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The U.S. Supreme Courtroom just lately held that an worker who earned in extra of $200,000 yearly was entitled to time beyond regulation pay as a result of he didn’t qualify for the FLSA’s extremely compensated worker exemption. This resolution – which turned on whether or not the worker was paid on a “wage foundation” – requires employers to take a detailed take a look at their worker compensation pay construction to make sure that exempt workers are being paid in accordance with relevant regulation. Learn on for the Supreme Courtroom’s reasoning on this explicit case.
In Helix Vitality Options Group, Inc. v. Hewitt, 598 U.S. __ (2023), an offshore oilrig supervisor incomes over $200,000 yearly sued his employer searching for time beyond regulation pay. The worker commonly labored over 80 hours per week and was paid on a day by day price starting from $963 to $1,341 “in order that he receives a certain quantity if he works at some point in per week, twice as a lot for 2 days, thrice as a lot for 3 days, and so forth.” In protection, the employer raised the FLSA’s extremely compensated worker exemption. This exemption requires, amongst different issues, that the worker’s complete annual compensation be a minimum of $107,432, which should embody a minimum of $684 per week paid on a wage or payment foundation. The problem earlier than the Courtroom turned on whether or not the worker was paid on a “wage foundation” when his “paycheck [was] based mostly solely on a day by day price.”
The Supreme Courtroom discovered the exemption inapplicable as a result of the employer didn’t assure a “predetermined quantity” constituting “a gradual and predictable stream of pay, week after week after week” whatever the time labored – a requirement of the exemption’s “wage foundation” take a look at. In different phrases, the exemption shouldn’t be met based mostly purely on assembly a easy earnings degree.
Whereas not relevant on this case, the Supreme Courtroom’s majority opinion famous that the FLSA laws present for an additional approach to fulfill the wage foundation take a look at for workers whose compensation is calculated on an hourly, day by day, or shift foundation. Extra particularly, the regulation requires (i) that the employer assure the worker a minimal wage degree (presently $684 per week), and (ii) that such quantity be “roughly equal to the worker’s standard earnings on the assigned hourly, day by day or shift price for the worker’s regular scheduled workweek.” This creates “a compensation system functioning very like a real wage.”
Within the wake of this resolution, and due to the penalties related to FLSA violations, employers ought to proactively overview and analyze their use of the extremely compensated worker exemption. When unsure, seek the advice of authorized counsel, as the results for failure to pay time beyond regulation will be steep. The Mintz Employment, Labor & Advantages group can assist if your corporation has questions on time beyond regulation pay or worker classification.
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