Opposition Brief — Helix Energy Solutions Group, Inc., et al., Petitioners v. Michael J. Hewitt
Supreme Court briefMar 21, 2022
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No. 21-984
In the
Supreme Court of the United States
__________________
HELIX ENERGY SOLUTIONS GROUP, INC.;
HELIX WELL OPS, INC.,
Petitioners,
v.
MICHAEL J. HEWITT,
__________________
Respondent.
On Petition for Writ of Certiorari to the
United States Court of Appeals
for the Fifth Circuit
__________________
BRIEF IN OPPOSITION
__________________
EDWIN SULLIVAN
Counsel of Record
OBERTI SULLIVAN LLP
712 Main Street, Suite 900
Houston, TX 77002
(713) 401-3557
ed@osattorneys.com
Counsel for Respondent
March 21, 2022
Becker Gallagher · Cincinnati, OH · Washington, D.C. · 800.890.5001
i
TABLE OF CONTENTS
TABLE OF AUTHORITIES. . . . . . . . . . . . . . . . . . . iii
INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
STATEMENT OF THE CASE . . . . . . . . . . . . . . . . . . 3
A. Factual And Procedural Background . . . . . . . 3
B. Statutory And Regulatory Background . . . . . 7
1. The FLSA and its Relevant Implementing
Regulations. . . . . . . . . . . . . . . . . . . . . . . . . 7
2. The FLSA Distinguishes Between Daily
Rate and Salaried Employees . . . . . . . . . . 9
3. The FLSA’s Special Rule for the SalaryBasis Test’s “General Rule” . . . . . . . . . . . 10
REASONS FOR DENYING CERTIORARI . . . . . . 11
A. Petitioners Fail to Establish Entitlement to
the HCE Regulation Because They Did Not
Prove They Paid Respondent on A “Salary
Basis” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
B. The Fifth Circuit’s Decision Creates No Split
and Finds Support from the Sixth and Eighth
Circuits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1. No Conflict Exists with the First or
Second Circuits. . . . . . . . . . . . . . . . . . . . . 17
2. The Fifth Circuit Prevented a Split . . . . 19
ii
3. The Fifth Circuit Correctly Interpreted 29
C.F.R. § 541.604(b), and Even if it was
Wrong, Petitioners Still Lose. . . . . . . . . . 20
C. Appeals To “Common Sense” and Grave
Rolling are Unavailing . . . . . . . . . . . . . . . . . 23
D. Amici Efforts to Change the Law via Judicial
Fiat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
1. Six States Argue Something Petitioners
Did Not Raise Below . . . . . . . . . . . . . . . . 24
2. Industry Briefs are no More Persuasive. . 25
CONCLUSION & PRAYER . . . . . . . . . . . . . . . . . . . 28
APPENDIX
Appendix 1 Opinion in the United States Court of
Appeals for the Fifth Circuit
(April 20, 2020) . . . . . . . . . . . . . . . . . . 1a
Appendix 2 Opinion in the United States Court of
Appeals for the Fifth Circuit
(December 21, 2020) . . . . . . . . . . . . . . 9a
Appendix 3 Letter, U.S. Department of Labor
(September 1, 2020) . . . . . . . . . . . . . 52a
iii
TABLE OF AUTHORITIES
CASES
Anani v. CVS RX Services, Inc.,
730 F.3d 146 (2d Cir. 2013) . . . . . . . . . . 18, 19, 20
Auer v. Robbins,
519 U.S. 452 (1997). . . . . . . . . . . . . . . . . . . . . . . . 8
Barnhart v. Sigmon Coal Co.,
534 U.S. 438 (2002). . . . . . . . . . . . . . . . . . . . . 7, 24
Chevron U.S.A., Inc. v. Natural Resources Defense
Council, Inc., 467 U.S. 837 (1984) . . . . . . . . . . . . 8
Coates v. Dassault Falcon Jet Corp.,
961 F.3d 1039 (8th Cir. 2020). . . . . . . . . . . . . 8, 19
Encino Motorcars, LLC v. Navarro,
___ U.S. ___, 138 S. Ct. 1134 (2018). . . . . . . 23, 24
Hughes v. Gulf Interstate Field Servs., Inc.,
878 F.3d 183 (6th Cir. 2017). . . . . . . . . . 10, 19, 20
Jewell Ridge Coal Corp. v. Local No. 6167,
325 U.S. 161 (1945). . . . . . . . . . . . . . . . . . . . . . . 24
Litz v. Saint Consulting Group, Inc.,
772 F.3d 1 (1st Cir. 2014) . . . . . . . . . 17, 18, 19, 20
STATUTES
29 U.S.C. § 207(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . 7
29 U.S.C. § 213(a)(1) . . . . . . . . . . . . . . . . . . . . . . 8, 20
REGULATIONS
29 C.F.R. Part 541 . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
iv
29 C.F.R. § 541.100(b) . . . . . . . . . . . . . . . . . . . . . . . 20
29 C.F.R. § 541.200(b) . . . . . . . . . . . . . . . . . . . . . . . 21
29 C.F.R. § 541.300(b) . . . . . . . . . . . . . . . . . . . . . . . 21
29 C.F.R. § 541.400(c) . . . . . . . . . . . . . . . . . . . . . . . 21
29 C.F.R. § 541.600 . . . . . . . . . . . . . . . . . . . . . . . . . 19
29 C.F.R. § 541.600(e) . . . . . . . . . . . . . . . . . . . . . . . 10
29 C.F.R. § 541.601 . . . . . . . . . . . . . . . . 1, 8, 9, 12, 20
29 C.F.R. § 541.601(b) . . . . . . . . . . . . . . . . . . . . 13, 16
29 C.F.R. § 541.601(b)(1) . . . . . . . . . . . . . . . . 1, 12, 21
29 C.F.R. § 541.602 . . . . . . . . . . . . . . . . . . . . . passim
29 C.F.R. § 541.602(a) . . . . . . . . . . . . . . . . . . . passim
29 C.F.R. § 541.602(a)(1) . . . . . . . . . . . . . . . . 5, 13, 14
29 C.F.R. § 541.604 . . . . . . . . . . . . . 12, 17, 18, 20, 21
29 C.F.R. § 541.604(b) . . . . . . . . . . . . . . . . . . . passim
29 C.F.R. § 541.604(b)(1) . . . . . . . . . . . . . . . . . . . . . 22
29 C.F.R. § 541.709 . . . . . . . . . . . . . . . . . . . . . . . . . 10
29 C.F.R. § 778.112 . . . . . . . . . . . . . . . . . . . . . . . . 4, 9
OTHER AUTHORITIES
Harold Stein, “Executive, Administrative,
Professional … Outside Salesman Redefined,”
Report and Recommendations of the Presiding
Officer at Hearings Preliminary to Redefinition
(1940). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26, 27
1
INTRODUCTION
The Petition is best summarized as follows: Since
Respondent Hewitt’s (“Respondent” or “Hewitt”) daily
pay rate always exceeded $455 per day, Respondent
always received more than $455 per week of work for
Petitioners Helix (“Petitioners” or “Helix”). And since
Petitioners paid Respondent more than $100,000 per
year, Petitioners claim entitlement to an exemption
from paying Respondent overtime under the federal
Fair Labor Standards Act (“FLSA”)—specifically the
FLSA’s Highly Compensated Employee regulation
codified at 29 C.F.R. § 541.601 (“HCE Regulation”).
Because they claim entitlement to the HCE Regulation,
Petitioners argue that the Fifth Circuit split with the
First and Second Circuits by applying a separate
regulation for daily rate employees codified at 29
C.F.R. § 541.604(b).
Petitioners’ arguments are unavailing. To reach
first base on its Circuit split argument, Petitioners
must demonstrate they established the HCE
Regulation’s requirements. Section B of the HCE
regulation requires Petitioners to prove that they paid
Respondent on a “salary or fee basis as set forth in …
§ 541.602 …” 29 C.F.R. § 541.601(b)(1). The Fifth
Circuit correctly determined that Petitioners failed to
establish they paid Respondent on a “salary basis”
under 29 C.F.R. § 541.602 because Helix failed to pay
Hewitt, a daily-rate employee, (1) on a “weekly, or less
frequent basis,” and (2) with, and not, “without regard
to the number of days or hours worked.” (Pet. Appx. at
4-5, 11). Petitioners devote only eight sentences to
support their supposition that they paid Hewitt on a
2
“salary basis,” (Petition at 24-25), and the reason for
such scant treatment is evident: It is contrary to the
plain text of the law, almost every published FLSA
decision, and the opinion of the Department of Labor.
UNITED STATES DEP’T OF LABOR OPINION FLSA2020-13
(Aug. 31, 2020) (attached at Resp. Appx. at 52a-65a).
Since Petitioners cannot establish that they paid
Respondent on a “salary basis” under the FLSA’s
“general rule” regulation, the Fifth Circuit analyzed
whether Petitioners could meet the “Minimum
Guarantee Plus Extras” regulation at 29 C.F.R.
§ 541.604(b) and determined that they could not. (Pet.
Appx. at 11). Petitioners know they cannot pass this
regulation’s requirements, so they argue that the Fifth
Circuit erred by even considering 29 C.F.R.
§ 541.604(b) and that two Circuits have determined
that 29 C.F.R. § 541.604(b) does not apply to the HCE
Regulation. (Petition at 13-16).
None of the arguments pass muster, and all require
Helix to prove it paid Hewitt on a “salary basis” under
29 C.F.R. § 541.602. The Fifth Circuit addressed the
issue of a split in its opinion. It correctly determined
that it split precisely zero Circuits when it analyzed
and applied 29 C.F.R. § 541.604(b), as the cases
Petitioners cite have significantly different factual
underpinnings from this one. (Pet. Appx. at 17). Had
the Fifth Circuit refused to analyze and apply 29 C.F.R.
§ 541.604(b), it would have created a split with the
Sixth and Eighth Circuits. (Pet. Appx. at 12, 17-18).
Moreover, beyond the fact that no split exists, the U.S.
Department of Labor reached the same conclusion as
3
the Fifth Circuit. (Resp. Appx. at 52a-65a). Finally,
since Petitioners failed to pay Respondent on a “salary
basis,” it does not matter that the Fifth Circuit
analyzed 29 C.F.R. § 541.604(b), or whether the HCE
Regulation is subject to 29 C.F.R. § 541.604(b).
This Court will read the Fifth Circuit’s opinion. The
twelve-judge majority grounded its decision in
textualist and judicially neutral principles that federal
courts considering the FLSA’s “salary-basis” test have
consistently applied for the past 80 years, regardless of
employee or industry interests. Should the dissenters’
view carry the day, this Court will stray from the law’s
plain text to rewrite the FLSA, which will have radical
consequences for employees and employers alike.
STATEMENT OF THE CASE
A. Factual And Procedural Background
On December 29, 2014, Hewitt began working for
Helix as a “Tool Pusher” on an offshore oil rig.
(ROA.197, 204-05, 816).1 In addition to supervising
several other employees, Hewitt was responsible for
ensuring that all operations on the rig complied with
“client and company procedure.” (ROA.204-05). A Tool
Pusher is not a pure white-collar office job.
(ROA.204:18-205:22).
For only one reason—his
supervisory duties—Helix classified the position as
“exempt” from the FLSA and did not pay Hewitt for
1
“ROA” refers to the electronic record on appeal in the Fifth
Circuit.
4
any overtime hours. (ROA.328:18-23).2 On August 3,
2017, Helix terminated Hewitt without telling him
why. (ROA.51:6-8, 286).
Before the Fifth Circuit and this Court, Helix
concedes it paid Hewitt a daily rate for his work. (Pet.
Appx. at 7 (“Helix concedes that it paid Hewitt based
solely on a day rate”); Petition at 1). Under the FLSA,
employers must generally pay daily rate employees an
overtime premium. 29 C.F.R. § 778.112. Hewitt
worked a significant amount of overtime, and Helix did
not pay him for the overtime he worked and earned.
(ROA.208 at 58:19-23; ROA.215).
On August 18, 2017, Respondent filed suit for
unpaid overtime under the FLSA. (ROA.7-17). On
July 31, 2018, the parties filed cross-motions for
summary judgment. (ROA.177-771). Respondent
argued Petitioners could not prove they satisfied any
applicable exemption under the FLSA because they did
not pay him on a “salary basis.” (ROA.182-191).
Petitioners argued that since Respondent’s daily rate
exceeded the FLSA’s “salary level” test, it actually paid
him on a “salary basis” and owed Hewitt no overtime.
(ROA.372-378).
The district court granted Petitioners’ motion for
summary judgment, concluding that Petitioners paid
Respondent on a “salary basis” because Hewitt always
received an amount over the FLSA’s then “salary level”
2
Helix’s HR Director Kenric McNeal provided devastating
testimony that Helix’s analysis of the FLSA was limited to his
duties, and not whether Helix paid him on a “salary basis.”
5
of $455 for any week in which he performed work and
disposed of the claim with prejudice. (ROA.824).
Hewitt filed a timely appeal. (ROA.825-827). On
April 20, 2020, the Panel assigned to this case reversed
the District Court and ruled unanimously in
Respondent’s favor on the lead issue presented. Hewitt
v. Helix Energy Solutions Group, Inc., 956 F.3d 341
(5th Cir. 2020) (“Hewitt I”) (attached at Resp. Appx. at
1a-8a). The Panel determined that Petitioners paid
Respondent: (1) “an amount contingent on the number
of days he worked each week. So he was not paid on a
‘salary basis’ under the Labor Department
regulations;” and (2) “‘with’ (not ‘without’) ‘regard to
the number of days worked,’ in direct conflict with the
plain language of 29 C.F.R. § 541.602(a)(1).” (Id. at 6a,
7a) (emphasis in original).
After the Panel issued its decision, Petitioners filed
a Petition for Rehearing En Banc and procured a
couple of briefs from industry groups bemoaning the
decision. The original Panel reconsidered its decision,
held oral argument, and rigorously examined the
parties’ attorneys. On December 21, 2020, the same
Panel withdrew Hewitt I and then held two judges to
one, in Respondent’s favor. Hewitt v. Helix Energy
Solutions Group, Inc., 983 F.3d 789 (5th Cir. 2020)
(“Hewitt II”) (attached at Resp. Appx. at 9a-51a). While
the Court still determined Petitioners failed to pay
Respondent on a “salary basis” under 29 C.F.R.
§ 541.602, it also addressed a two-pronged “special”
rule for the FLSA’s salary-basis test—29 C.F.R.
