As an unpaid wage attorney that focuses on representing oilfield workers, I often am asked, “Are day rates legal?” This is an important question, especially those in the oil and gas industry, where day rates are common. The answer, like many legal questions, is: it depends.

Understanding Day Rates

A day rate is a fixed amount of pay for a single day’s work, regardless of the number of hours worked in that day. This payment structure is common in certain industries, including the oilfield sector. While it may seem straightforward, the legality of day rates hinges on compliance with the Fair Labor Standards Act (FLSA).

The Fair Labor Standards Act (FLSA)

The FLSA is a federal law that establishes minimum wage, overtime pay, recordkeeping, and youth employment standards. Under the FLSA, most workers are entitled to overtime pay at a rate of one and a half times their regular rate of pay for hours worked over 40 in a workweek.

When Are Day Rates Legal?

Day rates can be legal if they meet certain criteria set forth by the FLSA. Specifically:

1. Overtime Pay Requirements: Employers must still comply with overtime pay requirements. If a worker is paid a day rate, the employer must calculate the worker’s regular rate of pay and then pay overtime for any hours worked beyond 40 in a workweek.
2. Recordkeeping: Employers must maintain accurate records of the hours worked by employees, even if they are paid on a day rate basis. This is crucial for calculating overtime pay.
3. Exempt vs. Non-Exempt Employees: Some employees are exempt from overtime pay under the FLSA. However, the exemption is not determined by the payment method (day rate, salary, etc.) but by the nature of the job duties and the employee’s compensation level. Misclassifying non-exempt employees as exempt can lead to legal issues. HOWEVER – MOST OIL AND GAS FIELD WORKERS ARE NOT EXEMPT.

Common Issues with Day Rates

In my experience representing oilfield workers, common legal issues with day rates include:

• Misclassification: Workers are often misclassified as independent contractors or exempt employees to avoid paying overtime. MOST OILFIELD WORKERS WHO WORK ON A DEDICATED BASIS FOR AN OIL AND GAS PRODUCER OR SERVICE COMPANY WILL BE FOUND TO BE EMPLOYEES, EVEN IF THEY ARE CALLED INDEPENDENT CONTRACTORS.
• Improper Overtime Calculation: Employers may fail to properly calculate and pay overtime, thinking the day rate covers all hours worked.
• Lack of Recordkeeping: Without accurate records of hours worked, it becomes challenging to ensure compliance with overtime laws.

What Can Workers Do?

If you being paid day rates, you have options. You should:

• Document Your Hours: Keep a personal record of the hours you work each day. This can be helpful if you need to challenge your employer’s payment practices. However, even if you have not done so, you will likely be able to estimate your hours, as the burden is on the employer to keep records of their employees’ time. Do not let a lack of documentation prevent you from seeking legal counsel.
• Consult an Attorney: An experienced employment attorney can help you understand your rights and determine if your employer is complying with the law. If not, legal action may be necessary to recover unpaid wages and overtime.

Conclusion

While day rates can be legal, in many cases, especially in the oil and gas industry, they do not comply with the FLSA’s requirements. If you’re an oilfield worker paid a day rate and suspect you’re not receiving the wages you deserve, don’t hesitate to reach out for legal assistance. Protecting your rights is essential, and you need experienced legal representation. This is not my first rodeo – I regularly sue large oil and gas companies, and I have recovered millions of dollars in lost wages for my oilfield clients.

For more information on this topic or to discuss your specific situation, feel free to contact my office – email me at josh@dfwcounsel.com, call me at 817.908.9861, or fill out this contact form. I’m here to help you navigate the complexities of unpaid overtime law and ensure you receive the compensation you’re entitled to.