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Directional drillers win overtime ruling

The plaintiffs David Dean and others (“Plaintiffs”) were directional drillers that worked for Newsco International Energy Services, USA, Inc. (“Defendant”). The plaintiffs brought their lawsuit, Dean v. Newsco International Energy Services, USA, Inc., No 4:15-cv-03406 (S.D. Tex., August 6, 2019), seeking unpaid overtime under the Fair Labor Standards Act (“FLSA”) alleging that they worked 12-hour days for weeks at a time and were not paid overtime. 

As directional drillers, the plaintiffs were required to steer a well bore in order to drill a well at an angle to get to the oil underground. All the plaintiffs followed a “well plan” that consisted of the location of the target oil reservoir and plans on how to reach it. The defendant conceded that the plaintiffs were not paid overtime and the defendant admitted that often times, the plaintiffs worked in excess of 40-hour weeks. However, the defendant claimed that the plaintiffs were not paid overtime because they were exempt from the FLSA as a highly compensated executive or administrative employee. 

Under the FLSA, highly compensated workers are exempt from overtime pay if they meet the following criteria:

  1. The employee earns $100,000 or more, which includes at least $455 per week paid on a salary basis; 
  2. The employee’s primary duty includes performing office or non-manual work; and
  3. The employee customarily and regularly performs at least one of the exempt duties or responsibilities of an exempt executive, administrative or professional employee.

Alternatively, for the administrative exemption to apply, the employee must be one:

  1. who is compensated on a salary or fee basis at a rate of not less than $455 per week;
  2. whose primary duty is the performance of office or non-manual work directly related to the management and general business operations of the employer or the employer’s customers; and 
  3. whose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance. Dewan v. M-I, L.L.C., 858 F.3d 331, 334 (5th Cir. 2017).

The “primary duty” has consistently been given different meanings but the Fifth Circuit has said that the test for an employee’s primary duty is 

“while, in the ordinary case it may be taken as a good rule of thumb that primary duty means the major part, or over 50 percent, of the employee’s time, time alone … is not the sole test.” Exempt work may be an employee’s primary duty even though such work occupies less than half her time “if the other pertinent factors support such a conclusion.” Precisely what those factors are depends on upon which exemption is being claimed, but for each the essence of the test is to determine the employee’s chief or principal duty … [T]he employee’s primary duty will usually be what she does that is of principal value to the employer, not the collateral tasks that she may also perform, even if they consume more than half her time. Dalheim v. KDFW-TV, 918 F.3d 1220, 1227 (5th Cir. 1990). 

With these considerations in mind, the Court turned to the legal question: whether the plaintiffs fall within the FLSA’s administrative exemption. In this case, the determination required the consideration of whether the plaintiffs’ primary duty was “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 whether their primary duty “includes the exercise of discretion and independent judgment with respect to matters of significance.” See 29 C.F.R. § 541.200(a). In a similar dispute regarding mud engineers employed by a drilling company, the Fifth Circuit observed that this “ultimate determination, however, relies on many factual determinations that can be resolved by a jury.” Dewan v. M-I, L.L.C., 858 F.3d 331, 334 (5th Cir. 2017). Accordingly, based on the factual nature of this case, the Court found it appropriate to leave this determination to a jury.   

The defendant also claimed the highly-compensated exemption applied, but because the defendant could not prove that the plaintiffs’ primary duty of directional drilling and executing the well plan satisfied any of the primary duty requirements of the executive or administrative exemptions, it cannot satisfy the requirements of this exemption either. 29 C.F.R. § 541.601; 29 C.F.R. § 541.708. Accordingly, the Court found that there were material issues present for the highly compensated worker and since it is fact-intensive, it left that ultimate issue to a jury. 

The upshot of this case is that when assessing the applicability of overtime exemptions that could apply to oilfield workers, Courts generally will find that such exemptions must be determined by the trier-of-fact.  In this case, the plaintiffs have moved much closer to receiving their underpaid overtime. If you are an oilfield worker who has been denied overtime pay because you were told you were exempt, consider speaking with an experienced overtime attorney today. Josh Borsellino is a FLSA attorney who fights for oilfield workers wanting to recover their unpaid overtime. Call him today at 817.908.9861 or 432.242.7118.