§ 541.604(b)—and found that Petitioners did not satisfy
either prong. (Resp. Appx. at 11a, 17a). The Panel’s
6
majority determined that its “reading of the regulations
finds support not only from the Sixth and Eighth
Circuits, but also in repeated statements by the Labor
Department.” (Id. at 19a). It outlined the constraints
placed upon it as follows:
If we were limited to the statutes enacted by
Congress, we might very well have ruled for
Helix in this matter. But we are also bound by
regulations issued by the Secretary of Labor.
And those regulations exempt daily rate
employees from overtime—but only “if” that
employee’s compensation meets certain
conditions. Helix asks us to ignore those
conditions. But we are not at liberty to do so.
And certainly not on the ground that the oil and
gas industry warrants special treatment not
supported by the text, or because Hewitt already
makes enough money and thus doesn’t deserve
FLSA protection. Our duty is to follow the law,
not to vindicate anyone’s policy preferences. Our
ruling today construes the salary basis for
everyone—not just the oil and gas industry.
Likewise, the salary basis test applies not only
to highly compensated employees like Hewitt,
but also to all other executive, administrative,
and professional employees—including those
who earn less than a fifth of what Hewitt makes.
(Id. at 25a).
Helix filed a second Petition for Rehearing En Banc.
The Fifth Circuit withdrew Hewitt II, held oral
argument, and then reversed the district court for the
third time, twelve judges to six. Hewitt v. Helix Energy
7
Solutions Group, Inc., 15 F.th 289 (5th Cir. 2020)
(“Hewitt III”). (Pet. Appx. at 1-76). Judge Ho, writing
for the majority, demonstrated how “[t]he plain text of
the regulations is decisive … [and] this textualist
approach is also shared by the Sixth and Eighth
Circuits and the Secretary of Labor—not to mention
the overwhelming majority of district courts that have
confronted these issues …”. (Pet. Appx. at 11). In
addressing the policy arguments of Petitioners and the
amici, the Court determined:
Our job is to follow the text—not to bend the text
to avoid perceived negative consequences of the
business community. That is not because
industry concerns are unimportant.
It is
because those concerns belong in the political
branches, not the courts. “We will not alter the
text in order to satisfy the policy preferences” of
any person or industry. “These are battles that
should be fought among the political branches
and the industry.”
(Pet. Appx. at 20) (quoting Barnhart v. Sigmon Coal
Co., 534 U.S. 438, 462 (2002)).
B. Statutory And Regulatory Background
1. The
FLSA
and
its
Implementing Regulations
Relevant
The FLSA prohibits, for qualifying employees,
employment “for a workweek longer than forty hours
unless such employee receives compensation for his
employment in excess of the hours above specified at a
rate not less than one and one-half times the regular
rate at which he is employed.” 29 U.S.C. § 207(a)(1).
8
The law exempts some employees from this
requirement, such as those “employed in a bona fide
executive, administrative, or professional capacity.” 29
U.S.C. § 213(a)(1).
The FLSA grants the Secretary of Labor “broad
authority to define and delimit the scope of the
exemption for executive, administrative, and
professional employees.” Auer v. Robbins, 519 U.S.
452, 456 (1997) (citing 29 U.S.C. § 213(a)(1)). “Under
the Secretary’s chosen approach, exempt status
requires that the employee be paid on a salary basis,
which in turn requires that his compensation not be
subject to reduction because of variations in the
‘quality or quantity of the work performed.” Id. Courts
“must sustain the Secretary’s approach so long as it is
‘based on a permissible construction of the statute.’”
Id. (quoting Chevron U.S.A., Inc. v. Natural Resources
Defense Council, Inc., 467 U.S. 837, 842–843 (1984)).
The FLSA’s implementing regulations are codified
at 29 C.F.R. Part 541. Petitioners argue that they
satisfied the FLSA’s so-called HCE Regulation at 29
C.F.R. § 541.601, (Petition at 1), which “is a less
burdensome way to prove an executive, administrative,
or professional exemption, [and is] not a separate
exemption.”3 Coates v. Dassault Falcon Jet Corp., 961
F.3d 1039, 1048 (8th Cir. 2020). To claim entitlement
to the HCE Regulation, an employer must prove (1) the
employee performs specific job duties of an exempt
executive, professional, or administrative employee
(the “duties” test); (2) the employer paid the employee
3
Congress did not authorize a separate “highly compensated
employee” exemption in 29 U.S.C. § 213(a)(1).
9
on a salary basis (the “salary-basis” test); and (3) the
employer paid the employee a salary of above a defined
floor (the “salary-level” test). 29 C.F.R. § 541.601.
Hewitt concedes that Helix could satisfy the FLSA’s
so-called “duties” test under the HCE Regulation. And,
if Petitioners paid Respondent on a “salary basis,”
which they did not, they could satisfy the “salary level”
test. Petitioners, however, failed a fundamental
requirement: They paid Respondent on a daily rate,
which is not a salary under the FLSA, meaning they
failed the FLSA’s “salary-basis” test.
2. The FLSA Distinguishes Between Daily
Rate and Salaried Employees
Under the FLSA, a “day rate” is “a flat sum for a
day’s work … without regard to the number of hours
worked in the day.” 29 C.F.R. § 778.112. Helix
concedes it paid Hewitt a daily rate. (Pet. Appx. at 7;
Petition at 1). With few exceptions not applicable here,
employers must pay overtime to daily-rate employees.
29 C.F.R. § 778.112 (“[h]e is then entitled to extra halftime pay at this rate for all hours worked in excess of
40 in the workweek”).
Salaried employees are not daily rate employees.
The FLSA has a different definition of the term “salary
basis” at 29 C.F.R. § 541.602(a) contained in its
“General Rule.” It reads in relevant part:
An employee will be considered to be paid on a
“salary basis” within the meaning of these
regulations if the employee regularly receives
each pay period on a weekly, or less frequent
basis, a predetermined amount constituting all
10
or part of the employee’s compensation, which
amount is not subject to reduction because of
variations in the quality or quantity of the work
performed.
(1)
… an exempt employee must receive
the full salary for any week in which
the employee performs any work
without regard to the number of days
or hours worked …
29 C.F.R. § 541.602(a) (emphasis added).
An employee paid “an amount contingent on the
number of days he worked each week … [is] not paid on
a ‘salary basis’ under Labor Department regulations.”
Hughes v. Gulf Interstate Field Servs., Inc., 878 F.3d
183, 189 (6th Cir. 2017); see also Resp. Appx. at 61a
(pay “based … on the number of days worked” is not a
“salary basis”); FLSA2009-18 (Jan. 16, 2009) at 4 (day
rates are “inconsistent with the guaranteed salary
basis of payment required”); FLSA2009-14 at 2 (Jan.
15, 2009) (same).
3. The FLSA’s Special Rule for the SalaryBasis Test’s “General Rule”
The FLSA’s white-collar exemptions do not always
mandate overtime for daily-rate employees. For
example, an employer can pay doctors and lawyers a
daily rate and still legally classify them exempt from
overtime. 29 C.F.R. § 541.600(e). The FLSA also
expressly excepts certain “daily rate” workers in the
“motion picture producing industry.”
29 C.F.R.
§ 541.709.
11
The FLSA also permits an employer to exempt a
daily-rate employee from overtime if it can show: (1) A
“guarantee” of “minimum weekly” pay “on a salary
basis” to the employee and (2) a “reasonable
relationship” between the guarantee and the amount
earned by the employee. 29 C.F.R. § 541.604(b). After
scrutinizing the arguments, the Fifth Circuit found
that “Helix does not even purport to meet these
conditions. Instead, Helix asks us to ignore them
altogether. … But respect for the text forbids us from
ignoring text. As a matter of plain text, we hold that …
Helix must comply with § 541.604(b).” (Pet. Appx. at
5).
REASONS FOR DENYING CERTIORARI
All the reasons for denying certiorari are within
Hewitt III’s majority opinion, authored by a committed
textualist and grounded in judicially neutral principles.
The Court comprehensively addressed and defeated
each argument raised by Petitioners, including their
view that the court created an alleged Circuit split.
Respondent also offers the following arguments.4
4
Petitioners lead with their argument that the Fifth Circuit split
the Circuits and then argue that the Fifth Circuit’s decision was
wrong on the merits. Since all of Petitioners’ arguments first
hinge on the requirement that they pay him on a salary,
Respondent has flipped the order of its response to provide better
context.
12
A. Petitioners Fail to Establish Entitlement to
the HCE Regulation Because They Did Not
Prove They Paid Respondent on A “Salary
Basis”
Petitioners assert the Fifth Circuit’s decision was
wrong on the merits, (Petition at 22-33), while
simultaneously and erroneously claiming that the Fifth
Circuit agreed with its analysis that Petitioners paid
Respondent on a “salary basis,” (Petition at 25) (“[t]he
en banc majority did not dispute any of the above
analysis”). Contrary to this declaration, the Fifth
Circuit did not find that Helix paid Hewitt a salary. If
it had, then the case would have been over. Instead,
the Fifth Circuit explained that since Petitioners
admitted they paid Hewitt by the day, Helix could not
meet the FLSA’s “general rule” for the salary-basis
test. (Pet. Appx. at 16). Because it could not meet the
“general rule,” it looked to see if they could meet a
special rule.
Id. (“Hewitt cannot be a ‘highly
compensated employee’ under § 541.601 unless his
total annual compensation satisfies the salary-basis
test. And the only way for an employee to have his pay
‘computed on a daily basis’ ‘without violating the salary
basis requirement’ is to comply with § 541.604”).
The HCE Regulation requires Helix to establish it
paid Hewitt on a “salary … basis as set forth in …
§ 541.602 …” 29 C.F.R. § 541.601(b)(1).5 Thus, the
HCE Regulation requires Helix to prove it complied
with the FLSA’s “salary-basis” regulation located at 29
C.F.R. § 541.602. Yet, the Petition simply glosses over
5
Helix has never argued it paid Hewitt on a “fee” basis. The only
issue is whether Helix paid Hewitt on a “salary basis.”
13
this requirement.
(Petition at 15) (“[b]ecause
Respondent satisfies the requirements of the HCE
regulation, and because 29 C.F.R. § 541.604(b) does not
apply or alter or supersede those requirements,
Respondent is exempt”).
Petitioners’ reason for glossing over is apparent:
Applying the law to these facts demonstrates that
Petitioners cannot meet 29 C.F.R. § 541.602’s
requirements, which they must do to satisfy the FLSA’s
HCE Regulation at 29 C.F.R. § 541.601(b). Petitioners
failed to provide any facts demonstrating that they
paid Respondent a “predetermined” or “guaranteed”
pay rate on a “weekly, or less frequent basis” as
required by § 541.602(a). Petitioners paid Respondent
“with” and not “without” regard to the number of days
he worked, which § 541.602(a)(1) disallows. Petitioners
also maintained the right to reduce Respondent’s pay
based on the quality of his work in violation of
§ 541.602(a). (ROA.209:61:6-9) (Hewitt’s testimony
that Helix required him to sign paperwork
acknowledging his pay was subject to deduction for
negligence).
Petitioners also offered no evidence that it
guaranteed Respondent any amount of pay. They only
provided evidence that Hewitt’s daily rate exceeded
$455 a week—over the then-existing “salary level” test
amount—but failed to prove that Hewitt received more
than $455 a week because Petitioners guaranteed him
a salary of at least $455 a week. This logical fallacy
serves as the foundation of Petitioners’ argument that
they paid Respondent a salary.
14
If there was no guaranteed daily pay rate, there was
no guaranteed weekly pay rate. Respondent is not
abstractly speculating. Helix offered him no guarantee
of pay. Helix lowered and raised Hewitt’s day rate
throughout his employment for various reasons,
including economic ones. (ROA.217-285) (check stubs
showing varying day rates throughout Hewitt’s
employment).
Petitioners ignore all that and dismissively assert in
eight sentences that they paid Respondent a salary
because he received an amount of pay over the FLSA’s
then-existing “salary level” of $455 per week. (Petition
at 24-25). Petitioners focus exclusively on the level of
pay Respondent received and ignore the method (or
“basis”) on which Helix calculated his pay. Rewriting
a regulation to fit a preferred outcome is not
textualism.
The text is clear that an employer may not base the
predetermined amount on the employee’s quantity of
work. 29 C.F.R. § 541.602(a) (“which amount is not
subject to reduction because of variations in the quality
or quantity of the work performed”). Further, it is
irrelevant whether Helix actually made deductions
based on the quality of his work because the law
prohibits pay that is “subject to deduction” based on the
employee’s “quality of the work.” Id. (emphasis added).
Finally, Helix paid Hewitt with—and not
without—regard to the number of days he worked in
violation of 29 C.F.R. § 541.602(a)(1)’s plain-text
requirement that “an exempt employee must receive
the full salary for any week in which the employee
15
performs any work without regard to the number of
days or hours worked.” (emphasis added).
Petitioners’ argument restructures the FLSA in an
unprecedented manner. Consider an employee paid by
the hour. Hourly employees, like day rate employees,
are generally entitled to overtime. If an hourly
employee otherwise entitled to overtime received more
than the law’s “salary level” through a weekly or less
frequent paycheck, Helix’s proposed revision means the
employer paid the employee on a salary basis. Helix
admitted this at oral argument before the Panel.6
Helix’s argument would also apply to commissioned
and piece-rate employees, who, like day-rate
employees, no one considers salaried under 29 C.F.R.
§ 541.602. Indeed, every worker getting a weekly (or
less frequent) paycheck for more than the FLSA’s
“salary level” would have satisfied the law’s “salarybasis” test, regardless of the method used to calculate
their pay. But the “salary-basis” test asks how an
employer determines that pay. It is not applied in
hindsight, with the “level” of payment to the employee
the sole determinant. What matters is how Helix
determined what it owed Helix, and Helix could only
make that determination by calculating the day rate by
the days worked after Hewitt worked them. In other
words, Helix post-determined Hewitt’s pay, as opposed
to the law’s requirement that a salary is “a
predetermined amount.” 29 C.F.R. § 541.602.
6
https://www.ca5.uscourts.gov/OralArgRecordings/19/19-20023_99-2020.mp3 at 27:06-27:17 (“Q. [The Court]: So would your
position be, that even someone paid hourly, is salaried if that
hourly amount exceeds the minimum and it’s guaranteed. A. Yes,
it would”).
16
Nothing supports such an end-run around the law,
other than a tortured (mis)reading of the regulation.
Helix’s rewritten rule is the opposite of the Department
of Labor’s consistent interpretation of the regulation
across multiple administrations. “[The DOL’s Wage
and Hour Division] knows how to include in the
exemption certain employees whose pay is calculated
on a daily basis; it has chosen not to do so broadly.”
