, according to the majority, “trie[d] just to power past the regulatory text” and its all-important definition of “salary.”

Justice Neil Gorsuch, meanwhile, wrote a brief separate dissent that opined that the justices should have dismissed the Helix case as improvidently granted because it “does not tee up [the] issue in the way we hoped.”

Although it wasn’t intended for this purpose, Justice Kavanaugh’s dissent will garner fans among employee-side advocates: They can now point to its argument — one that’s frequently deployed by defendants in lower courts — as having been found inconsistent with the unambiguous text of the regulations.


Nicholas Woodfield is principal and general counsel of The Employment Law Group, P.C.

[1] Christopher v. SmithKline Beecham Corp., 567 U.S. 142, 166 (2012).

(Note: This article has been edited slightly from the version published by Law360, and carries a different headline.)