Page:Helix Energy Solutions Group, Inc. v. Hewitt.pdf/2

Syllabus

managing the enterprise, directing other employees, and exercising power to hire and fire (duties test). §541.100(a). The HCE rule relaxes only the duties test, while restating the other two. As litigated in this case, whether Hewitt was an executive exempt from the FLSA’s overtime pay guarantee turns solely on whether Hewitt was paid on a salary basis. The District Court agreed with Helix’s view that Hewitt was compensated on a salary basis and granted the company summary judgment. The Court of Appeals for the Fifth Circuit reversed, deciding that Hewitt was not paid on a salary basis and therefore could claim the FLSA’s protections. The court so held based on its examination of the two regulations that give content to the salary-basis test. The majority first concluded that a daily-rate employee (like Hewitt) does not fall within the main salary-basis provision of §541.602(a), which states:

“An employee will be considered to be paid on a ‘salary basis’ … if the employee regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of the employee’s compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed. Subject to [certain exceptions], an 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.”

Second, the court held that “daily-rate” workers can qualify as paid on a salary basis only through the “special rule” of §541.604(b), which focuses on workers whose compensation is “computed on an hourly, a daily or a shift basis.” Because Hewitt’s compensation concededly did not satisfy §604(b)’s conditions, the court concluded that Hewitt, although highly paid, was not exempt from the FLSA. Reaching the opposite conclusion, a dissenting opinion determined that Hewitt’s compensation satisfied the salary basis test of §602(a) and that §604(b) is not applicable to employees who fall within the HCE rule.

Held: Hewitt was not an executive exempt from the FLSA’s overtime pay guarantee; daily-rate workers, of whatever income level, qualify as paid on a salary basis only if the conditions set out in §541.604(b) are met. Pp. 7–20.

(a) The critical question here is whether Hewitt was paid on a salary basis under §602(a). A worker may be paid on a salary basis under either §602(a) or §604(b). But Helix acknowledges that Hewitt’s compensation did not satisfy §604(b)’s conditions. And the Court concludes that Helix did not pay Hewitt on a salary basis as defined in §602(a), a conclusion that follows from the text and the structure of the regulations. Pp. 7–17.

(1) The text of §602(a) excludes daily-rate workers. An employee,