"The Fifth Circuit Court of Appeals Rules That an Oil Rig Supervisor Paid a High Day Rate is Still Entitled to Overtime Pay"

Article by Julie Offerman on "The Fifth Circuit Court of Appeals Rules That an Oil Rig Supervisor Paid a High Day Rate is Still Entitled to Overtime Pay"

In a recent Shale Magazine article, Julie Offerman, shareholder in our Houston’s Labor & Employment Practice, discusses the Fifth Circuit Court of Appeals’ decision in the case of Hewitt v. Helix Energy Solutions Group, Inc., in which it considered whether an employee paid a day rate satisfies the “salary basis” requirement for certain overtime exemptions from the federal wage law—the Fair Labor Standards Act (FLSA). The article analyzes the ruling and identifies alternative compensation structures for day rate workers, as well as risk management strategies that businesses should consider.

According to Offerman, “the Fifth Circuit ruling has major ramifications for the oil and gas industry, where it is a common practice to pay supervisors high day rates for each day worked. Under the Fifth Circuit’s ruling, workers paid a day rate may also be entitled to overtime pay for every hour worked over forty hours in a given week, no matter how high the day rate. … The significant impact of the decision on employers combined with conflicting interpretations by other circuit courts may lead to Supreme Court review.”

Offerman further discussed alternative compensation structures for day rate workers, such as minimum weekly guarantees or a guaranteed salary, as well as avoiding the “salary basis” altogether in favor of “a fee” basis payments.

Offerman and co-author, Lee Snelgrove, Senior Vice President of Alliant Insurance Services, also addressed whether the Employment Practices Liability Insurance (EPLI) policies cover wage and hour claims and discussed specialized Wage and Hour insurance policies now available to larger employers.

To learn more, read the full article here.