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Fifth Circuit: day rates do not meet salary basis test

Under the FLSA, which is the federal overtime law, in order to qualify for the “white collar” exemptions – the executive, professional, administrative and/or “highly compensated” exemptions – employees must meet both a duties test and salary basis test. The Fifth Circuit recently held that employees paid on a day rate basis do not meet the “salary basis” test. As the Court explained in Helix Energy, because the Plaintiff was paid a day rate, he “did not receive a ‘predetermined amount’ ‘on a weekly, or less frequent basis’—rather, he received an amount contingent on the number of days he worked each week. So he was not paid on a ‘salary basis’ under Labor Department regulations.” The Fifth Circuit went on to state:

Any doubt that this is a proper reading of § 541.602(a) is put fully to rest by looking at § 541.602(a)(1). That section provides as follows: ‘[A]n exempt employee must receive the full salary for any week in which the employee performs any work without regard to the number of days or hours worked.’ 29 C.F.R. § 541.602(a)(1). [Plaintiff’s] pay cannot be squared with this provision. He was paid on a daily rate—so he was paid ‘with’ (not ‘without’) ‘regard to the number of days or hours worked,’ in direct conflict with the plain language of § 541.602(a)(1). So § 541.602(a)(1) confirms that [Plaintiff] was not paid on a salary basis.

The Fifth Circuit thus held that neither the executive nor highly compensated exemptions could apply to the plaintiff, and remanded the case back to the trial court. 

This means that any employees that are paid day rates may be eligible for overtime pay. Day rates are common in the oilfield industry. If you received day rate pay within the past three years, you should contact an experienced overtime attorney as soon as possible to learn of your legal rights. Josh Borsellino is a Texas attorney that represents workers in overtime cases. Call Josh today at 817.908.9861 for a free evaluation of your legal matter. 

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