(Resp. Appx. at 61a at n.27).
Helix failed to pay Hewitt on a “salary basis.”
Because of that, Helix cannot establish entitlement to
the HCE Regulation. 29 C.F.R. § 541.601(b) (“Total
annual compensation” must include at least $684 per
week paid on a salary … basis as set forth in …
§ 541.602 …”).
B. The Fifth Circuit’s Decision Creates No
Split and Finds Support from the Sixth and
Eighth Circuits
Petitioners complain the Fifth Circuit erred by
applying 29 C.F.R. § 541.604(b). As demonstrated
supra, since Helix failed to pay Hewitt on a salary
basis, it cannot claim entitlement to the HCE
Regulation. Unless another regulation applied, it was
game, set, match on this case against Helix.
The Fifth Circuit analyzed and applied a regulation
for workers paid an “hourly, a daily, or shift basis…”
29 C.F.R. § 541.604(b). If the employer can establish
that it paid the employee a minimum guaranteed
amount of $455 “on a salary basis,” and if there is a
“reasonable relationship” between that minimum
guarantee and the amount earned by the employee,
17
then the employer may satisfy the salary-basis test. 29
C.F.R. § 541.604. (Pet. Appx. at 4) (“[T]he Secretary
has promulgated a special rule that must be satisfied
before an hourly or daily rate will be regarded as a
‘salary’”).
After its analysis, the Fifth Circuit
determined that because Helix offered Hewitt no
“guarantee” of “minimum weekly” pay “on a salary
basis,” and (2) a “reasonable relationship” between the
alleged guarantee and the amount earned, the Court
determined that Helix did “not comply with either
prong of § 541.604(b).” (Id. at 11).
In its main reason for seeking certiorari, Petitioners
argue that the Fifth Circuit created a Circuit split by
applying 29 C.F.R. § 541.604(b) to the HCE Regulation.
(Petition at 2) (“The HCE regulation is a self-contained
provision that deems highly compensated employees
exempt if they perform any of several listed duties and
earn more than $455 in salary each week they work”)
(emphasis in original). The problem here is that even
if Petitioners were correct—and they are
not—Petitioners still must establish entitlement to the
HCE regulation by proving they paid Respondent a
salary—which they did not.
1. No Conflict Exists with the First or
Second Circuits
Based on a faulty assumption that they paid Hewitt
on a “salary basis” under the HCE Regulation,
Petitioners argue the Fifth Circuit—by analyzing and
applying § 541.604(b), created “a clear” and “plain and
simple” Circuit split with the First and Second Circuits
in Litz v. Saint Consulting Group, Inc., 772 F.3d 1 (1st
18
Cir. 2014), and Anani v. CVS RX Services, Inc., 730
F.3d 146 (2d Cir. 2013). (Petition at 13; 16-20).
Any fair reading of those opinions demonstrates
beyond doubt that they are distinguishable because
those cases involved guarantees of weekly pay, and
Helix made no guarantee of weekly pay to Hewitt.
Unlike Hewitt, who Helix paid purely by the day, the
workers in Litz and Anani were paid a weekly
guarantee of pay by the employer. As stated in the
majority opinion: “Litz and Anani involve pay
calculated ‘on a weekly, or less frequent basis’ (29
C.F.R. § 541.602(a))—and not pay ‘computed on … a
daily … basis’ (§ 541.604(b)).” (Pet. Appx. at 17).
In Litz, the employer’s compensation plan provided
that “‘[a]ll project managers will ... be guaranteed a
minimum weekly salary of $1,000 whether they bill
any hours or not.’ Therefore, if a project manager
billed 10 hours at a $50 hourly rate, or $500, she would
still receive $1,000 in pay for that week.” 772 F.3d at
2. The Court’s decision “depend[ed] on whether Saint
Consulting paid the $1,000 stipend on a salary basis
within the meaning of 29 C.F.R. § 541.602(a).” Id. at 3.
The First Circuit held that the guaranteed $1,000 per
week payment, which it labeled an “undisputed
guarantee,” “plainly qualifies as a payment on a ‘salary
basis.’” Id. at 3, 5. Helix paid no weekly guarantee to
Hewitt, and so the Fifth Circuit’s decision is not in
conflict with Litz.7
7
Notably, in Litz, neither party relied on 29 C.F.R. § 541.604. Id.
at 5 (“Saint Consulting does not rely on that exemption” and
“plaintiffs do not take a position on this issue”).
19
The same is true for Anani. In Anani, the Second
Circuit determined that a pharmacist qualified for the
HCE regulation when he received a guaranteed $1,250
weekly salary and significant additional compensation
based on the number of hours worked after 44 hours in
a week. Id. at 148. (“appellant’s base weekly salary
was guaranteed, i.e., to be paid regardless of the
number of hours appellant actually worked in a given
forty-four-hour shift. The requirements of C.F.R.
§§ 541.600 and 541.602 are thus satisfied with regard
to the minimum guaranteed weekly amount being paid
‘on a salary basis.’”) Anani is not in conflict with the
Fifth Circuit’s holding for the same reason Litz is not
in conflict—the facts and reasoning are dissimilar.
2. The Fifth Circuit Prevented a Split
In distinguishing Litz and Anani, the Fifth Circuit
pointed out that the Sixth Circuit previously
distinguished those cases on the same grounds when it
decided Hughes. (Pet. Appx. at 17) (“Indeed, the Sixth
Circuit has already distinguished Litz and Anani on
precisely this textual ground”). Similarly, the Eighth
Circuit determined that the FLSA’s salary-basis test is
“subject to numerous interpretive rules,” including 29
C.F.R. § 541.604(b). Coates, 961 F.3d at 1042 (8th Cir.
2020). Pointedly, both Hughes and Coates were decided
after Litz and Anani.
Petitioners argue the Sixth Circuit did not squarely
address the issue at bar, (Petition at 20-21), but such a
reading of Hughes is plainly wrong. In Hughes, the
employer paid the plaintiffs a day rate of $337 and paid
each plaintiff annualized pay over $100,000. 878 F.3d
at 186, 189. The defendant made the same argument
20
Appellees make here and similarly cited to Litz and
Anani. The Court distinguished those two cases on the
same grounds listed above. Id. at 189 (“the situations
in which those authorities ignore [541.604] … are
situations in which the textual requirements of 29
C.F.R. §§ 541.601, 541.602(a) are already clearly met”).
In Hughes, however—like this case—there was no such
guarantee, and so the Court correctly declined to apply
Litz or Anani to the facts it faced. Instead, the Court
determined that the employer failed to demonstrate
that it met “textual prerequisites” of 29 C.F.R.
§ 541.602(a) because the plaintiffs introduced evidence
that the defendant paid them a “day rate” and “thus
reason to conclude that their pay was calculated more
frequently than weekly,” id. at 189 (emphasis in
original).
3. The Fifth Circuit Correctly Interpreted
29 C.F.R. § 541.604(b), and Even if it was
Wrong, Petitioners Still Lose
Petitioners argue the Fifth Circuit erred by
analyzing and applying 29 C.F.R. § 541.604(b) to the
FLSA’s HCE Regulation. (Petition at 25-33). As
explained infra, the Fifth Circuit correctly applied the
regulation. Even if it was wrong, however, it is of no
consequence since Helix cannot establish entitlement
to the HCE Regulation.
Petitioners also note the HCE Regulation’s text does
not reference 29 C.F.R. § 541.604. (Petition at 27).
True, but none of the 29 U.S.C. § 213(a)(1) exemptions
defined and delimited by the Department of Labor
references 29 C.F.R. § 541.604.
See 29 C.F.R.
§ 541.100(b) (executive exemption references “salary
21
basis” under 29 C.F.R. § 541.602 but not under 29
C.F.R. § 541.604); 29 C.F.R. § 541.200(b) (same for
administrative exemption); 29 C.F.R. § 541.300(b)
(same for professional exemption); 29 C.F.R.
§ 541.400(c) (same for computer employees’ exemption).
The Fifth Circuit’s majority made the same point:
the same “salary basis” language that appears in
the highly compensated employee regulation
also appears in the regulations governing more
modestly paid executive, administrative, and
professional employees. Like their “highly
compensated” counterparts, these employees are
exempt only if they are “[c]ompensated on a
salary basis.” … There is no principled basis for
applying or ignoring § 541.604(b) based on how
much the employee is paid.
Judge Ho’s concurring opinion makes the point
finer: Since none of the exemptions mention 29 C.F.R.
§ 541.604, it would render the regulation “surplusage”
under this theory advanced by Petitioners and the
dissenters in the Fifth Circuit. (Pet. Appx. at 25).
29 C.F.R. § 541.604(b) explicitly mentions the
“salary basis” requirement, as it begins with the
following clause: “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 … .” The “salary-basis” requirement
is at 29 C.F.R. § 541.602, which is referenced explicitly
in the HCE Regulation at 29 C.F.R. § 541.601(b)(1). As
noted aptly by the Fifth Circuit:
22
[E]ven accepting Helix’s premise about
§ 541.602, it should go without saying that an
employer must comply with all relevant
regulations. Helix admits that Hewitt’s pay is
“computed on a daily basis,” so it must comply
with § 541.604(b). Indeed, § 541.604(b) makes
this explicit: It says that an otherwise “exempt”
employee who is paid a daily rate “los[es] the
exemption” and “violat[es] the salary basis
requirement” unless the employer complies with
§ 541.604(b).
(Pet. Appx. at 6).
Petitioners also argue that the HCE Regulation
uses the term “deemed exempt,” making it a standalone provision, as the other exemptions do not use
such language. (Pet. Appx. at 26). No. It means they
“are exempt” if they can establish pay on a “salary …
basis as set forth in 29 C.F.R. § 541.602” as 29 C.F.R.
§ 541.604(b)(1) explicitly states. Since Helix failed to
pay Hewitt on a “salary basis” under 29 C.F.R.
§ 541.602, they lose unless they could establish the
requirements of 29 C.F.R. § 541.604(b). (Pet. Appx. at
15) (“the only way for an employee to have his pay
‘computed on a daily basis’ ‘without violating the salary
basis requirement’ is to comply with § 541.604(b)”).
As the Fifth Circuit explained, the Department of
Labor supports its interpretation: “That opinion
concluded that, absent some special rule, daily rate
workers ‘would not qualify as highly compensated
employees’ because ‘their day rate does not constitute
payment on a salary basis.’” (Pet. Appx. at 12-13)
(citing Resp. Appx. at 52a-53a). The Department of
23
Labor made clear that it “knows how to include in the
exemption certain employees whose pay is calculated
on a daily basis; it has chosen not to do so broadly.”
(Resp. Appx. at 61a n.27).
Ultimately, Petitioners’ arguments—even if this
Court thinks that the Fifth, Sixth, and Eighth Circuits
reached the wrong conclusion on an issue the First and
Second Circuits did not directly address—cannot
prevail unless they prove they paid Hewitt on a “salary
basis,” and they failed to do so.
C. Appeals To “Common Sense” and Grave
Rolling are Unavailing
Courts have correctly and consistently applied the
“salary-basis” test countless times. Helix objects to
paying someone overtime to whom they believe they
have already paid generously. This objection explains
why Petitioners, in every brief and argument, decry
that the sky is falling when all the Fifth Circuit did is
apply 80 years of overwhelming, binding, and
persuasive precedent to the facts of this case.
“[I]t should go without saying that we are governed
by the text of the FLSA and its implementing
regulations, not some unenumerated purpose.” (Pet.
Appx. at 18) (citing Encino Motorcars, LLC v. Navarro,
___ U.S. ___, 138 S. Ct. 1134, 1152 (2018)). “Indeed, if
the Secretary had wanted to exempt employees based
solely on the fact that they are well compensated, the
regulations could have been written accordingly.” Id.
at 19. “Congress has never amended the text of the
FLSA to categorically exempt highly paid employees
from overtime—to the contrary, as previously noted, it
24
has repeatedly rejected efforts to do so.” Id. at 18.
“[E]mployees 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, 162
(1945) (noting that underground mine workers “are not
deprived of the benefits of the [Act] simply because
they are well paid”). This issue is “hardly novel—and
can hardly come as a surprise to the oil and gas
industry.” (Pet. Appx. at 15). If the Department of
Labor wanted to exempt all employees making a total
annual compensation of $100,000 or more per year, it
could have done so.
Put simply, Helix has spent four years trying to
persuade courts, and now the highest court, to declare
by judicial fiat that the FLSA’s “salary-basis” test
means something contrary to its ordinary meaning and
80 years of precedent. There is, however, a principled
way to protest the “salary-basis” test, and that is
through the political process. (Pet. Appx. at 20) (“Our
job is to follow the text—not to bend the text to avoid
perceived negative consequences for the business
community. That is not because industry concerns are
unimportant. It is because those concerns belong in
the political branches, not the courts”) (citing Barnhart,
534 U.S. at 462).
D. Amici Efforts to Change the Law via
Judicial Fiat
1. Six States Argue Something Petitioners
Did Not Raise Below
Six states argue that the Department of Labor has
“issued regulations that are in serious tension with the
25
statute: they make the executive exemption turn on
the employee’s compensation and how his
compensation is computed.” (States’ Brief at 3). They
also argue that the Fifth Circuit “stretched those
regulations even farther from the statute—to bestow
overtime pay on a highly paid executive solely because
his total compensation may turn in part on how many
days he works in a week.” (Id.). Petitioners—for good
reason—have never advanced these arguments.
In his concurring opinion, Judge Ho effectively
responded to these objections with the following
question: “So how exactly do they propose that we
construe the regulations to avoid a salary-basis test,
when the regulations explicitly apply a salary-basis
test?” (Pet. Appx. at 22). The answer the States
attempt to provide is on page 12 of their brief, but their
solution is to ignore the “salary-basis” test so long as
the employer meets the “salary level” test. This radical
argument contradicts the FLSA’s regulations, which
require pay on a “salary basis” and not just a “salary
level.” As Judge Ho observed, a Court’s “duty is to
interpret the text—not to ignore it.” (Pet. Appx. at 22).
2. Industry Briefs are no More Persuasive
In addition to the baseless argument the FLSA’s
“salary level” test supplants its “salary-basis” test,
energy industry briefs essentially argue that day rates
are common in the oil patch and that the regulations’
imposition of a salary-basis test is unfair.
