Court refuses to apply admin. exemption in oilfield case

A federal magistrate judge in Galveston has recommended that a summary judgment motion based on the administrative exemption to the FLSA be denied in a lawsuit filed by former oilfield workers employed by Beast Energy Service.  The workers served as service supervisors and were responsible for loading and transporting oilfield service equipment to clients’ well sites in south and west Texas, making sure the equipment was used in a safe manner, and returning the equipment to Beast Energy’s shop.  They were paid a monthly salary and were also eligible to receive bonus compensation.  

Beast Energy moved for summary judgment, arguing that the workers were subject to the administrative exemption and thus not entitled to overtime pay.  An employee qualifies as an administrative employee if:

(1) He is compensated on a salary or fee basis at a rate of not less than $455 per week;

(2) His primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and

(3) His primary duty includes the exercise of discretion and independent judgment with respect to matters of significance. See 29 C.F.R. § 541.200(a). 

There was no dispute the workers were paid more than $455 per week.  Plaintiffs disputed whether they satisfied the second and third prongs of the administrative exemption.  The Court noted that “production employees whose job it is to generate the product or service the business offers to the public will not qualify for the administrative exemption.”  It also stated that the line between an administrative employee and an administrative employee is particularly blurry in the oil and gas industry.  The Court found that since the employees worked to produce the same services Beast Energy offers – i.e. the delivery and operation of oilfield equipment – this would weigh in favor of a finding that they were production employees.  The Court also found that Beast did not establish that the workers’ jobs were related to the management of Beast Energy’s business operations or those of its customers.  The Court was persuaded that Plaintiffs “spent most of their time loading equipment, traveling, setting up equipment, operating equipment, and taking down equipment—duties that are manual in nature.” 

The Court also found that Beast Energy failed to show that the workers exercised discretion and independent judgment, and thus failed to meet their summary judgment burden for the third prong of the administrative exemption.  The Court also recommended denying summary judgment on the number of hours Plaintiffs claimed to have worked, and on whether bonuses should be included in their regular rate of pay, finding that fact issues precluded summary judgment on these issues.

This case demonstrates that it is exceedingly difficult for an oilfield company to prevail on any of the “white collar” exemptions on summary judgment, particularly where the workers’ job duties primarily involved manual labor.  If you have worked in the oil and gas industry within the past three years and have been paid a salary, day rates, or otherwise denied overtime pay, contact an experienced overtime attorney as soon as possible to learn of your legal rights.  Josh Borsellino regularly represents oilfield workers on claims for unpaid overtime.   Call Josh today at 817.908.9861 or email him here for a free, confidential, no-obligation consultation of your overtime pay matter.    


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