Paid “By-the-Day”? You Might be Owed Overtime, Even if Highly Paid

 In Employment Law, Overtime Law, Wage Law

Salaried-Exempt from Overtime?

A federal court of appeals recently issued an opinion holding that, if an employee is paid “by-the-day,” that employee is not exempt from overtime—and thus, is entitled to overtime pay. This applies even if the employee is highly paid — that is, receives more than $50,000 to $100,000 or more in annual compensation. See Hewitt v. Helix Energy Solutions Group, Case No. 19-20023 (5th Cir. 2021). The complexity of wage and hour law is one reason that, if you think your rights as an employee have been violated, you should seek the advice and counsel of experienced Employee Rights attorneys. Here is a quick explanation of the case.

Under federal law, certain highly paid employees do not have to be paid overtime. Such employees are considered “exempt” from the overtime pay requirement. But to be salaried exempt from overtime, three conditions must be met. Note that ALL three conditions must be met. They are:

  • The employee must be highly paid — not less than $684 per week which is about $35,500 a year — if an employee is paid less than this, the employee is entitled to overtime
  • The employee’s duties and responsibilities must meet the definition of “executive, administrative or professional employee” AND
  • The employee must be paid on a “salary basis” — which means being paid a “predetermined amount of compensation each pay period”

See US Department of Labor fact sheet here. If all three conditions are not met, then the employee is not “exempt” and is entitled to overtime if they work more than 40 hours in any given work week. Note, that employers must comply with state laws if state laws differ from the federal requirements. Thus, for example, in California, the threshold is $1,120 per work.

In the Hewitt case, the federal court held that the employer did not satisfy the three conditions to avoid having to pay overtime. In particular, the court held that paying compensation based on a “per-day rate” did not meet the definition of “salary basis” as defined by the US Department of Labor. Thus, the employees were entitled to be paid overtime. This was the court’s decision, even though the employees at issue were much more than “highly paid.”

The court explained that a “per-day rate” could still satisfy the requirements for exemption from paying overtime if the employee still received a guaranteed weekly minimum payment and there was a “reasonable relationship” between the guaranteed weekly minimum and the actual amount earned per week or hour. In Hewitt, there was no reasonable relationship shown. As such, since the employees received a “per-day rate” — and not a “salary” — the employees were entitled to overtime pay.

So, as can be seen, do not assume that you cannot receive overtime pay just because you are highly paid. An employer must satisfy ALL legal conditions to be exempt from having to pay overtime.

Call the Employee Rights Attorneys at Herrmann Law Today

For more information, call the Employee Rights attorneys at Herrmann Law. If you think that your employer has engaged in wage theft or has otherwise violated your rights as an employee, call us. We are proven, experienced, employee-focused attorneys representing workers across the United States in all types of workplace disputes. Use our Online Contact page or call us at (817) 479-9229. We are more than just a law firm for employees – we are an employee’s fiercest advocate, equipping employees with the legal representation needed to achieve the best result possible.

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