As Judge Ho correctly addressed in his concurring
opinion:
26
When all is said and done, amici’s point amounts
to this: An employee’s compensation can satisfy
the income level requirements of § 541.601—yet
violate the salary-basis test requirements of
§ 541.604(b). Okay, but so what? I thought
everyone agreed that the regulations impose a
three-prong test: (1) the performance of certain
duties, (2) income over a certain level, and (3)
the salary-basis test. These are obviously
separate and distinct requirements—the text
makes this clear, and the parties do not dispute
it. So an employer cannot prevail unless it
meets all three requirements. And it is of course
possible to satisfy one prong but not another. If
that is all that amici is setting out to prove, then
mission accomplished—but how this leads to
judgment for Helix is a mystery.
(Pet. Appx. at 24-25).
Further, despite its protestations now, companies
within the energy industry advocated for the
Department of Labor’s inclusion of the salary-basis
test.
Harold Stein, “Executive, Administrative,
Professional … Outside Salesman Redefined,” Report
and Recommendations of the Presiding Officer at
Hearings Preliminary to Redefinition, (1940) at 42
(“[t]he salary paid the employee is the best single test
of the employer’s good faith in characterizing the
employment as of a professional nature”). In the socalled Stein Report, companies within the energy
industry received an acknowledgment for their role in
lobbying the Department of Labor for the “salary-basis”
test. Id. at 6 n.16 (“A salary qualification was included
27
in proposed redefinitions submitted by the following:
Shell Oil Co., Mid-Continent Oil & Gas Association. …
Oklahoma Stripper Well Association …”). And, as
further noted in this supported analysis, “[s]urely if
Congress had meant to exempt all white collar workers,
it would have adopted far more general terms than
those actually found in section 13(a)(1) of the act.” Id.
at 6-7.
In any event, compliance with the FLSA was not
complex. (Pet. Appx. at 29) (“Just provide Hewitt a
minimum weekly guarantee of, say, $4,000. That’s the
economic equivalent of Hewitt’s daily rate of $963.
Such an arrangement would benefit both parties. Helix
would avoid paying Hewitt overtime. And Hewitt
would enjoy a stable, predictable weekly income”).
The truth is that Helix never even bothered to look
at the salary-basis regulation when it decided not to
pay Hewitt overtime. HR Director Kenric McNeal
provided direct and devastating testimony against
Helix on this point:
Q. All right. To your knowledge, why are
toolpushers not eligible for overtime at
Helix?
A. Because they are in a supervisory role.
Q. Okay. Anything else?
A. No sir.
(ROA.328 at 19-23). Thus, Hewitt’s job duties—as
opposed to some well-thought-out pay design of the
hydrocarbon industry—were the sole reason Helix
failed to pay Hewitt overtime.
28
In short:
[A]mici’s arguments are at war with the text. So
we cannot credit them, no matter how important
(or upset) the industry may be. If the court’s
ruling today is bad for the industry
(notwithstanding how easy it would be for Helix
to comply with the salary-basis test), that is a
policy consideration for the political
branches—not the courts.
(Pet. Appx. at 32).
CONCLUSION & PRAYER
This Court should not grant certiorari. A bedrock
principle of legal interpretation is to apply the ordinary
meaning of laws, regardless of the policy preferences of
litigants. Helix should place its dissatisfaction with
the law on the lawmaker—not Hewitt—and it should
not ask this Court to enact legislation via
“interpretation” for its preferred policy outcome.
Because an employee received something of value
does not mean the employer guaranteed the employee
something of value. If a person wins a lottery and
receives a prize, one cannot deduce that he was
guaranteed to win. Yet, the very foundation of Helix’s
case is that because its paychecks to Hewitt were over
the FLSA’s “salary level” test, it paid him on a “salary
basis.” This illogical approach leads to an illegal result.
All Hewitt asks is for this Court to refuse to
shoehorn the plain text of the law to Helix’s desire
because someone at the company failed to check the
29
FLSA’s requirements before classifying Hewitt’s
position as exempt from overtime.
Respectfully submitted,
EDWIN SULLIVAN
Counsel of Record
OBERTI SULLIVAN LLP
712 Main Street, Suite 900
Houston, TX 77002
(713) 401-3557
ed@osattorneys.com
Counsel for Respondent
APPENDIX
i
APPENDIX
TABLE OF CONTENTS
Appendix 1 Opinion in the United States Court of
Appeals for the Fifth Circuit
(April 20, 2020) . . . . . . . . . . . . . . . . . . 1a
Appendix 2 Opinion in the United States Court of
Appeals for the Fifth Circuit
(December 21, 2020) . . . . . . . . . . . . . . 9a
Appendix 3 Letter, U.S. Department of Labor
(September 1, 2020) . . . . . . . . . . . . . 52a
1a
APPENDIX 1
United States Court of Appeals, Fifth Circuit.
No. 19-20023
[Filed: April 20, 2020]
__________________________________________
MICHAEL J. HEWITT,
)
Plaintiff - Appellant
)
)
v.
)
)
HELIX ENERGY SOLUTIONS GROUP,
)
INCORPORATED; HELIX WELL OPS,
)
INCORPORATED,
)
Defendants - Appellees
)
__________________________________________)
Before WIENER, HIGGINSON, and HO, Circuit
Judges.
Opinion
JAMES C. HO, Circuit Judge:
A panel of this court recently divided over the proper
interpretation of a Labor Department regulation issued
under the Fair Labor Standards Act (FLSA). See
Faludi v. U.S. Shale Sols., 936 F.3d 215 (5th Cir. 2019),
opinion withdrawn, 950 F.3d 269 (5th Cir. 2020). Today
we revisit the issue initially raised, but ultimately left
undecided, in Faludi.
2a
The regulation in question defines what it means for an
employee to be compensated on a “salary basis”—a
requirement that must be met for an employer to
qualify for certain exemptions under the FLSA. As the
regulation makes clear, an employee is paid on a
“salary basis” if he “regularly receives each pay period
on a weekly, or less frequent basis, a predetermined
amount”—and if that salary is paid “without regard to
the number of days or hours worked.” 29 C.F.R.
§ 541.602(a), (a)(1).
Based on those provisions, the dissent in Faludi
concluded that an employee is not paid on a salary
basis—and therefore is entitled to the protections of the
FLSA—if the employee is paid a daily, rather than
weekly, rate. See 936 F.3d at 222 (Ho, J., dissenting).
The majority initially disagreed. Id. at 220. But after
the employee in Faludi filed a petition for rehearing en
banc, the panel majority withdrew its earlier opinion
and decided the case on other grounds. See Faludi v.
U.S. Shale Sols., 950 F.3d 269, 271 (5th Cir. 2020).
The case we decide today presents the same
interpretive question that divided our court in Faludi.
We hold, consistent with the dissent in Faludi, that an
employee who is paid a daily rate is not paid on a
“salary basis” under 29 C.F.R. § 541.602(a).
Accordingly, we reverse the district court and remand
for further proceedings.
I.
Michael Hewitt was an employee of Helix for over two
years, working as a Tool Pusher. In that position,
Hewitt managed other employees while on a
3a
“hitch”—that is, while working offshore on an oil rig.
Each hitch lasted about a month. Helix paid Hewitt a
set amount for each day that he worked. Hewitt
received his paycheck biweekly.
Hewitt worked more than forty hours a week. So under
the FLSA, he would ordinarily be entitled to overtime
unless he was an exempt employee. 29 U.S.C.
§§ 207(a)(1), 213(a)(1).
And that is what Helix contends, arguing that Hewitt
is either an exempt executive or highly compensated
employee. See 29 C.F.R. § 541.100 (executive
employees); § 541.601 (highly compensated employees).
Both of those exemptions require the employer to meet
both a duties test and a salary test. The salary test, in
turn, has two components—first, the employer must
pay the employee a minimum per-week rate, and
second, the employer must pay the employee on a
“salary basis.” Id.
Hewitt contends that Helix did not pay him on a
“salary basis” because it calculated his pay based on a
daily, rather than weekly, rate. Helix responds that
Hewitt’s daily rate was greater than the weekly salary
requirement under Labor Department regulations.
Accordingly, Helix argues, so long as Hewitt worked at
least a single day during any particular week, he would
receive more than the weekly salary requirement, and
was therefore paid on a “salary basis” under Labor
Department regulations.
The district court agreed with Helix and granted
summary judgment to the company on the ground that
Hewitt is exempt as either an executive or highly
4a
compensated employee. Hewitt v. Helix Energy Sols.
Grp., Inc., 2018 WL 6725267, at *4 (S.D. Tex. Dec. 21,
2018). Hewitt appealed.
The primary question presented on appeal is purely a
matter of legal interpretation. As such, review is de
novo. See 21st Mortg. Corp. v. Glenn (In re Glenn), 900
F.3d 187, 189 (5th Cir. 2018). For the reasons we
explain below, we reverse.
II.
At the heart of this appeal is the proper interpretation
of the following Labor Department regulation:
An employee will be considered to be paid on a
‘salary basis’ within the meaning of this part if
the employee regularly receives each pay period
on a weekly, or less frequent basis, a
predetermined amount constituting all or part of
the employee’s compensation, which amount is
not subject to reduction because of variations in
the quality or quantity of the work performed.
29 C.F.R. § 541.602(a) (emphasis added).
Broadly speaking, then, § 541.602(a) requires that an
employee receive for each pay period a “predetermined
amount” calculated on a “weekly, or less frequent” pay
period. To put it plainly: The salary basis test requires
that an employee know the amount of his compensation
5a
for each weekly (or less frequent) pay period during
which he works, before he works.1
An example helps: Consider an employee with an
employment contract providing an annual salary to be
paid biweekly. That employee can easily determine
what he will receive every two weeks before he
works—just divide his annual salary by twenty-six. He
is thus “paid on a ‘salary basis.’ ” See U.S. Dep’t of
Labor, Wage & Hour Div., Opinion Letter (July 9,
2003) (reviewing a pay system guaranteeing that
employees “will be paid at least 1/26th of their annual
salary every other week”).2
1
Subsection (b) does allow employers to deduct, and thus, vary,
employees’ pay while still paying them on a salary basis. That
subsection is not at issue in this case.
2
To be sure, that is an approximation—there are 52 weeks plus
one day in a 365-day year. So technically, the annually-salaried
employee will receive slightly less than 1/26th of the annual salary
per biweekly paycheck. But the point is the same—that employee
can count on receiving at least that predetermined amount for
each biweekly paycheck. See also, e.g., Escribano v. Travis County,
947 F.3d 265, 267 (5th Cir. 2020) (“ ‘Salary basis’ ... generally
means what its label suggests: an employee is paid on a salary
basis if he or she receives the same wage each pay period.”);
Hughes v. Gulf Interstate Field Servs., Inc., 878 F.3d 183, 189 (6th
Cir. 2017) (noting that an annual salary meets the salary basis
test); id. at 193 n.7 (comparing payment on a salary basis to an
employment contract with a set compensation); In re Wal-Mart
Stores, Inc., 395 F.3d 1177, 1184 (10th Cir. 2005) (“[T]he natural
reading of [‘predetermined amount’] is that it refers to the amount
previously agreed on for the period for which the salary is to be
paid.”).
6a
Now consider Hewitt. He was paid biweekly. But he did
not receive a constant fraction of his annual
compensation—akin to the 1/26th amount mentioned
above—for each biweekly pay period. Rather, he had to
take the number of days he worked (past tense) and
multiply by the operative daily rate to determine how
much he earned. So Hewitt knew his pay only after he
worked through the pay period.
As a result, he did not receive a “predetermined
amount” “on a weekly, or less frequent basis”—rather,
he received an amount contingent on the number of
days he worked each week. So he was not paid on a
“salary basis” under Labor Department regulations.
See, e.g., Hughes v. Gulf Interstate Field Servs., Inc.,
878 F.3d 183, 189 (6th Cir. 2017) (calculating
compensation based on a per-day amount meant that
“it was very much disputed whether what [the
employees] received weekly was in fact guaranteed”);
cf. Anani v. CVS RX Servs., Inc., 730 F.3d 146, 148 (2d
Cir. 2013) (noting that an employee’s salary was
“guaranteed” when it was “paid regardless of the
number of hours appellant actually worked in a given
forty-four-hour shift”).3
3
If Hewitt and Helix agreed beforehand on the length of each
hitch, there could be an argument that Hewitt’s salary was
“predetermined.” See, e.g., Thomas v. County of Fairfax, 803 F.
Supp. 1142, 1149 n.15 (E.D. Va. 1992). Helix did not make that
argument to the district court, and only mentions that point here
in passing, burying it in a paragraph discussing § 541.604(b). So
we will not consider the argument. See, e.g., AG Acceptance Corp.
v. Veigel, 564 F.3d 695, 700 (5th Cir. 2009) (“[A]rguments not
raised before the district court are waived.”); Brinkmann v. Dall.
Cty. Deputy Sheriff Abner, 813 F.2d 744, 748 (5th Cir. 1987) (“We
7a
Any doubt that this is a proper reading of § 541.602(a)
is put fully to rest by looking at § 541.602(a)(1). That
section provides as follows: “[A]n exempt employee
must receive the full salary for any week in which the
employee performs any work without regard to the
number of days or hours worked.” 29 C.F.R.
§ 541.602(a)(1) (emphases added).
Hewitt’s pay cannot be squared with this provision. He
was paid on a daily rate—so he was paid “with” (not
“without”) “regard to the number of days or hours
worked,” in direct conflict with the plain language of
§ 541.602(a)(1). So § 541.602(a)(1) confirms that Hewitt
was not paid on a salary basis.4
***
will not raise and discuss legal issues that [a party] failed to
assert.”).
4
The parties also discuss whether Helix meets the alternative
requirements of 29 C.F.R. § 541.604(b), which governs employment
compensation based on minimum weekly guarantee in addition to
hourly or daily rates. As § 541.604(b) provides, an employer may
“compute[ an employee’s earnings] on an hourly, a daily or a shift
basis,” while still satisfying “the salary basis requirement,” so long
as “the employment arrangement also includes a guarantee of at
least the minimum weekly required amount paid on a salary
basis”—that is, paid according to § 541.602. 29 C.F.R. § 541.604(b).
Two problems here: As explained above, Helix did not pay Hewitt
on a salary basis, as § 541.604(b) expressly requires. Moreover,
§ 541.604(b) requires that there be “a reasonable relationship ...
between the guaranteed amount and the amount actually earned.”
Helix does not even attempt to claim that it meets that
requirement, instead saying that the test does not apply.
8a
We reverse the grant of summary judgment to Helix
and remand for proceedings consistent with this
opinion.5
5
Hewitt also asks for liquidated damages. See 29 U.S.C. § 216(b).
But the district court decided this case on summary judgment.
