Update Applicable to:
On February 22, 2023, the Supreme Court held that high-earning professionals must be paid on a salary basis to qualify for overtime-exempt status under the Fair Labor Standards Act (FLSA).
What are the details and what should you do?
Relevant Department of Labor regulations states that highly compensated employees are exempt from overtime pay requirements if:
- The employee earns total annual compensation of US$107,432 or more, which includes at least US$684 per week paid on a salary or fee basis;
- The employee’s primary duty includes performing office or non-manual work; and
- The employee customarily and regularly performs at least one of the exempt duties or responsibilities of an exempt executive, administrative, or professional employee.
In Helix Energy Solutions Group, Inc. v. Hewitt, the Supreme Court found that Helix Energy Solutions Group Inc. violated the FLSA by classifying an employee who earned over US$200,000 per year as overtime-exempt but calculated his pay daily rather than on a salary basis. Although the employee made well over US $107,432 in a year and met the second and third requirements of the above test, the Supreme Court held that the employee was nevertheless not exempt under the FLSA, and thus entitled to overtime pay, because his annual compensation did not include “at least $684 per week paid on a salary or fee basis.”
Employers should not interpret this ruling to mean that all highly compensated executives are now overtime eligible. Rather, as long as such employees are compensated on a salary basis (which the vast majority are) and meet the other requirements, the Supreme Court ruling would not require an employer to pay them overtime.
Although this ruling may have limited applicability to most employers, it is always prudent to regularly review employment classifications when new guidance or decisions are issued.
For more information, please see the links below:
Schedule a Call
Learn more about VensureHR and how we can make an impact on your business.Contact VensureHR
This communication is intended solely for the purpose of conveying information. The present post might incorporate hyperlinks directing readers to websites managed by third-party entities. The inclusion of any links within this communication is meant to serve as points of reference and could encompass opinion articles from various law firms, articles from HR associations, official websites, news releases, and documents of government agencies, and other relevant third-party sources. Vensure has no authority over these external websites and bears no responsibility for their content. Furthermore, Vensure does not endorse the materials present on these websites. The contents of this communication should not be interpreted as legal advice or as a legal standpoint concerning specific facts or scenarios. Nor should it be deemed an exhaustive compilation of facts potentially pertinent to federal, state, or local laws. It is strongly advised that employers solicit legal guidance from an employment attorney when undertaking actions in response to any legal updates provided. This is due to the possibility of future alterations occurring in federal, state, and local laws, regulations, as well as the directives and guidelines issued by governing agencies. These changes may transpire at any given time, potentially rendering certain portions of the content within this update void or inaccurate.