Interim Leadership Leaders- Daily Rate and Threshold rules could require overtime compensation- Helix Energy Solutions Group, Inc. v. Hewitt Decision

In the Helix Energy Solutions Group, Inc. v. Hewitt case, the U.S. Supreme Court deliberated on the conditions under which an employee is exempt from overtime pay under the Fair Labor Standards Act of 1938 (FLSA). Key facts of the case include:

Michael Hewitt worked as a tool pusher (a supervisor) on oil rigs for Helix Energy Solutions Group between 2014-2017. He was paid over $200,000 annually on a daily-rate basis, with no overtime pay. Hewitt typically worked 84 hours per week, and his pay varied with the number of days he worked each pay period. After being fired in 2017, Hewitt filed a collective action under the FLSA against Helix, asserting his entitlement to overtime pay (Wikipedia, 2023).

To determine the exemption status under the FLSA, three tests were considered: the "salary level" test, the "duties" test, and the "salary basis" test:

·         The "salary level" test requires the preset salary to exceed a specified amount. Hewitt did meet this exemption test as his annual income exceeded $200,000.

·         The "duties" test involves carrying out responsibilities such as managing the enterprise, directing other employees, and exercising power to hire and fire. Hewitt, being a supervisor, did meet this exemption test (Legal Information Institute, 2023).

·         The "salary basis" test requires an employee to receive a predetermined and fixed salary that does not vary with the amount of time worked. Hewitt did not meet this exemption test as his pay was daily and varied with the number of days worked.

In the final decision, the Supreme Court ruled in favor of Hewitt, affirming that he was not an executive exempt from the FLSA’s overtime pay guarantee. The ruling hinged on the interpretation of the "salary basis" test. Hewitt, despite his high income and managerial role, was not exempt from overtime pay under the FLSA because his pay varied with the number of days he worked each pay period (Legal Information Institute, 2023). How will this affect highly paid interim employees in healthcare that are paid in their contract a “daily rate” under a threshold rule of entering the work premises? Interim agency agreements, contract administrators, and attorneys must consider this new risk for healthcare providers.

References

Legal Information Institute. (2023). HELIX ENERGY SOLUTIONS GROUP, INC. v. HEWITT. https://www.law.cornell.edu/supremecourt/text/21-984

Wikipedia. (2023). Helix Energy Solutions Group, Inc. v. Hewitt. https://en.wikipedia.org/wiki/Helix_Energy_Solutions_Group,_Inc._v._Hewitt

Legal Information Institute. (2023). HELIX ENERGY SOLUTIONS GROUP, INC. v. HEWITT. https://www.law.cornell.edu/supremecourt/text/21-984