Issues relating to liability, including whether liquidated damages
are appropriate, see, for example, Lowe v. Southmark Corp., 998
F.2d 335, 337 (5th Cir. 1993), are best left to the district court in
the first instance.
9a
APPENDIX 2
United States Court of Appeals, Fifth Circuit.
No. 19-20023
[Filed: December 21, 2020]
__________________________________________
MICHAEL J. HEWITT,
)
Plaintiff—Appellant,
)
)
v.
)
)
HELIX ENERGY SOLUTIONS GROUP,
)
INCORPORATED; HELIX WELL OPS,
)
INCORPORATED,
)
Defendants—Appellees.
)
__________________________________________)
Before Wiener, Higginson, and Ho, Circuit Judges.
Opinion
James C. Ho, Circuit Judge:
Our prior opinion in this case is withdrawn, and the
following is substituted in its place. The petition for
rehearing en banc remains pending.
***
The Fair Labor Standards Act establishes a standard
40-hour work week by requiring employers to pay a 50
percent overtime penalty for any time worked over 40
hours per week. See 29 U.S.C. § 207(a). Many people do
10a
not think of overtime pay as a penalty on the employer,
but as a benefit to the employee. But that is not the
only way—and perhaps not even the proper way—to
understand the Act. Historically, the FLSA has been
understood to “reduce unemployment,” as well as to
protect workers from excessive hours, by encouraging
employers to hire two workers to work 40 hours rather
than one worker to work 80 hours. Hence the use of the
term “penalty.” See, e.g., Mechmet v. Four Seasons
Hotels, Ltd., 825 F.2d 1173, 1176 (7th Cir. 1987)
(Posner, J.) (explaining that Congress enacted the
FLSA in part “to spread work and thereby reduce
unemployment, by requiring an employer to pay a
penalty for using fewer workers to do the same amount
of work as would be necessary if each worker worked a
shorter week”). See also Overnight Motor Transp. Co.
v. Missel, 316 U.S. 572, 577, 62 S.Ct. 1216, 86 L.Ed.
1682 (1942) (“[O]ne of the fundamental purposes of the
Act was to induce worksharing and relieve
unemployment by reducing hours of work.”) (quotations
omitted).
These principles apply, of course, only to those workers
who are in fact covered by the Act. Congress exempted
“bona fide executive, administrative, [and]
professional” employees from the overtime laws. 29
U.S.C. § 213(a)(1). And it expressly authorized the
Secretary of Labor to promulgate regulations to further
“define[ ] and delimit[ ]” those terms. Id.
This case involves a worker who is purportedly an
“executive” employee under the regulations—and a
“highly compensated” one at that, earning over
$200,000 per year. See 29 C.F.R. § 541.100 (executive
11a
employees); id. § 541.601 (highly compensated
employees). But the precedent we establish here will
equally govern lower paid “administrative” and other
employees as well, who receive “not less than $684 per
week,” or $35,568 per year. See id. § 541.200
(administrative employees).
That is because this appeal turns on a legal question
common to all executive, administrative, and
professional employees—and to the modestly and
highly compensated alike: whether a worker is paid “on
a salary basis” under § 541.602. See id. § 541.100(a)(1);
id. § 541.200(a)(1); id. § 541.300(a)(1); id.
§ 541.601(b)(1). (The regulations also exempt
employees paid on a “fee basis,” but that is not an issue
in this appeal.)
Helix Energy Solutions Group paid Michael Hewitt a
daily rate. Under the regulations, an employee whose
pay is computed on a daily basis—rather than on a
weekly, monthly, or annual basis—could in theory be
regarded as paid on a “salary basis” under § 541.602.
But the regulations are explicit that special rules apply
when it comes to daily rate workers:
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
12a
hours, days or shifts worked, and a reasonable
relationship exists between the guaranteed
amount and the amount actually earned.
Id. § 541.604(b) (emphasis 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. The employer here does not
even purport to meet both of these conditions. Instead,
the employer candidly asks us to ignore those
conditions.
But “if” means “if”—not “irrespective of.” And respect
for text forbids us from ignoring text. Respect for text
thus requires us to hold that Helix is subject to the
requirements of § 541.604(b). We accordingly 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.
According to the summary judgment record, Helix paid
Hewitt based solely on a daily rate.
Helix concedes that it required Hewitt to work over
forty hours per week. Helix nevertheless attempts to
avoid the FLSA overtime penalty by characterizing
Hewitt as either an executive or highly compensated
employee—both of which are exempt from the FLSA
overtime requirements. See id. § 541.100 (executive
13a
employees); id. § 541.601 (highly compensated
employees).1
To prevail under either formulation, Helix must show
that it paid Hewitt on a “salary basis” as defined by the
regulations. Id. §§ 541.100(a)(1), .600(a), .601(b)(1).
(Alternatively, Helix could attempt to invoke the highly
compensated employee exemption by showing that it
paid Hewitt on a “fee basis”—but it has made no such
argument in this appeal. See id. §§ 541.601(b)(1), .605.)
Hewitt contends that Helix did not pay him on a
“salary basis” because the company calculated his pay
using a daily rate but did not satisfy 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. Dec.
21, 2018). 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).
1
We note that “highly compensated employees” are simply a
subset of exempt executive, administrative, or professional
employees. See, e.g., Coates v. Dassault Falcon Jet Corp., 961 F.3d
1039, 1042 n.2 (8th Cir. 2020) (“Although the parties and the
district court refer to a ‘highly compensated employee exemption,’
this is a less burdensome way to prove an executive,
administrative, or professional exemption, not a separate
exemption.”); see generally 29 C.F.R. § 541.601(c).
14a
II.
There are multiple components to the salary basis test,
as articulated in various Labor Department
regulations. There is the “[g]eneral rule”—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 issue
presented in this appeal.
A.
The “[g]eneral rule” begins as follows: “An employee
will be considered to be paid on a ‘salary basis’ within
the meaning of this part if the employee regularly
receives each pay period on a weekly, or less frequent
basis, a predetermined amount constituting all or part
of the employee’s compensation.” 29 C.F.R. § 541.602(a)
(emphasis added). The general rule further provides
that “an exempt employee must receive the full salary
for any week in which the employee performs any work
without regard to the number of days or hours worked.”
Id. § 541.602(a)(1) (emphasis added).
The emphasis on being paid “on a weekly, or less
frequent basis”—and “without regard to the number of
days or hours worked”—begs the question: What if an
employee’s compensation is computed on a daily
basis—rather than on a weekly, monthly, or annual
basis? In other words, what if the employee is not paid
“on a weekly, or less frequent basis,” but instead with
“regard to the number of days or hours worked”?
15a
In sum: Can a daily rate employee ever be regarded as
being paid on a “salary basis” and therefore exempt
from overtime pay under the FLSA?
To answer that question, we must look beyond the
“[g]eneral rule,” and turn instead to one of the provisos
promulgated by the Secretary. And as it turns out, the
answer is yes—a daily rate employee can qualify under
the salary basis test—but only “if” certain other
conditions are met.
The Sixth and Eighth Circuits have so held. And we
agree: “The text of § 541.602(a) does not tell us what to
do when an employee’s salary is not clearly calculated
‘on a weekly, or less frequent basis.’ ” Hughes v. Gulf
Interstate Field Servs. Inc., 878 F.3d 183, 189 (6th Cir.
2017). Instead, we must turn to a “helpful”
“neighboring provision”—namely, § 541.604(b). Id.
Similarly, the Eighth Circuit concluded that the
“general definition” of salary basis as set forth in
§ 541.602(a) is “subject to numerous interpretive rules.”
Coates v. Dassault Falcon Jet Corp., 961 F.3d 1039,
1042 (8th Cir. 2020). And the first example that circuit
gave was § 541.604(b). See id. (quoting § 541.604(b));
see also id. at 1048 (relying on Hughes and
§ 541.604(b)).
So we turn to § 541.604(b). That regulation makes clear
that an employer can pay an exempt employee an
amount “computed on ... a daily ... basis, without losing
the exemption or violating the salary basis
requirement.” 29 C.F.R. § 541.604(b). But that is so
only “if” two conditions are met. Id. Those conditions
are as follows: First, “the employment arrangement
also includes a guarantee of at least the minimum
16a
weekly required amount paid on a salary basis
regardless of the number of hours, days or shifts
worked.” Id. Second, “a reasonable relationship exists
between the guaranteed amount and the amount
actually earned.” Id.
This two-prong test protects employees in two ways.
First, the “minimum weekly” guarantee ensures that a
daily rate employee still receives a guaranteed amount
each week “regardless of the number of hours, days or
shifts worked.” Id. In other words, it sets a floor for
how much the employee can expect to earn,
“regardless” of how many hours, days, or shifts the
employee works. Id. Second, the reasonable
relationship test ensures that the minimum weekly
guarantee is not a charade—it sets a ceiling on how
much the employee can expect to work in exchange for
his normal paycheck, by preventing the employer from
purporting to pay a stable weekly amount without
regard to hours worked, while in reality routinely
overworking the employee far in excess of the time the
weekly guarantee contemplates. And as the Labor
Department has explained, without the reasonable
relationship test, “employees could routinely receive
weekly pay of $1,500 or more and yet be guaranteed
only the minimum required $455 (thus effectively
allowing the employer to dock the employee for partial
day absences).” Dep’t of Labor, Defining and Delimiting
the Exemptions for Executive, Administrative,
Professional, Outside Sales and Computer Employees;
Final Rule, 69 Fed. Reg. 22,121, 22,184 (2004). But
“[s]uch a pay system would be inconsistent with the
salary basis concept and the salary guarantee would be
nothing more than an illusion.” Id. (emphasis added).
17a
See also Brock v. Claridge Hotel & Casino, 846 F.2d
180, 185 (3rd Cir. 1988) (explaining that an employee
is not paid on a “salary basis” if “the employee’s usual
weekly income” calculated on an hourly basis “far
exceeds the ‘salary’ guarantee” the employer provided).
So an employer can pay a daily rate under § 541.604(b)
and still satisfy the salary basis test of § 541.602—but
only if the employer complies with both the minimum
weekly guarantee requirement and the reasonable
relationship test.
Helix does not comply with either prong. First, it pays
Hewitt a daily rate without offering a minimum weekly
required amount that is paid “regardless of the number
of hours, days or shifts worked.” 29 C.F.R. § 541.604(b).
Rather, Helix theorizes that the daily rate that it pays
Hewitt is a minimum weekly guaranteed amount—
even though it is the very opposite of an amount that is
paid “regardless of the number of ... days ... worked.”
Id. Second, Helix does not comply with the reasonable
relationship test. To the contrary, it pays Hewitt orders
of magnitude greater than the minimum weekly
guaranteed amount theorized by Helix—namely,
Hewitt’s daily rate. Not surprisingly, Helix does not
even bother to contend that it satisfies the reasonable
relationship test.
Instead, Helix contends that it is not required to
comply with § 541.604(b), because Hewitt is a “highly
compensated employee” under § 541.601. In other
words, in Helix’s view, if an employee satisfies
§ 541.601, there is no need to additionally satisfy
§ 541.604(b).
18a
But the text of § 541.601 says precisely the opposite. It
makes clear that it’s not enough that the employee
receives a “total annual compensation of at least
$107,432.” Id. § 541.601(a) (1). It also requires that
that “ ‘[t]otal annual compensation’ must include at
least $684 per week paid on a salary ... basis.” Id.
§ 541.601(b)(1) (emphases added). So Hewitt cannot be
a “highly compensated employee” under § 541.601
unless his total annual compensation satisfies the
salary basis test. And as we’ve already explained, the
only way for an employee paid on a daily rate to satisfy
the salary basis test is to comply with the two
conditions of § 541.604(b).
Moreover, the same “salary basis” language that
appears in the highly compensated employee regulation
also appears in the regulations governing all executive,
administrative, and professional employees—including
employees who make far less than $107,432 per year.
Id. § 541.601(a)(1). Like their “highly compensated”
counterparts, all other executive, administrative, and
professional employees are exempt if they are
“[c]ompensated on a salary basis.” Id. § 541.100(a) (1).
See also id. § 541.200(a)(1) (same); id. § 541.300(a) (1)
(same). And that is so even though they receive much
less compensation—“not less than $684 per week,” or
$35,568 per year. Id. § 541.100(a)(1); § 541.200(a)(1)
(same); id. § 541.300(a)(1) (same). We can find no
textual or other principled basis for exempting highly
compensated employees, but not all other executive,
administrative, and professional employees, from
§ 541.604(b).
19a
B.
Our reading of the regulations finds support not only
from the Sixth and Eighth Circuits, but also in
repeated statements by the Labor Department. Those
statements confirm that a daily rate employee falls
outside the general rule, and thus must qualify under
some other exception or proviso such as § 541.604(b).
For example, when the Department promulgated
§ 541.604(b) in 2004, it explained that the “[p]roposed
section 541.604(b) provided that an exempt employee’s
salary may be computed on an hourly, daily or shift
basis, if the employee is given 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.’ ” Defining and Delimiting the Exemptions, 69
Fed. Reg. at 22,183. “[T]he reasonable relationship
requirement applies ... when an employee’s actual pay
is computed on an hourly, daily or shift basis.” Id.
And just this year, the Labor Department reaffirmed
this point within the specific context of “highly
compensated employees” who are “paid a day rate.”
U.S. Dep’t of Labor, Wage & Hour Div., Opinion Letter
FLSA2020-13, 2020 WL 5367070, at *1 (Aug. 31, 2020).
In an opinion letter, the Administrator of the Wage and
Hour Division agreed with our previous ruling in this
case, noting that “[t]he Fifth Circuit recently addressed
a similar question, holding that an employee paid a
daily rate, with no minimum weekly guarantee, is not
paid on a salary basis” under “the plain language of the
salary basis test.” Id. at *4 (emphasis added) (citing
20a
Hewitt v. Helix Energy Sols. Grp., 956 F.3d 341, 342–
43 (5th Cir. 2020)). “The Hewitt plaintiff, like the
employees here, was paid per day of work.” Id. “[S]o he
was paid ‘with’ (not ‘without’) ‘regard to the number of
days or hours worked,’ in direct conflict with the plain
language of the salary basis test.” Id. (some quotations
omitted).
Moreover, the Administrator further explained that
this “conclusion is further supported by [the
Department] having specified certain instances when
exempt executive, administrative, or professional
employees may be paid a daily rate while not more
generally permitting a day rate to satisfy the salary
basis test.” Id. at *4 n.27 (noting as an example 29
C.F.R. § 541.709, which exempts certain motion-picture
employees from complying with the salary basis test at
all). So the Department “knows how to include in the
exemption certain employees whose pay is calculated
on a daily basis; it has chosen not to do so broadly.” Id.
