A recent series of court decisions involving NES Global LLC (also known as NES Fircroft) has brought attention to the company’s use of a “retainer” compensation system and whether it complies with federal overtime laws.

The case, Alvarez v. NES Global LLC, involved workers who alleged they were not paid overtime despite regularly working more than 40 hours per week. The claims were brought under the Fair Labor Standards Act (FLSA).

Court Rulings on the Retainer Pay System

In the case, NES compensated certain workers using a “retainer” model. Under this structure, workers received a guaranteed base amount for a limited number of days or hours, along with additional pay based on the number of days or hours worked.

The federal district court determined that this compensation system did not satisfy the “salary basis” requirementunder the FLSA and concluded that the workers were not properly classified as exempt from overtime requirements. 

The U.S. Court of Appeals for the Fifth Circuit later affirmed that conclusion, holding that the pay structure failed to meet the legal standard for a true salary because it did not provide a consistent weekly rate. 

Key Issue: Salary Basis Requirement

Under federal law, employees may be exempt from overtime only if they meet specific criteria, including being paid on a salary basis.

In this case, the courts focused on whether NES’s retainer system functioned as a true salary. The rulings emphasized that:

• A salary must be a predetermined, consistent weekly amount
• Pay systems based on day rates or partial-week guarantees may not qualify
• Employers bear the burden of proving that an exemption applies

Because the court found that the pay structure did not meet these requirements, the workers were entitled to pursue claims for unpaid overtime.

Industries and Workers Potentially Affected

The case involved workers placed on projects through a staffing company and may be relevant to individuals working in:

• Oil and gas
• Engineering and technical services
• Inspection and field-based roles
• Project-based contract positions

Many of these workers are compensated using day rates, hourly rates, or hybrid pay systems, which can raise similar legal questions under the FLSA.

Statute of Limitations Considerations

FLSA claims are subject to time limits, typically allowing recovery of unpaid wages for up to three years. As a result, the timing of any potential claim can affect the amount of recovery available.

Additional Information

Workers who were employed by NES Global / NES Fircroft and paid under a retainer or similar compensation structure may wish to review how they were paid and whether overtime was properly calculated.

For questions about overtime eligibility or wage and hour laws feel free to contact attorney Josh Borsellino:

817.908.9861
josh@dfwcounsel.com