Hewitt v. Helix Energy Solutions Grp., Inc.

• Decision Date: 09 September 2021
• Docket Number: No. 19-20023,19-20023
• Citation: 15 F.4th 289
• Parties: Michael J. HEWITT, Plaintiff—Appellant, v. HELIX ENERGY SOLUTIONS GROUP, INCORPORATED ; Helix Well Ops, Incorporated, Defendants—Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

15 F.4th 289

Michael J. HEWITT, Plaintiff—Appellant,

v.HELIX ENERGY SOLUTIONS GROUP, INCORPORATED ; Helix Well Ops, Incorporated, Defendants—Appellees.

No. 19-20023

United States Court of Appeals, Fifth Circuit.

FILED September 9, 2021

Edwin Sullivan, Esq., Oberti Sullivan, L.L.P., Houston, TX, for Plaintiff-Appellant

Michael Carter Crow, Kimberly Frances Cheeseman, Katherine D. Mackillop, Esq., Jesika Jasmine Silva Blanco, Norton Rose Fulbright US, L.L.P., Houston, TX, for Defendants-Appellees.

Robert Peter Lombardi, Esq., Kullman Firm, New Orleans, LA, for Amicus Curiae Independent Petroleum Association of America, Offshore Operators Committee.

Justin Lee Matheny, Esq., Office of the Attorney General, for the State of Mississippi, for Amicus Curiae State of Mississippi, State of Mississippi, State of Louisiana, State of Montana, State of Utah.

David B. Jordan, Littler Mendelson, P.C., Houston, TX, for Amicus Curiae Texas Oil & Gas Association, Incorporated.

Before Owen, Chief Judge, and Jones, Smith, Wiener, Stewart, Dennis, Elrod, Southwick, Haynes, Graves, Higginson, Costa, Willett, Ho, Duncan, Engelhardt, Oldham, and Wilson, Circuit Judges.

James C. Ho, Circuit Judge, Joined By Smith, Stewart, Haynes, Graves, Higginson, Costa, Willett, Duncan, Engelhardt, Oldham, and Wilson, Circuit Judges:

The Fair Labor Standards Act (FLSA) establishes a standard 40-hour workweek by requiring employers to pay "time and a half" for any additional time worked. See 29 U.S.C. § 207(a).

Congress has repeatedly rejected efforts to categorically exempt all highly paid employees from overtime requirements. See , e.g. , 84 Cong. Rec. 5458–59 (1939) (bill to exempt "employees employed at a guaranteed monthly salary of $200 a month or more"); H.R. 8624, 76th Cong. (1940) (bill to exempt all employees receiving a guaranteed monthly salary of $150 or more); 143 Cong. Rec. E317-04, E318, 1997 WL 79643, at *2 (Feb. 26, 1997) (proposing a bill to "create an income threshold that automatically exempts from FLSA scrutiny the highest paid strata of the workforce").

Accordingly, both the Secretary of Labor and the Supreme Court—as well as our court—have observed that "employees are not to be deprived of the benefits of the [FLSA] simply because they are well paid." Jewell Ridge Coal Corp. v. Local No. 6167 , 325 U.S. 161, 167, 65 S.Ct. 1063, 89 L.Ed. 1534 (1945). See also Parrish v. Premier Directional Drilling , 917 F.3d 369, 388 (5th Cir. 2019) (same); 69 Fed. Reg. 22,122 -01 (2004) (same).

Instead, Congress has authorized the Secretary to promulgate regulations exempting "bona fide executive, administrative, [and] professional" employees from overtime. 29 U.S.C. § 213(a)(1). Under that authority, the Secretary has exempted "highly compensated" ( 29 C.F.R. § 541.601 ) as well as more modestly paid "executive," "administrative," and "professional" employees (id . §§ 541.100, 541.200, 541.300).

To fall within any of these exemptions, however, three conditions must be met: First, the employee must meet certain criteria concerning the performance of executive, administrative, and professional duties. Second, the employee must meet certain minimum income thresholds. Finally, the employee must be paid on a "salary basis." And although the duties criteria and income thresholds vary from exemption to exemption, the regulations apply the same salary-basis requirement to all four exemptions. See id . § 541.100(a)(1) (applying the salary-basis test to executive employees); id . § 541.200(a)(1) (administrative employees); id . § 541.300(a)(1) (professional employees); id . § 541.601(b)(1) (highly compensated employees).

So earning a certain level of income is necessary, but insufficient on its own, to avoid the overtime protections of the FLSA. The employee must also be paid on a salary basis, as well as perform certain duties. And unless those tests are met, the employee is "not exempt ... no matter how highly paid they might be ." Id. § 541.601(d) (emphasis added) (specifying various professions that are subject to overtime regardless of the amount of income earned).¹

It is the salary-basis test that is sharply contested in this case. Helix Energy Solutions Group claims that Michael Hewitt is exempt from overtime as a highly compensated executive employee under § 541.601. The parties agree that Hewitt meets both the duties requirements and income thresholds of both exemptions.