“The familiar ‘easy-to-say-so-if-that-is-what-wasmeant’ rule of interpretation has full force here.” Id.
(cleaned up) (quoting C.I.R. v. Beck’s Estate, 129 F.2d
243, 244 (2nd Cir. 1942)). And that same logic of course
applies to other daily rate provisions like § 541.604(b).
We see no reason not to agree with the respected
Administrator.
C.
Helix contends that our understanding of the salary
basis test conflicts with Litz v. Saint Consulting Group,
Inc., 772 F.3d 1 (1st Cir. 2014), and Anani v. CVS RX
Services, Inc., 730 F.3d 146 (2nd Cir. 2013). To be sure,
there is some language in Anani that appears to be in
21a
tension with the approach taken here. See Anani, 730
F.3d at 149 (“We perceive no cogent reason why the
requirements of C.F.R. § 541.604 must be met by an
employee meeting the requirements of C.F.R.
§ 541.601.”); see also Litz, 772 F.3d at 5 (quoting Anani
but noting that “[p]laintiffs ‘do not take a position on
this issue’ ”).
But on closer analysis, we see no actual conflict here.
Unlike Hewitt, the employees in Litz and Anani were
paid a weekly guaranteed salary “regardless of the
number of hours, days or shifts worked.” 29 C.F.R.
§ 541.604(b). See Litz, 772 F.3d at 2 (employees were
“guaranteed a minimum weekly salary of $1,000
whether they bill[ed] any hours or not”) (emphasis
added); Anani, 730 F.3d at 148 (employee’s “base
weekly salary was guaranteed, i.e. to be paid regardless
of the number of hours ... actually worked”) (emphasis
added). In other words, Litz and Anani were in fact
weekly rate cases. So those cases have nothing to say
about Hewitt, who was paid solely based on a daily
rate.
Indeed, the Sixth Circuit has made precisely this
observation already. As that court explained, “the
situations in which [Litz and Anani] ignore
§ 541.604(b) are situations in which the textual
requirements of 29 C.F.R. §§ 541.601, 541.602(a) are
already clearly met.” Hughes, 878 F.3d at 189. In other
words, “Anani and Litz involved plaintiffs who ... were
undisputedly guaranteed weekly base salaries above
22a
the qualifying level.” Id. at 189–90. We agree with the
Sixth Circuit: There is no split.2
D.
Amici offer two additional points in hopes of bolstering
Helix’s position.
First, amici suggest that, because Hewitt was already
well compensated, extending overtime protection to
him conflicts with the purpose of the FLSA.
But that is wrong as a matter of both text and purpose.
To begin with, it should go without saying that we are
governed by the text of the regulation, not some
unenumerated purpose. See Encino Motorcars, LLC v.
Navarro, ––– U.S. ––––, 138 S. Ct. 1134, 1142, 200
L.Ed.2d 433 (2018). If the Secretary had wanted to
exempt employees based solely on the fact that they are
well compensated, the regulations could have been
written accordingly. In fact, as the Labor Department
has publicly noted, “a number of commenters” have
“urge[d] the Department to abandon the salary basis
test entirely, arguing that [the] requirement serves as
2
Moreover, if there is a split, it’s one that has existed since 2017,
when the Sixth Circuit decided Hughes. What’s more, it seems
telling that, since Hughes, no circuit has seen fit to join the First
and Second Circuits in this alleged split. Quite the opposite, in
fact: Just this year, both the Eighth Circuit and the Labor
Department sided with the Sixth Circuit (and with our circuit)
over Litz and Anani. See Coates, 961 F.3d at 1048 (relying on
Hughes and § 541.604(b)); Opinion Letter FLSA2020-13, 2020 WL
5367070 (relying on Hewitt). Even the dissent acknowledges as
much. Post, at 806 – –––– (noting Hughes and Coates); id. at
806–07 – –––– (noting Opinion Letter FLSA2020-13).
23a
a barrier to the appropriate classification of exempt
employees.” Defining and Delimiting the Exemptions,
69 Fed. Reg. at 22,176. But the Secretary has so far
rejected those requests, and instead required both that
the employee be paid at least a certain amount of
compensation and that the compensation be paid “on a
salary basis.” See id. (“[T]he Department has decided
that [the salary basis test] should be retained.”). See
also 3 Employ. Coordinator Comp. § 3:26 (“Note that a
highly compensated employee must still meet the
requirements of the salary basis test, being paid at
least $684 on a salary basis, to be exempt from the
overtime requirements. Thus, an employee earning
over $100,000 will not necessarily be a highly
compensated employee if the employee’s compensation
is paid on an hourly basis.”).
Moreover, amici’s purposivist argument is not just
anti-textual—it also fails on its own terms. Amici
suggest that Hewitt is well paid, so he has no right to
complain about his hours. But it should surprise no one
that many people value more free time over more
money. And honoring that preference has always been
at the heart of the FLSA. As we noted at the outset,
courts have historically understood overtime pay not so
much as a benefit to employees (although it obviously
is), but as a “penalty” to employers—a penalty
specifically designed to make it more expensive for an
employer to hire one worker to work 80 hours than two
workers to work 40 hours. See, e.g., Overnight Motor
Transp., 316 U.S. at 577, 62 S.Ct. 1216; Mechmet, 825
F.2d at 1176. The overtime penalty helps “reduce
unemployment” by encouraging employers to add more
workers rather than more hours. Id. So amici’s
24a
approach is not just contrary to text—it also
undermines a core purpose of the FLSA.
Second, amici complain that faithful application of the
regulatory text will wreak havoc on the oil and gas
industry.
But of course, the salary basis test applies across
countless industries, not just oil and gas—and if the oil
and gas industry doesn’t like it, it can seek an industry
exemption, just as other industries have done. See, e.g.,
29 C.F.R. § 541.709 (exempting certain motion-picture
employees from complying with the salary basis test).
Perhaps one reason why no oil and gas exemption
exists to date is because it is unclear why that
particular industry would be uniquely harmed by the
ordinary application of the Secretary’s salary basis test.
After all, there would appear to be any number of ways
that companies like Helix could avoid paying overtime
under the FLSA. They could pay Hewitt a comparable
weekly or monthly salary, rather than a daily rate. Or
they could pay him a fee for each hitch—or comply with
the “fee basis” test in some other way. See id.
§§ 541.601(b) (1), .605. (Alternatively, they could hire
more tool pushers, so that none of them has to work
more than forty hours. Admittedly, that would increase
costs to the company. But that would also serve a core
objective of the FLSA, namely, to increase employment.
If the industry does not like that result, its complaint
lies not with Hewitt—or this court—but with
Congress.)
Barring all of that, the industry can lobby Congress or
the Secretary of Labor to amend the salary basis test—
25a
either on behalf of all employers, or for just those in the
oil and gas business. But what the industry cannot do
to ask judges to “alter the text [of the regulations] in
order to satisfy ... policy preferences.” Barnhart v.
Sigmon Coal Co., 534 U.S. 438, 462, 122 S.Ct. 941, 151
L.Ed.2d 908 (2002). “These are battles that should be
fought among the political branches and the industry.
Those parties should not seek to amend the
[regulations] by appeal to the Judicial Branch.” Id.
***
If we were limited to the statutes enacted by Congress,
we might very well have ruled for Helix in this matter.
But we are also bound by regulations issued by the
Secretary of Labor. And those regulations exempt daily
rate employees from overtime—but only “if” that
employee’s compensation meets certain conditions.
Helix asks us to ignore those conditions. But we are not
at liberty to do so. And certainly not on the ground that
the oil and gas industry warrants special treatment not
supported by the text, or because Hewitt already
makes enough money and thus doesn’t deserve FLSA
protection. Our duty is to follow the law, not to
vindicate anyone’s policy preferences. Our ruling today
construes the salary basis for everyone—not just the oil
and gas industry. Likewise, the salary basis test
applies not only to highly compensated employees like
Hewitt, but also to all other executive, administrative,
and professional employees—including those who earn
less than a fifth of what Hewitt makes.
26a
We reverse the grant of summary judgment to Helix
and remand for further proceedings consistent with
this opinion.3
James C. Ho, Circuit Judge, concurring:
The dissent begins by expressing “due respect” to the
majority—and then ends with a well-known literary
quote about idiots. Post, at 802–03, 809 & n.39. It
concludes that my opinion in this case is worth
“nothing.” Id. at 809.
To some, statements like these may be reminiscent of
the wisdom of Ricky Bobby. See Talladega Nights: The
Ballad of Ricky Bobby (2006) (“What? I said ‘with all
due respect!’ ”). To others, it may call to mind a recent
observation by one of our respected colleagues: “More
often than not, any writing’s persuasive value is
inversely proportional to its use of hyperbole and
invective.” Keohane v. Fla. Dep’t of Corrs. Sec’y, 981
F.3d 994, 996 (11th Cir. 2020) (Newsom, J., concurring
in the denial of rehearing en banc).
As the adage goes, the loudest voice in the room is
usually the weakest.
3
On remand, Helix may be able to demonstrate that it paid Hewitt
on a “fee basis” under 29 C.F.R. § 541.605, or that it complied with
another regulatory exemption from the overtime requirements.
The parties can resolve those issues, along with any other factual
disputes, on remand. Hewitt also asks for liquidated damages. See
29 U.S.C. § 216(b). But the district court decided this case on
summary judgment. Issues relating to liability, including whether
liquidated damages are appropriate, see, e.g., Lowe v. Southmark
Corp., 998 F.2d 335, 337 (5th Cir. 1993), are best left to the district
court in the first instance.
27a
***
“Reasonable jurists can apply traditional tools of
construction and arrive at different interpretations of
legal texts.” Gamble v. United States, ––– U.S. ––––,
139 S. Ct. 1960, 1986, 204 L.Ed.2d 322 (2019) (Thomas,
J., concurring). For example, in JCB, Inc. v. Horsburgh
& Scott Co., 912 F.3d 238 (5th Cir. 2018), I observed
that “Judge Duncan and I emphatically agree that the
proper function of the judiciary is to construe statutory
texts faithfully .... We nevertheless reach different
conclusions as to the particular text before us, as
textualists sometimes do.” Id. at 242 (Ho, J.,
concurring). Some laws are “capable of competing
plausible interpretations among reasonable jurists of
good faith.” Id.
But with “due respect,” if there is a reasonable textual
basis for refusing to apply 29 C.F.R. § 541.604(b) in
cases governed by § 541.601 involving highly
compensated employees, I cannot find one in the
dissent.
1. The dissent’s entire textual basis for refusing to
apply § 541.604(b) in cases involving § 541.601
amounts to this: § 541.601 does not mention § 541.604.
To quote the dissent: Ҥ 541.601 is devoid of any
reference to § 541.604(b). It instead mentions only
§ 541.602.” Post, at 807. See also id. at 807 (same).
But if the dissent is right that we shouldn’t apply
§ 541.604(b) to any provision that does not explicitly
mention it, then we should also refuse to apply
§ 541.604(b) to any executive, administrative, or
professional employee—regardless of how much or
28a
little he is compensated. After all, the regulations
governing executive, administrative, and professional
employees are all indistinguishable from § 541.601: All
of them cite § 541.602—and none of them cite
§ 541.604(b). See 29 C.F.R. §§ 541.100, .200, .300.
Indeed, under the dissent’s reading, we would never
apply § 541.604(b)—because §§ 541.602 and 541.604(b)
do not expressly cross-reference each other. The
dissent’s theory would thus render § 541.604(b) a dead
letter—contrary to the canon against surplusage.
I suggest that the following is a better reading of the
text: None of these provisions needs to cite
§ 541.604(b), because § 541.604(b) itself makes clear
that it is modifying the “salary basis” test of § 541.602.
See id. § 541.604(b) (laying out the circumstances in
which an “exempt employee’s earnings may be
computed on an hourly, daily, or a shift basis[ ] without
... violating the salary basis requirement”) (emphasis
added).
Besides which, there is nothing remarkable about
reading one legal provision in light of another—even in
the absence of an express cross-reference. See, e.g.,
Lockhart v. United States, 546 U.S. 142, 148, 126 S.Ct.
699, 163 L.Ed.2d 557 (2005) (Scalia, J., concurring)
(collecting cases holding that “Congress ... may [enact]
exempt[ions] ... by ‘fair implication’—that is, without
an express statement”) (emphasis added) (citing, e.g.,
Warden v. Marrero, 417 U.S. 653, 659-660 n.10, 94
S.Ct. 2532, 41 L.Ed.2d 383 (1974); Marcello v. Bonds,
349 U.S. 302, 310, 75 S.Ct. 757, 99 L.Ed. 1107 (1955);
Hertz v. Woodman, 218 U.S. 205, 218, 30 S.Ct. 621, 54
L.Ed. 1001 (1910); Great N. Ry. Co. v. United States,
29a
208 U.S. 452, 465, 28 S.Ct. 313, 52 L.Ed. 567 (1908)).
Indeed, it is a bedrock principle of statutory
interpretation that “text[s] must be construed as a
whole.” Antonin Scalia & Bryan A. Garner, Reading
Law: The Interpretation of Legal Texts 167 (2012). See
also id. (“Perhaps no interpretive fault is more common
than the failure to follow the whole-text canon, which
calls on the judicial interpreter to consider the entire
text, in view of its structure and of the physical and
logical relation of its many parts.”).
Under the dissent’s brand of textualism, by contrast,
courts may read a provision out of the law altogether,
on the ground that no other provision of law expressly
cites it. That is a peculiar approach to textualism. It is
no wonder that the dissent does not cite a single court
that has ever embraced its cross-referencing theory of
interpretation.
2. The dissent offers a second justification for its
interpretation. It suggests that applying § 541.604(b)
here would somehow render § 541.601 “superfluous.”
Post, at 804–05 (quoting Anani v. CVS RX Services,
Inc., 730 F.3d 146, 149 (2nd Cir. 2013)).
But that can’t be right. The dissent forgets that
§ 541.604(b) only applies to those whose pay is
“computed on an hourly, a daily or a shift basis.” 29
C.F.R. § 541.604(b). It doesn’t apply to weekly,
monthly, and annually salaried workers at all. So how
can applying § 541.604(b) to daily rate workers render
§ 541.601 surplusage—when § 541.604(b) would have
no effect on highly compensated weekly, monthly, and
annually salaried workers governed by § 541.601? The
answer is that it can’t.
