Another pivotal case in 2023 was the U.S. Supreme Court ’ s decision to weigh in on the applicability of an FLSA exemption for highly-compensated employees with atypical payment structures. In Helix Energy Solutions Group, Inc. v. Hewitt, et al., 143 S. Ct. 677 (2023), the plaintiff, a former “tool pusher” on an offshore oil rig, filed an action alleging that his employer failed to pay overtime compensation in violation of the FLSA. The plaintiff typically worked 12 hours per day for 28 days straight and then had the next 28 days off work before returning to the vessel. His pay rate ranged from $963 to $1,341 per day. Under this compensation structure, he earned at least $200,000 annually throughout the course of his employment. In response to the lawsuit, the defendant argued that the plaintiff qualified for the FLSA ’ s executive exemption and was therefore not entitled to overtime. The plaintiff argued that his compensation did not meet the salary basis test because his employer paid him a daily rate, not a weekly salary. The district court disagreed with the plaintiff ’ s analysis and granted summary judgment in the defendant ’ s favor. On appeal, the Fifth Circuit reversed and held that the plaintiff ’ s pay did not meet FLSA ’ s salary basis requirement. In so holding, the Fifth Circuit reasoned that: (i) a daily rate employee does not receive the weekly preset salary required by § 541.602(a), and (ii) the plaintiff ’ s pay did not satisfy the conditions of the special rule of § 541.604(b) that authorizes pay for exempt employees on an hourly, daily, or shift basis. The U.S. Supreme Court granted certiorari and affirmed the Fifth Circuit ’ s decision. The Supreme Court sided with the plaintiff and held that paying a daily rate ― even to a highly compensated worker ― is not paying on a “salary basis.” Id. at 679. The Supreme Court stated that only two compensation structures pass the “salary basis” test under the rules, including: (i) the employer satisfies § 602(a) by paying the employee a pre-determined salary of at least the minimum salary level (currently $684) computed on a weekly (or less frequent) basis regardless of hours, days or shifts worked; or (ii) the employer satisfies § 604(b) by computing the employee ’ s pay on an hourly, daily, or shift basis, but guarantees a weekly amount of at least the minimum salary level (now $684) and ensures that a “reasonable relationship” exists between the guaranteed amount and the amount actually earned. Id. at 684. The employer acknowledged that the plaintiff ’ s compensation did not satisfy § 604(b) ’ s conditions ( i.e. , the reasonable relationship test). The case therefore hinged on whether the employer had paid the plaintiff on a salary basis as described in § 602(a). According to the Supreme Court, the employer had not done so because “a daily-rate worker ’ s weekly pay is always a function of how many days he has labored. It can be calculated only by counting those days once the week is over - not, as §602(a) requires, by ignoring that number and paying a predetermined amount.” Id. at 686. The Supreme Court rejected the employer ’ s argument that § 602(a) requires only the minimum salary amount (then $455 per week) on a weekly or less frequent basis because “a ‘ basis’ of payment typically refers to the unit or method for calculating pay, not frequency of its distribution.” Id. at 687. Section 602(a) “describes those paid a weekly rate.” Id. The Supreme Court ’ s Helix decision may indicate a willingness to strictly construe the FLSA ’ s requirements when assessing whether an employer can fit within the criteria exempting it from paying overtime, particularly in novel or non- traditional salary structures. 2. Rulings Granting Conditional Certification Motions Considering the minimal evidence required, it is not surprising that the bulk of motions seeking conditional certification in 2023 were granted, continuing a long-standing trend in the federal courts. The exact evidentiary burden required in these instances can differ significantly, which is often influenced by the case ’ s specific legal stage. Typically, plaintiffs’ lawyers rely on declarations from one or more individuals who use their personal experiences to demonstrate the requisite facts and circumstances that show the plaintiff and potential collective action members are similarly-situated. However, due to the more stringent criteria for certification of a FLSA collective action set by the Fifth Circuit in 2021 and the Sixth Circuit in 2023, the plaintiffs in those jurisdictions must be prepared to present more comprehensive evidence to secure collective action certification. Ademi, et al. v. Central Park Boathouse, LLC, 2023 U.S. Dist. LEXIS 170402 (S.D.N.Y. Sept. 25, 2023), demonstrates that even a single affidavit from a plaintiff can support conditional certification. The plaintiff, a former long-tenured server who worked at the Central Park Boathouse from approximately January 2011
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© Duane Morris LLP 2024
Wage & Hour Class And Collective Action Review – 2024
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