The company admits, however, that Hewitt's pay is "computed on a daily basis," rather than on a weekly, monthly, or annual basis.

As a matter of common parlance, we typically associate the concept of "salary" with the stability and security of a regular weekly, monthly, or annual pay structure. By contrast, we do not ordinarily think of daily or hourly wage earners—whose pay is subject to the vicissitudes of business needs and market conditions—as "salaried" employees.

FLSA regulations reflect this dichotomy—defining salary as compensation paid "on a weekly, or less frequent basis," "without regard to the number of days or hours worked." Id. § 541.602(a) & (a)(1).

That is not to say that an hourly or daily rate can never meet the salary-basis test. But the Secretary has promulgated a special rule that must be satisfied before an hourly or daily rate will be regarded as a "salary."

That regulation is found in 29 C.F.R. § 541.604(b). And it explicitly states that an employee whose pay is "computed on a daily basis" must meet certain criteria to satisfy the salary-basis test:

An exempt employee's earnings may be computed on an hourly, a daily or a shift basis , without losing the exemption or violating the salary basis requirement , if the employment arrangement also includes a guarantee of at least the minimum weekly required amount paid on a salary basis regardless of the number of hours, days or shifts worked, and a reasonable relationship exists between the guaranteed amount and the amount actually earned.

Id. § 541.604(b) (emphases added). So a daily-rate worker can be exempt from overtime—but only "if" two conditions are met: the minimum weekly guarantee condition and the reasonable relationship condition.

Helix does not even purport to meet these conditions. Instead, Helix asks us to ignore them altogether.

But respect for text forbids us from ignoring text. As a matter of plain text, we hold that, when it comes to daily-rate employees like Hewitt, Helix must comply with § 541.604(b).

The same textual approach has been taken by both the Sixth and Eighth Circuits as well as the Labor Department—regardless of how much the employee is compensated.² Likewise, the overwhelming majority of federal district courts to have addressed the issue have made clear that § 541.604(b) applies to daily-rate employees throughout the energy industry, regardless of the amount of their pay.

Helix could have easily complied with § 541.604(b) —for example, by offering a minimum weekly guarantee of $4,000 based on Hewitt's daily rate of $963. See , e.g. , Hewitt v. Helix Energy Sols. Grp. , 983 F.3d 789, 801 (5th Cir. 2020) (Ho, J., concurring), vacated on petition for rehearing en banc , 989 F.3d 418 (5th Cir. 2021). It has not done so. Under the plain text of § 541.604(b), that is all that matters.

We reverse and remand for further proceedings.

I.

Hewitt worked as a tool pusher for Helix for over two years. In that position, Hewitt managed other employees while on a "hitch"—that is, while working offshore on an oil rig. Each hitch lasted about a month.

Helix concedes that it paid Hewitt based solely on a daily rate. Helix also concedes that it required Hewitt to work well over forty hours per week.

The company nevertheless attempts to avoid the FLSA overtime penalty by characterizing Hewitt as a highly compensated executive employee. See 29 C.F.R. § 541.601.

To prevail, however, Helix must show that it paid Hewitt on a "salary basis" as defined by the regulations. Id. §§ 541.600(a), .601(b)(1). (Alternatively, Helix could have attempted to invoke the highly compensated employee exemption by showing that it paid Hewitt on a "fee basis," see id. §§ 541.601(b)(1), .605—but it has made no such argument in this appeal.)

Hewitt contends that Helix did not pay him on a "salary basis" because the company calculated his pay using a daily rate without satisfying the requirements of § 541.604(b). Helix responds that it was not required to comply with § 541.604(b).

The district court agreed with Helix and granted the company summary judgment. Hewitt v. Helix Energy Sols. Grp. , 2018 WL 6725267, at *3–*4 (S.D. Tex.). This appeal followed. We review the district court's interpretation of the applicable Labor Department regulations de novo. See Davis v. Signal Int'l Texas GP, L.L.C. , 728 F.3d 482, 488 (5th Cir. 2013).

II.

This appeal requires us to do nothing more than apply the plain text of the regulations. Under 29 C.F.R. § 541.601, a highly compensated employee must be paid on a "salary basis" in order to avoid overtime. Under § 541.604(b), an employee whose pay is "computed on a daily basis" must meet certain conditions in order to satisfy the salary-basis test. And Helix admits that Hewitt's pay is "computed on a daily basis." Accordingly, Hewitt is subject to overtime unless his pay complies with § 541.604(b). If we are following the plain text of the regulations, that should be the end of the story.

A.

There are multiple components to the salary-basis test, as articulated in various Labor Department regulations. There is the "[g]eneral rule," 29 C.F.R. § 541.602(a) —and then there are various exceptions and provisos to that general rule. To properly understand and apply the salary-basis test, we must examine not only the general rule, but also any exceptions or provisos that bear upon a particular fact pattern—such as the daily rate presented in this appeal. Viewing the regulations as a whole, we conclude that Helix has failed to demonstrate that Hewitt is exempt from overtime.

The "[g]eneral rule" begins as follows: "An...