Supreme Court Will Hear Highly Paid Supervisor’s FLSA Case

Allen Smith, J.D. By Allen Smith, J.D. May 2, 2022
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An oil rig in the ocean

​The U.S. Supreme Court announced May 2 that it will review whether the Fair Labor Standards Act's (FLSA's) highly compensated executive exemption applies to a supervisor of oil rig workers who claimed overtime pay even though he earns more than $200,000 a year. We've gathered articles on the news from SHRM Online and other media outlets.

Lower Court Ruled for the Supervisor

The 5th U.S. Circuit Court of Appeals ruled last year that the FLSA did not apply to the plaintiff because he was paid a daily rate and not a salary. Supporting the plaintiff's employer, the American Petroleum Institute said in a friend-of-the-court brief that paying highly skilled supervisors daily rates has been common industry practice for decades. Upsetting that standard could be costly for businesses, it said.

(Reuters)

Payment of Daily Rate Called Significant

It is undisputed that the plaintiff performed executive duties and easily satisfied the annual earnings threshold. But a divided 5th Circuit held that he was nonexempt and entitled to retroactive overtime pay because he was paid based on a daily rate rather than at a guaranteed weekly rate, even though his daily rate worked out to be more than twice the weekly minimum.

(SCOTUSblog)

Appellate Court Split

Not only did both the appellants and the dissenting 5th Circuit judges call the ruling "counterintuitive," but the ruling in the plaintiff's favor is at odds with opposing rulings from the 1st Circuit and 2nd Circuit.

(Law & Crime)

Don't Neglect Salary Basis Rules

Employers are often focused on the salary-level and duties tests, and they neglect to fully consider salary basis rules for white-collar exemptions. The salary basis regulations contain seemingly straightforward exceptions to and examples of the general rule against deductions from salary. But applying the rules in specific situations can be vexing,

(SHRM Step-by-Step Guide to Complying with White-Collar Exemptions)

DOL Justifies Gradual Salary-Level Increase for Highly Compensated Exemption

In response to businesses' concern in 2016 that its proposed overtime rule's salary threshold for highly compensated employees was too high, the U.S. Department of Labor (DOL) raised it less steeply in the final rule that was announced in 2019. The DOL increased the exemption threshold for highly compensated employees from $100,000 a year to $107,432, rather than to $147,414 as originally proposed.

(SHRM Online)

Proposed Overtime Rule Expected Soon

The publication of a new proposed overtime rule is expected soon. Employment law attorneys are anticipating that the DOL will recommend higher salary-level thresholds for the white-collar exemptions to the rule.

(SHRM Online)

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