Thursday, February 23, 2023

SCOTUS: Day Rate does not meet salary basis requirement

I'm not sure how this is possible, but I tend to agree with the majority and both dissents in the latest Supreme Court decision. Yesterday, SCOTUS issued its opinion in Helix Energy Solutions Group, Inc. v. Hewitt

The case dealt with a highly compensated employee who earned over $200,000 annually and performed executive duties. The employer treated him as an exempt employee and did not pay him overtime. The employee, however, was paid a daily rate of $963 (which changed at one point to $1,341). 

The "critical question," according to the majority, was whether this daily rate met the "salary basis test" - to be an exempt employee under the white collar (and corresponding highly compensated employee) exemptions, an employee must be paid on a salary basis. Per the FLSA regs:

Justice Kagan
An employee will be considered to be paid on a ‘salary basis’ . . . if the employee regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of the employee’s compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed. Subject to [certain exceptions], an exempt employee must receive the full salary for any week in which the employee performs any work without regard to the number of days or hours worked.”

29 CFR §541.602(a). 

Ultimately, the majority (opinion by Justice Kagan) reached the rather uncontroversial conclusion that paying someone a set rate "per day" does not meet the requirement that they be paid a weekly salary. 

Justice Gorsuch, however, had a rather compelling dissent noting that SCOTUS granted certiorari to decide a totally different question (and the briefs barely touched on the majority's "critical question") - he would have dismissed the case as improvidently granted. 

Justices Kavanaugh and Alito likewise make a compelling argument based on the actual facts of this particular employee. Here, the employee was paid more (at least $963) than the weekly salary requirement  (then $455) for any day he worked. Thus, any week in which he worked he would necessarily be guaranteed an amount in excess of the salary requirement for that week. Indeed, "this case would be different if Hewitt had been guaranteed, say, only $250 per day that he worked."

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