30a
So what gives? I can’t help but wonder if the dissent’s
surplusage argument is premised on a basic
misunderstanding of § 541.601. Perhaps the dissent
believes that the Secretary of Labor promulgated
§ 541.601 so that the highly compensated don’t have to
comply with salary basis requirements like
§ 541.604(b). Because if that’s the premise, then
applying § 541.604(b) to cases involving § 541.601
might very well render the latter provision surplusage.
But if that’s the dissent’s premise, it’s demonstrably
wrong. As the majority notes, ante, at 794–95,
§ 541.601 still requires the highly compensated to be
“paid on a salary ... basis.” 29 C.F.R. § 541.601(b)(1). So
the Secretary did not promulgate § 541.601 to alter the
salary basis requirement for the highly compensated—
rather, the Secretary promulgated § 541.601 to alter
the “executive, administrative, or professional” duties
requirement for the highly compensated. Indeed, §
541.601 expressly tells us so in subsection (c): “A high
level of compensation is a strong indicator of an
employee’s exempt status, thus eliminating the need
for a detailed analysis of the employee’s job duties.” Id.
§ 541.601(c) (emphasis added).
So it’s not surprising that the Eighth Circuit sides with
our majority here, and not the dissent. See, e.g., Coates
v. Dassault Falcon Jet Corp., 961 F.3d 1039, 1042 n.2
(8th Cir. 2020) (“[the] ‘highly compensated employee
exemption[ ]’ ... is a less burdensome way to prove an
executive, administrative, or professional exemption”)
(citing 29 C.F.R. § 541.601(c)).
It’s likewise unsurprising that the Sixth Circuit sides
with our majority over the dissent. The dissent’s sole
31a
authority for its surplusage theory is Anani. But Anani
involved a weekly, not daily, rate employee—as both
the Sixth Circuit and the majority here have pointed
out, and the dissent itself concedes. See Hughes v. Gulf
Interstate Field Servs. Inc., 878 F.3d 183, 189–90 (6th
Cir. 2017) (“Anani ... involved [a] plaintiff[ ] who ...
[was] undisputedly guaranteed [a] weekly base salar[y]
above the qualifying level.”); ante, at 795–96 (same);
post, at 804 (Anani involves an “employee with a
guaranteed weekly amount”). This case, by contrast,
involves a daily rate employee—as the dissent admits.
See post, at 805–06 (noting “Hewitt’s [ ] daily rate”).
3. The dissent acknowledges that its approach has been
rejected by the Sixth and Eighth Circuits. It simply
accuses the Sixth Circuit of following “false premise[s],”
and dismisses the Eighth Circuit as “misguided.” Id. at
806–08.
The dissent likewise admits that its approach has been
rejected by the Labor Department. It concedes that a
recent opinion letter issued by the Department
“directly address[es] the question presented in this
case.” Id. at 807 – ––––. The dissent nevertheless
minimizes its importance, claiming that the letter was
simply following our circuit’s prior opinion in this case.
To quote the dissent, “[t]he DOL opinion letter did not
‘call the play’—it is merely cheerleading after the fact.”
Id. at 807.
It is unclear to me how the dissent thinks this
metaphor serves its cause. I would have thought that
the whole point of being a “cheerleader” is to take sides
in a competition between opposing sides. And that is
precisely what the Labor Department did here: If there
32a
is a circuit split as the dissent claims, then the
Department took sides in that split by siding with us,
as well as with the Sixth and Eighth Circuits—and not
with the dissent.
4. The dissent accuses the majority of engaging in
purposivism. Id. at 807–08 – ––––. But this is
projection. For it is the dissent that seems to embrace
purposivism. The majority disavows it—discussing
legislative intent and purpose only to explain how
amici’s purposivist arguments (echoed by the dissent)
fail on their own terms. Ante, at 795–97 – ––––.
a. For example, the dissent begins its analysis by
appealing to “common sense.” Post, at 803–04. But as
the majority responds, it is common sense that many
people prefer more free time over more money. Ante, at
796–97. It is common sense that workers like Hewitt
might not want to work a 16-hour day (or an 80-hour
week), for the exact same pay that they would have
earned working far fewer hours over the same number
of days. It is common sense that free time is valuable to
workers at every level of compensation—and not just to
lesser paid employees. And so it is unsurprising that
these principles would be reflected in FLSA
regulations.
b. The dissent insists that “[i]t would be redundant and
a waste of resources” to force the oil and gas industry
to hire more tool pushers. Post, at 808. Yet the dissent
admits that “the FLSA was enacted to encourage
employers to hire more employees.” Id.
Besides which, what’s so hard about a daily rate
worker complying with § 541.604(b) anyway? All you
33a
have to do is meet the minimum weekly guarantee and
reasonable relationship requirements. Heck, the
regulation even provides a helpful example of how to do
this: “[A]n exempt employee guaranteed compensation
of at least $725 for any week in which the employee
performs any work, and who normally works four or
five shifts each week, may be paid $210 per shift
without violating the $684-per-week salary basis
requirement.” 29 C.F.R. § 541.604(b).
So all it takes here is just one simple adjustment. Helix
paid Hewitt $963 per day. So imagine that Helix also
assured Hewitt that he would never earn less than,
say, $4,000 per week—even during those weeks in
which he worked four days or less. That simple
adjustment would be enough to satisfy the salary basis
test by satisfying both prongs of § 541.604(b): Hewitt
would be paid a minimum weekly guarantee of $4,000,
regardless of the number of hours, days, or shifts
worked. And that guaranteed weekly pay would be
reasonably related to the amount actually earned—
consistent with the example provided in § 541.604(b)
itself.
In sum, it is not at all clear why our holding would
necessarily require the industry to hire more tool
pushers or otherwise endure significantly higher
expenses. See also ante, at 797–98 (noting other
potential measures that the industry could adopt).
c. Perhaps strangest of all, the dissent quotes a snippet
of legislative history from 1997 to support its
contention that overtime pay just shouldn’t apply to
high earners. Post, at 807–08 & nn.35–36. The dissent
neglects to mention that the sentiment it imputes to
34a
“Congress” is nothing more than a floor statement by a
lone House member, in support of a proposed FLSA
amendment that never got so much as a vote.
This is not even good purposivism, let alone good
textualism.
***
The dissent used to side with the majority on these
issues. See Hewitt v. Helix Energy Sols. Grp., 956 F.3d
341 (5th Cir. 2020). It once agreed that “an employer
may compute an employee’s earnings on an hourly, a
daily or a shift basis, ... so long as the employment
arrangement also includes a guarantee of at least the
minimum weekly required amount paid on a salary
basis.” Id. at 344 n.4 (cleaned up) (citing 29 C.F.R.
§ 541.604(b)).
But now the dissent calls for rehearing en banc. So
what’s changed?
Certainly none of the relevant legal texts have
changed. To the contrary, our view has since been
reinforced by the Labor Department, as well as by
a(nother) unanimous circuit decision (the Eighth
Circuit in Coates).
The only change I’m aware of is that an armada of oil
industry amici now urges us to take this case en banc.
According to one amicus, applying § 541.604(b) here
would “threaten[ ] the country’s hydrocarbon industry.”
According to other amici, applying § 541.604(b) will
“negatively impact[ ] a vital industry.” The dissent
openly echoes amici’s themes—speaking on behalf of
“[t]hose of us who were born, bred, and educated in the
35a
‘oil patch.’ ” Post, at 802. See also, e.g., id. at ––––
(applying § 541.604(b) “will have lasting, negative
repercussions ... on the petroleum industry”); id. at 803
(applying § 541.604(b) “will likely have devastating
effects ... in the oil and gas arena”); id. (quoting amici).
But with “due respect” to “[t]hose of us who were born,
bred, and educated in the ‘oil patch,’ ” id. at 808: Those
of us who were born, bred, and educated in textualism
are unfamiliar with the “bad for business” theory of
statutory interpretation offered by the dissent under
the purported flag of textualism.
No one of course doubts the importance of the energy
industry to the health and prosperity of our nation. But
these are policy arguments that should be presented to
Congress and the Secretary, not the judiciary. “These
are battles that should be fought among the political
branches and the industry”—“not ... by appeal to the
Judicial Branch.” Barnhart v. Sigmon Coal Co., 534
U.S. 438, 462, 122 S.Ct. 941, 151 L.Ed.2d 908 (2002).
See also ante, at 802 (same).
I remain, as always, willing—indeed, duty bound—to
go wherever the text leads. For it is the text enacted by
the political branches that leads—and the judiciary
that follows. If our panel has erred, I will be the first to
admit it. But nothing in the dissent persuades me that
anything in the text directs us to ignore § 541.604(b), or
to reject the opinions of the Sixth and Eighth Circuits
and the Labor Department. To the contrary, this case
seems by every indication to fall well within the plain
terms of § 541.604(b). Indeed, why did the Secretary
bother to promulgate this provision, if not to govern
daily rate cases just like this? The dissent offers no
36a
good reason. And I cannot conceive of one myself.
Accordingly, I concur.
Jacques L. Wiener, Jr., Circuit Judge, dissenting:
With due respect for my esteemed colleagues in the
majority, who in good faith attempt to apply the
regulatory text as written, I am compelled to dissent.
Those of us who were born, bred, and educated in the
“oil patch,” and who practiced mineral law for decades,
are quite familiar with the levels of personnel who
work the various on-shore and off-shore oil rigs and
platforms. First come the geologists and petroleum
engineers who make trips to oil and gas rigs, but who
spend most of their time in offices analyzing and
advising owners and promoters. They are analogous to
colonels or even generals in the military. Next, among
those who spend all of their worktime on oil rigs and
platforms, the superintendent ranks highest—the
equivalent of captains or even majors. Then come the
so-called tool pushers (who never “push” a “tool”), the
equivalent of first or second lieutenants. Tool pushers
oversee and maintain direct contact with the common
laborers on the oil and gas rigs—universally called
“roughnecks,” the equivalent of privates or PFCs.
***
Plaintiff-Appellant Michael Hewitt worked for
Defendant-Appellee Helix Energy Solutions Group, Inc.
(“Helix”) as a tool pusher, supervising approximately
twelve to fourteen roughnecks at any given time. The
parties agree that Hewitt made $963 per day for every
day that he worked, regardless of the number of hours
37a
per day he worked.4 His salary totaled more than
$200,000 per year. Common sense dictates that he was
a “highly compensated employee,”5 and a very high one
indeed. In fact, Hewitt made more than twice as much
as the threshold amount of $100,000 required to be a
highly compensated employee at the time of the thenapplicable regulation.6 So why, you ask, would such a
highly compensated employee be entitled to overtime?
The answer is clear to the panel majority: because
(1) he was not entitled to a guaranteed weekly rate,
and (2) there was no “reasonable relationship” between
his take-home pay and his daily rate. To me, this
conclusion ignores common sense.
4
Hewitt’s pay fluctuated from as low as $871.65 per day to as high
as $1,912.32 per day. His daily rate, however, was predetermined
by an employment agreement. So his daily rate was always
“predetermined.” See 29 C.F.R. § 541.602(a). At oral argument the
parties referred to his salary as $963 per day, regardless of the
number of hours per day he worked. In any event, his salary was
indisputably more than $455 per day—the minimum amount that
must be earned by highly compensated employees under the
relevant regulation at the time the incident arose. See id.
§ 541.601(b)(1) (2014).
5
6
See id. § 541.601(a)(1) (2020).
See id. § 541.601(b)(1) (2014). The 2014 version of the regulation
was the version in place at the time of Hewitt’s employment. On
June 8, 2020, however, the total annual compensation was
changed to at least $107,432, including at least $684 per week. See
id. § 541.601 (2020). Hewitt’s daily rate of $963 and annual
compensation of $200,000 satisfy either version of the regulation.
Throughout the rest of this dissent, I refer to and use the numbers
from the 2020 version of the regulation.
38a
To determine whether Hewitt was a highly
compensated employee and thus not entitled to
overtime under the Fair Labor Standards Act (“FLSA”),
however, we cannot rely on mere common sense; we
must look to the text of the regulation governing this
type of employee. The highly compensated employee
exemption states that “an employee with total annual
compensation of at least $107,432 is deemed exempt ...
if the employee customarily and regularly performs any
one or more of the exempt duties or responsibilities of
an executive, administrative or professional
employee.”7
The parties agree that Hewitt met all of these
conditions. So why does the panel majority require
more? It is clear to me as a textualist that if one looks
at § 541.601, there is no requirement that an employee
meet § 541.604(b)’s reasonable relationship test. In
fact, § 541.601 is devoid of any reference to § 541.604(b);
it states only that the “ ‘[t]otal annual compensation’
must include at least $684 per week paid on a salary ...
basis as set forth in [ ]§ 541.602.”8 (Note that there is no
requirement that the employee’s pay satisfy
§ 541.604(b).) The panel majority chooses to look
beyond the text of the regulation at issue and look to an
inapplicable regulation, viz., § 541.604(b).
This was not the law prior to the panel majority’s
opinion. And I fear that the result of the panel
majority’s opinion will have lasting, negative
7
Id. § 541.601(a)(1).
8
Id. § 541.601(b)(1) (emphasis added).
39a
repercussions, not just on the petroleum industry, but
on all industries in this region and in any region that
finds the panel majority’s opinion persuasive.
Moreover, it creates an unnecessary circuit split,9 while
purporting not to do so, by bringing in cases that are
inapplicable to the case at hand.10
9
See Anani v. CVS RX Servs., Inc., 730 F.3d 146, 149 (2d Cir.
2013) (“We perceive no cogent reason why the requirements of
C.F.R. § 541.604 must be met by an employee meeting the
requirements of C.F.R. § 541.601.”); Litz v. Saint Consulting Grp.,
Inc., 772 F.3d 1, 2 (1st Cir. 2014) (holding that the reasonable
relationship test does not apply to highly compensated employees
and citing Anani).
10
The panel majority says Coates v. Dassault Falcon Jet Corp. and
Hughes v. Gulf Interstate Field Services, Inc. are applicable to this
case and that “[t]here is no split” between these cases, Hewitt’s
case, and Anani and Litz. This is wrong, as explained below.
Moreover, in Hughes, the employees’ daily rate was below the
regulatory minimum, so § 541.604(b) was clearly applicable. See
878 F.3d 183, 185–86 (2017) (noting that the employees received
a letter stating that they were entitled to a daily rate of $337 per
day in addition to their weekly per diem and computer stipend).
The Hughes court also applied the reasonable relationship test
because the employees’ salary was not computed on a “weekly, or
less frequent basis.” Id. at 189. Hewitt’s salary, however, was
computed on a “weekly, or less frequent basis,” see 29 C.F.R.
