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SCOTUS ponders: Ought to a employee making $200K yearly be overtime-exempt?

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Michael Hewitt and his employer, oil and gasoline firm Helix Power Options Group, agree: His duties as a device pusher meet the outline of a bona fide government, administrative or skilled worker beneath the Honest Labor Requirements Act. They agree, too, that Hewitt is paid properly for his companies, incomes greater than $200,000 a yr.

On the floor, these particulars alone could seem unlikely to present rise to an employment legislation dispute performed out earlier than the nation’s highest court docket. And but, there Helix and Hewitt have been on Oct. 12, with the 9 justices of the U.S. Supreme Courtroom analyzing a small wrinkle in an in any other case presumably easy employment relationship.

Specifically, is Hewitt — a employee paid extremely on a day by day, quite than a weekly, foundation  entitled to earn considerably more cash in extra time pay?

A quick overview of FLSA’s wage necessities for OT exemption

Half 541 of the FLSA’s rules describe the situations beneath which bona fide government, administrative or skilled staff could also be granted exemption from the legislation’s minimal wage and extra time necessities. To qualify, employees should not solely carry out sure duties as outlined by the FLSA — i.e. the “duties take a look at” — however in addition they should be compensated on a wage foundation. 

In accordance with Half 541.600, exempt staff typically should be compensated on a wage foundation at a fee of lower than the required weekly quantity, at the moment $684 per week. Half 541.602 additional defines “wage foundation” as a state of affairs during which an worker receives a “predetermined quantity constituting all or a part of the worker’s compensation which quantity isn’t topic to discount due to variations within the high quality or amount of the work carried out.” This quantity should be obtained every pay interval on a weekly or much less frequent foundation.

Of curiosity in Helix is Half 541.601, which outlines an exemption for sure extremely compensated employees, outlined as these with a complete annual compensation of $107,432. These employees should nonetheless be paid a minimum of $684 per week “on a wage or payment foundation as set forth” in 541.602; the overall annual compensation might embrace commissions, nondiscretionary bonuses and different nondiscretionary compensation; and employers are allowed to make so-called “catch up” funds to realize the required pay stage by the tip of the yr.

What makes Hewitt’s case of curiosity is that Helix compensated him utilizing a day fee, arguably not on the “weekly or much less frequent foundation” laid out in 541.602. Helix disputes this. In oral arguments Oct. 12, Paul D. Clement, counsel for Helix, stated that Hewitt was assured to earn $963 “for any week during which he labored a minute” and thus met the weekly minimal requirement, though the corporate specified his fee as $963 per day.

Clement argued that this fee nonetheless satisfies 541.602’s wage requirement, as a result of “the take a look at is absolutely, what’s the quantity that you just obtain in any week during which you’re employed a minimum of one minute? And for this employee, that was $963 or extra, and that $963 was a assure.”

‘I don’t learn the regulation that approach’

Helix’s interpretation of the FLSA rules met opposition from the court docket’s three liberal justices. Justice Ketanji Brown Jackson questioned Clement’s studying of 541.602, particularly that the regulation’s wage take a look at might be summarized as the quantity a employee receives in any week during which the employee works a minimum of one minute.

“Counsel, I don’t learn the regulation that approach,” Jackson stated. “Actually, when [541.602] talks about what it means to be paid on a wage foundation, it seems to be trying on the predictability and the regularity of the fee, not the quantity.”

Helix Power Options Group’s interpretation of the FLSA regs drew questions from members of the court docket’s liberal wing, together with Justice Ketanji Brown Jackson.

Drew Angerer by way of Getty Photos

 

Jackson requested how the definition of “salaried” worker might apply to Hewitt, provided that his pay might differ from week to week: “One week, it might be the minimal quantity as a result of he labored a minute. One other week, it might be far more than that as a result of he labored greater than a minute. Why is that not the way in which we should always take into consideration wage foundation given this regulation?”

Clement responded partly by saying that 541.602 “is kind of particular” in regards to the distinction between wage and compensation. He stated that the “predetermined quantity” included within the wage foundation definition of 541.602 want solely represent “all or half” of an worker’s compensation. “And, with all due respect, the regulation does not ask for stability above that,” he added.

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