On February 22nd, 2023, the U.S. Supreme Court ruled in favor of an oil rig worker for overtime exemptions under the Fair Labor Standards Act (FLSA). Under the Helix Energy Solutions Group Inc. v. Hewitt case, the Supreme Court ruled that to be exempt from the requirement of being paid overtime after working over 40 hours a week, an employer must pay the employee their full salary in any week in which they perform work. In simpler terms, the recent ruling declared that highly compensated employees could be eligible for overtime pay if they are paid on a daily basis. If the employer does not follow that, the employee is entitled to overtime compensation regardless of their job duties or position.
Understanding The Court Case
During the Helix Energy Solutions Group Inc. v. Hewitt court case, the Supreme Court was asked whether an overtime exemption under the FLSA applied to non-salaried high-earning employees. The distinction, in this case, is whether a high-earning employee should be compensated on a salary basis when his paycheck is based on a daily rate. The Supreme Court declared the long-standing FLSA and Department of Labor regulations to be upheld and considered a salaried, overtime-exempt employee, the employee must receive his full weekly salary in any week in which the employee performs any work.
What You Should Know As A Business Owner
The new ruling makes it essential for business owners to implement the criteria within their businesses properly. If you don’t, you could face hefty penalties. Let’s break down what the ruling says and what you should know.
- Employees are exempt from overtime under the FLSA if they earn at least $107,432 per year on a salary basis (now at least $684 per week) and perform executive, administrative, professional, or outside sales work
- The predetermined salary level cannot vary based on the quality or quantity of work
- Business owners may use nondiscretionary bonuses, incentive payments, and commissions to meet up to 10% of the standard level salary
- To be considered an executive, the employee must manage the business, direct the work of at least two full-time employees, and have the authority to hire or fire employees
- An administrative employee is considered an individual who performs office or nonmanual work directly related to management or general business operations
- A professional employee is defined as one who must do work that requires advanced knowledge, is predominantly intellectual in character, and includes exercising discretion and judgment
Additional information can be found here.
Additional Measures To Take
Everchanging rules and regulations is a constant battle you face as a business owner. You didn’t start your business to become a lawyer or one who understands and implements every single law associated with your business. That’s where Group Management Services (GMS) comes in to help you. Our team of HR experts ensures you remain compliant with every new law that can affect your business. Whether it’s creating a job offer that clearly states their compensation and overtime pay or working with you to implement these new laws and regulations, we’re here to help. Ready to alleviate some of the weight you’re carrying? Contact us today.