Did you know you can make over $200,000 a year and still be entitled to overtime pay? In Helix Energy Solutions Group, Inc. v. Hewitt, the en banc Fifth Circuit recently concluded as such. This surprising result was made possible by a Department of Labor regulation that requires some hourly employees to be paid overtime based on how frequently they receive their paycheck. You might think that employees’ job responsibilities (and perhaps pay level) should determine if they are eligible for overtime, not when they receive their paycheck. Congress would agree with you because that’s what it put in the Fair Labor Standards Act. But when has a statute—or common sense for that matter—ever constrained an agency’s actions?

So how did the Department of Labor manage to create a situation where Mr. Hewitt, an oil-rig supervisor that made over $200,000 a year, reasonably argued his employer owed him overtime? Let’s cover brass tacks and answer that question. The Fair Labor Standards Act does not require most managerial employees to be paid overtime. This is because “bona fide executive, administrative, and professional employees” are exempt from the Act’s overtime requirements. FLSA § 13(a)(1). This is known as the EAP exemption to overtime. As it often does, Congress gave the Department of Labor rulemaking authority to define which workers are executive, administrative, or professional employees. With this authority, the Department of Labor passed a regulation to further define EAP employee. According to the Department of Labor, one is a professional if they are paid “on a weekly, or less frequent basis, without regard to the number of days or hours worked.” 29 CFR § 541.602(a) & (a)(1). This regulation is the weekly salary requirement, and it means salaried employees do not need to be paid overtime, but hourly employees do.

Mr. Hewitt does not satisfy the weekly salary requirement because he was paid on a per-day rather than per-week basis. As such, he sued his former employer, Helix Energy, and argued to the Fifth Circuit he was owed several years’ worth of unpaid overtime. Helix Energy suggested that Mr. Hewitt was not owed overtime because another Department of Labor regulation exempts employees making just over $100,000 from being paid overtime. The Fifth Circuit concluded that even though Mr. Hewitt is highly compensated, his pay must be in the form of weekly salary to satisfy the Department of Labor’s weekly salary requirement. As a result, the Circuit considered the weekly salary regulation a necessary condition to withhold overtime and held that Mr. Hewitt is owed more money. Helix Energy appealed to the Supreme Court, which agreed to hear the case next term.

The irony of Mr. Hewitt’s litigation is that none of it is required by the Fair Labor Standards Act. The Act has no weekly salary test, or any sort of test for that matter; it simply states that administrative and professional employees need not be paid overtime. Mr. Hewitt is an administrative employee under any reasonable interpretation of that term because he acted in an administrative role and supervised around a dozen other employees. The fact he was being paid over $200,000 per year should dispel any doubt over his administrative role. Because the weekly salary requirement makes an employee who would not normally be entitled to overtime under the Fair Labor Standards Act eligible for it, the regulation is plainly inconsistent with the text and purpose of the Act.

It defies common sense to define whether one is professional or administrative by how frequently he receives his paycheck. One’s responsibilities in the workplace are far more telling, and that is why Congress exempted certain professional roles from the Fair Labor Standards Act’s overtime requirements. Perhaps the weekly salary regulation made sense when the Department of Labor promulgated it in the 1940s, but any conceivable justification has surely been lost in the subsequent decades, especially as industries evolve to require their EAP employees to work irregular hours.

Indeed, the Department itself recognizes some EAP employees work irregular hours and so created a carve-out for Hollywood movie producers. In May 1953, the Association of Motion Picture Producers, Inc. protested that many of its highly paid technical workers should not receive overtime because they were paid on an hourly rather than weekly basis due to the industry’s need for irregular hours. The Department responded by creating a special regulation stating that “[t]he requirement … that the employee be paid ‘on a [weekly] salary basis’ shall not apply to an employee in the motion picture producing industry.” 29 C.F.R. § 541.5a. No other industry enjoys a similar exemption from the weekly pay requirement. Is it possible that Hollywood is the only industry that has evolved since 1940 in a manner such that weekly pay no longer distinguishes bona fide executive, administrative, and professional employees from other, non-exempt employees? Or is it more likely that Executive Branch bureaucrats are granting special treatment to favored industries like Hollywood? In any event, the existence of this carve-out demonstrates the frequency at which one is paid has little bearing on whether they are an EAP employee.

Finally, it is not clear whether the Department of Labor’s own regulations require Mr. Hewitt to be paid overtime. His $200,000 a year compensation clearly exceeds the Department’s highly compensated exception, and some circuits have held an employee’s pay alone can exempt them from overtime, despite what the weekly salary requirement may suggest. Maybe the Fifth Circuit erred by requiring the weekly salary requirement to be met; maybe it did not. What is clear is that the Department of Labor has unnecessarily complicated the Fair Labor Standards Act’s overtime exemptions to the detriment of all regulated parties.

Helix Energy v. Hewitt demonstrates the consequences of an agency choosing to ignore the law and charting its own course. Had the Department of Labor faithfully interpreted the Fair Labor Standards Act, a supervisor making $200,000 a year would not be able to claim he is owed overtime, and the Circuit courts would not have to search in vain for a clear meaning of the Department’s regulations. Instead, the Department of Labor has unnecessarily muddied the waters by inserting its own arbitrary idea of what constitutes an exempt employee, with special carveouts given to industries it favors. The Department of Labor would be better served by returning to ­a plain understanding of the Fair Labor Standards Act. Until it does, disgruntled former employees will continue to concoct reasons they are owed extra pay under the Department’s convoluted regulatory scheme.

+