The distinction between exempt and non-exempt employees is an important one and has significant implications for employers and employees alike. Under the Fair Labor Standards Act (FLSA), exempt employees are not entitled to overtime pay. Non-exempt employees, on the other hand, must be paid overtime and enjoy the protections offered by the FLSA. Because of the broad implications pertaining to exempt versus non-exempt employment status, getting these designations is important, albeit sometimes very complicated. Employers should pay close attention to developments in this area of the law to help ensure that they are properly compensating their employees. For instance, on May 2nd, the U.S. Supreme Court announced that it will review a case which involves the issues of whether the FLSA’s highly compensated executive exemption applies to an oil rig worker supervisor who is claiming overtime pay even though he has annual earning of over $200,000.
Supreme Court to Hear FLSA Highly Paid Supervisor Case
The Supreme Court is set to review a 5th Circuit Court of Appeals case in which the divided appeals court ruled that an oil rig supervisor was nonexempt and, thus, entitled to retroactive overtime pay due to the fact that he was paid based on a daily rate as opposed to a guaranteed weekly rate. The court held this despite his daily rate totaling out to be more than twice the weekly minimum. The court also held this despite the fact that the supervisor performed executive duties and clearly surpassed the annual earnings threshold. The U.S. Department of Labor set the exemption threshold back in 2019 at $107,432, which was much lower than what was originally proposed.
The ruling was found to be counterintuitive to many and was also at odds with rulings that came out of the 1st and 2nd Circuits. The complications behind this case should be an important reminder for employers to pay attention to the multi-faceted tests as to whether an employee should be considered exempt or non-exempt. Furthermore, the job title of an employee is not part of the test to determine exempt status. Instead, exempt status will depend on the primary duty of the employee, as well as the level of discretionary authority held by the employee and whether the minimum salary requirement has been satisfied.
On top of the Supreme Court case on the horizon, there have also been hints at the DOL making some new proposed overtime rule in the near future. It is predicted that the DOL is going to recommend higher salary-level thresholds for the overtime rule’s white-collar exemptions. As a refresher, the white-collar exemption under the FLSA refers to the fact that white-collar workers, such as administrative, executive, and professional level employees are exempt under the FLSA and, therefore, not covered by the law’s minimum wage and overtime requirements.