The Supremes Confirm Weekly Fixed Salary is Critical for FLSA Exempt Status!

February 28, 2023

Last week in Helix Energy Solutions Group, Inc. v. Hewitt, the Supreme Court affirmed employees must be paid a fixed salary of $684.00 per week to be considered “exempt” under the popular administrative, executive, and professional exemptions. The case involved Michael Hewitt, an oil rig worker who was paid a daily rate. His paycheck, issued every two weeks, amounted to his daily rate times the number of days he had worked in the pay period, which resulted in variable amounts of compensation per week and per paycheck.  Even though he made over $200,000 per year, this did not allow his employer to escape the fixed weekly requirement.   Justice Kagan, writing for the majority stated: “Most simply put, an employee paid on an hourly basis is paid by the hour, an employee paid on a daily basis is paid by the day, and an employee paid on a weekly basis is paid by the week.”  Based on this decision, Helix will need to audit relevant periods of Hewitt’s employment and calculate all the overtime to which he was entitled but was not paid.  In addition to backpay, Helix will also be responsible for Hewitt’s attorneys’ fees and liquidated damages totaling three times the backpay award.

What should you do in response to this decision? It is a good time for all employers to conduct an internal audit to make sure they are properly classifying employees as “exempt” and “non-exempt” in accordance with state and federal law.  This means not only paying certain exempt employees a fixed weekly salary, but also making sure those employees are actually performing the duties required for the exemption.  In addition, employers should ensure non-exempt employees are being properly paid for all hours worked, and overtime when applicable.  As it is often critical to have attorney-client privilege protection during a wage and hour audit, do not hesitate to contact our Employment Law Team for assistance.

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