§ 541.602(a), because, although his salary was based on a daily
rate, it was computed and paid based on the total number of days
he worked each week. In Coates, the employees were paid $285.56
per day bi-weekly ($74,244.96 divided by 52 weeks per year divided
by 5 days per week). See 961 F.3d 1039, 1044 n.5 (8th Cir. 2020).
So for the same reason as the Hughes court, the Coates court was
required to apply the reasonable relationship test. In short, there
is no circuit split between Hughes, Coates, Anani, and Litz, but the
40a
I begin, as does the panel majority, by applying the
unambiguous language of the regulation at issue: the
highly compensated employee exemption. Section
541.601 states that “an employee with total annual
compensation of at least $107,432 is deemed
exempt[.]”11 There is one, and only one, condition: The
“[t]otal annual compensation must include at least
$684 per week paid on a salary ... basis as set forth in
[ ]§ 541.602.”12 Importantly, the Secretary points us to
§ 541.602 (the salary basis test), not to § 541.604(b)
(the reasonable relationship test).
By requiring employees meeting the requirements of
§ 541.601 to also meet the requirements of § 541.604(b),
the panel majority creates tension where there need
not be any. And why is there no tension between
§ 541.604(b) and § 541.602? Because these provisions
apply to different groups of employees. To quote Anani:
We perceive no cogent reason why the
requirements of C.F.R. § 541.604 must be met by
an employee meeting the requirements of C.F.R.
§ 541.601. Indeed, C.F.R. § 541.601 is rendered
essentially meaningless if a “highly compensated
employee” must also qualify for the exemption
under C.F.R. § 541.604 or, to state the converse,
would lose the “highly compensated employee”
panel majority creates a split by applying the reasonable
relationship test to Hewitt’s salary, which was more than the
regulatory minimum.
11
29 C.F.R. § 541.601(a)(1).
12
Id. § 541.601(b)(1).
41a
exemption by failing to qualify under C.F.R.
§ 541.604. To be sure, C.F.R. § 541.604 deals
with employees who earn the “[m]inimum
[g]uarantee plus extras,” but every employee
with a guaranteed weekly amount exceeding
$455 who earns over $100,000, and is therefore
purportedly exempted by C.F.R. § 541.601, also
fits the description of having a “minimum
guarantee plus extras.” Appellant’s
interpretation thus renders C.F.R. § 541.601
superfluous. The reading that gives full meaning
to both C.F.R. § 541.601 and C.F.R. § 541.604 is
that each deals with different groups of
employees who receive a “minimum guarantee
plus extras.” The first exemption deals with
those employees who earn over $100,000
annually while the second exemption deals with
employees whose guarantee with extras totals
less than $100,000 annually.13
Continuing to follow the text, then, we look to
§ 541.602 only—the “condition” of a highly
compensated employee. That “salary basis test”
requires that:
the employee [1] regularly receives each pay
period [2] on a weekly, or less frequent basis,
[3] a predetermined amount [4] constituting all
or part of the employee’s compensation,
[5] which amount is not subject to reduction
13
730 F.3d at 149 (alterations in original).
42a
because of variations in the quality or quantity
of the work performed.14
Hewitt’s bi-weekly pay clearly and indisputably
satisfied the salary basis test. He received his paycheck
every two weeks. He thus “regularly receive[d] each
pay period on a weekly, or less frequent basis.”15
Hewitt’s pay—$963 per day—was predetermined: Prior
to performing any work, he knew the amount he would
be paid for each day, regardless of how few or how
many hours he worked. His daily rate did not
constitute all of his compensation, but the salary basis
test only requires that the predetermined amount—
here, $963 per day for each day on which he worked—
constitute “all or part” of Hewitt’s compensation. It is
thus possible, as in Hewitt’s case, that a daily rate
employee, who has only a partially predetermined total
compensation, could satisfy the salary basis test.
Furthermore, Hewitt’s salary, or his base pay, was not
subject to reduction “because of variations in the
14
15
29 C.F.R. § 541.602(a).
Id. (emphasis added). But see Hughes, 878 F.3d at 189 (holding
that a daily rate is not received “on a weekly, or less frequent
basis” because a daily rate is “calculated more frequently than
weekly”). Hughes seems to be an outlier in holding that a daily rate
is calculated more frequently than weekly. See, e.g., Coates, 961
F.3d at 1046 (explaining that a human resources employee “gave
an accurate general description of [the defendant’s] hourly-based
payroll records, a system which, as we have explained, is not
inconsistent with the Secretary’s salary-basis regulations,” which
require that the employee be paid on a weekly, or less frequent
basis).
43a
quality or quantity of the work performed.”16 Hewitt
could have been less productive than Helix desired, but
he would still be paid his daily rate for any day during
which he performed any work. And he could have
significant variations in the quantity of days and hours
he worked, but his guaranteed daily minimum of $963
would not vary.
A final requirement of the salary basis test is that “an
exempt employee must receive the full salary for any
week in which the employee performs any work without
regard to the number of days or hours worked.”17 The
panel majority concludes that Hewitt was paid with
regard to the number of days worked. This is a flawed
reading of the regulation. If Hewitt performed any
work—even for just one hour—he was paid his full
daily rate. He was thus paid at least $963 for each and
every week he worked—even if he worked only one
hour—without regard to the number of days or hours
worked. He clearly met the requirements of 29 C.F.R.
§ 541.602(a).
The First and Second Circuits have similarly concluded
that an employee who is guaranteed an amount each
week that exceeds the $455 weekly threshold is paid on
a salary basis. In Litz, the employees earned between
$40 and $60 for every hour billed but were guaranteed
a weekly “stipend” of $1,000, regardless of hours
worked.18 The First Circuit concluded that the
16
29 C.F.R. § 541.602(a).
17
Id. § 541.602(a)(1) (emphasis added).
18
772 F.3d at 2.
44a
employee was paid on a salary basis because the $1,000
weekly guarantee was both (1) “predetermined” and
(2) “not subject to reduction because of variations in the
quality or quantity of the work performed.”19 The
Second Circuit in Anani concluded that a pharmacist
who received a guaranteed $1,250 weekly salary and
significant additional compensation based on number
of hours worked was paid on a salary basis.20 Similarly,
Hewitt’s $963 daily rate was a guarantee if he
performed any work at all. His rate was predetermined
and not subject to reduction absent operational
changes.
The panel majority distinguishes Litz and Anani by
focusing on the weekly guarantee in those cases. But
the panel majority misses the forest for the trees. The
weekly “stipend” in Litz and the “weekly guarantee” in
Anani are analogous to Hewitt’s $963 daily rate, which
was also guaranteed if he performed any work at all.
The regulations require only that the employee be paid
on a “weekly, or less frequent basis.”21 And Hewitt was
paid his daily rate every week in which he performed
any work at all. The fact that the “stipend” in Litz and
the “weekly guarantee” in Anani were guaranteed
makes no difference. These opinions focused less on the
guarantee and more on the fact that the sum was paid
on a weekly (or bi-weekly) basis. And Hewitt’s $963
daily rate was guaranteed as well if he performed any
19
Id. at 5 (quoting 29 C.F.R. § 541.602(a)).
20
730 F.3d at 147–48.
21
29 C.F.R. § 541.602(a)
45a
work at all. Furthermore, the regulation requires only
that the guarantee not be subject to reduction because
of the variations in the quality or quantity of work
performed.22 So too here. Hewitt’s guaranteed $963 was
not subject to reduction based on the quantity or
quality of the work he performed. Finally, the Litz and
Anani courts did not rely on § 541.604(b) in requiring
a weekly guarantee; they simply relied on § 541.602,
which requires no weekly guarantee.23 The weekly
guarantee is thus immaterial. But even if it was
material, Hewitt also had a weekly guarantee if he
performed any work at all, as explained above.
The panel majority relies heavily on Hughes and Coates
for the principle that a court must apply § 541.604(b)—
specifically a weekly guarantee—to daily rate
employees. It states that Coates was decided after
Hughes and thus it is entitled to more authority than
Litz and Anani. I disagree.
For one thing, the Hughes court misinterpreted
§ 541.602(a) because it held that a daily rate pay
cannot be paid on a weekly or less frequent basis.24 It
therefore begins with a false premise because a daily
rate can be paid on a weekly or less frequent basis. The
Coates court was thus misguided when it relied on that
opinion. Furthermore, the Coates court merely
concluded that there was insufficient evidence before
the district court to decide the case as a matter of law
22
See id.
23
See Litz, 772 F.3d at 5; Anani, 730 F.3d at 147–48.
24
878 F.3d at 189.
46a
when there was evidence of reductions in salary.25 The
Hughes court reached a similar conclusion.26 When
looking to § 541.604(b), the Coates court focused only
on the fact that a salary must be “guaranteed” at a
minimum amount not subject to reduction.27 It did not
focus on the second clause of the reasonable
relationship test, as the panel majority does in this
case.
The panel majority makes much of an August 2020
opinion letter issued by the Department of Labor
(“DOL”). After our now withdrawn opinion was
entered, the Wage and Hour Division of the
Department of Labor (“WHD”) issued an opinion letter
directly addressing the question presented in this
case.28 The WHD concluded that a daily rate employee
does not meet the salary basis test. This conclusion,
however, was based on our subsequently-revoked
opinion. The DOL opinion letter did not “call the
play”—it is merely cheerleading after the fact.
25
961 F.3d at 1045–46.
26
See Hughes, 878 F.3d at 189 (reversing grant of summary
judgment in favor of employer because the record did not establish
that “the employment arrangement also include[d] a guarantee of
at least the minimum weekly required amount paid on a salary
basis” (quoting 29 C.F.R. § 541.604(b))).
27
28
961 F.3d at 1048.
See Opinion Letter FLSA2020-13, 2020 WL 5367070, at *3–4
(Aug. 31, 2020) (citing Hewitt v. Helix Energy Sols. Grp., 956 F.3d
341 (5th Cir. 2020)).
47a
Furthermore, because neither the panel majority nor I
deem the regulation ambiguous, we need not provide
Chevron deference to the opinion letter.29 (In fact, it is
questionable whether we even need to provide
Skidmore deference to the opinion letter. Here, the
2020 opinion letter does not have the “power to
persuade” because it is based on our now-revoked
opinion; furthermore, the regulation at issue is not
ambiguous.)30
A report issued by the DOL addressing this specific
issue—the Weiss Report—is even more instructive,31
and the DOL continues to rely on it.32 The Weiss Report
29
See Owsley v. San Antonio Indep. Sch. Dist., 187 F.3d 521, 525
(5th Cir. 1999) (“Opinion letters, which are issued without the
formal notice and rulemaking procedures of the Administrative
Procedure Act, do not receive the same kind of Chevron deference
as do administrative regulations.”); accord Christensen v. Harris
Cnty., 529 U.S. 576, 587, 120 S.Ct. 1655, 146 L.Ed.2d 621 (2000);
see also Belt v. EmCare, Inc., 444 F.3d 403, 408 (5th Cir. 2006) (“If
the regulation is unambiguous, we may still consider agency
interpretation, but only according to its persuasive power.”).
30
Cf. Christensen, 529 U.S. at 587, 120 S.Ct. 1655 (granting
Skidmore deference to an opinion letter based on its “power to
persuade” (quoting Skidmore v. Swift & Co., 323 U.S. 134, 140, 65
S.Ct. 161, 89 L.Ed. 124 (1944))).
31
See Reports and Recommendations on Proposed Revisions of
Regulations, Part 541, by Harry Weiss, Presiding Officer, Wage &
Hour & Pub. Contracts Divs., U.S. Dep’t of Labor (June 30, 1949)
[hereinafter the “Weiss Report”].
32
See Defining and Delimiting the Exemptions for Executive,
Administrative, Professional, Outside Sales and Computer
Employees, 69 Fed. Reg. 22122, 22124 (Apr. 23, 2004) (“The
48a
states that, for “an employee paid on a daily or shift
basis” (as was Hewitt), the salary basis test will be met
“if the employment arrangement includes a provision
that he will receive not less than the amount specified
in the regulations in any week in which he performs
any work.”33 As stated above, Hewitt was a daily rate
employee who would receive $963—more than twice
the regulatory threshold amount—for any week in
which he performed any work at all.
Finally, the panel majority looks to the regulatory
purpose of the reasonable relationship test to justify its
position that Hewitt was not paid on a salary basis.
Again, I disagree. We must be wary of the dangers of
looking to regulatory purpose when the text of the
regulation clearly demands a different outcome. And
here, the text of § 541.601 is devoid of any reference to
§ 541.604(b). It instead mentions only § 541.602.34
Furthermore, purpose and policy do support Hewitt’s
salary satisfying the salary basis test. The panel
majority’s holding is in fact inconsistent with
Congress’s express intent under the FLSA. Congress
has stated that “there is no reason that the FLSA,
which was passed to protect laborers who ‘toil in
factory and on farm,’ and who are ‘helpless victims of
their own bargaining weakness,’ should ever be
interpreted to protect workers making high five-figure
Department notes, however, that much of the reasoning of the
Stein, Weiss and Kantor reports remains as relevant as ever.”).
33
Weiss Report at 26.
34
See 29 C.F.R. § 541.601(b)(1).
49a
or six-figure incomes.”35 Congress went on to say that
“the courts need to refocus their efforts” away from
protecting these highly paid workers.36
Hewitt was a very highly paid worker, and I seriously
doubt that Congress’s purpose was to allow him
overtime under the FLSA.
Finally, the panel majority states that § 541.604(b)
sets a ceiling on how much the employee can
expect to work in exchange for his normal
paycheck, by preventing the employer from
purporting to pay a stable weekly amount
without regard to hours worked, while in reality
routinely overworking the employee far in excess
of the time the weekly guarantee contemplates.37
But here, Helix did not routinely overwork Hewitt
without providing him adequate pay. In fact, it did just
the opposite: Hewitt worked on a “hitch” that lasted
about a month, and he made a staggering $200,000 or
more per year.
The panel majority correctly states that the FLSA was
enacted to encourage employers to hire more
employees. It creates a “penalty” for not doing so, viz.,
overtime wages. But that regulatory purpose falls flat
on its face in the fact pattern before us. Hewitt was
35
143 Cong. Rec. E317-04, E317-18, 1997 WL 79643, at *2 (Feb. 26,
1997).
36
Id.
37
Majority Opinion (“Ante”) at 793–94.
50a
paid more than $200,000 per annum as a tool pusher.
He would have been paid significantly more with
overtime. So why not hire more tool pushers? The
answer is clear: Tool pushers are employed as
overseers, not as manual laborers. It would be
redundant and a waste of resources to hire multiple
overseers to perform the work of this particular
position. Furthermore, if a company, such as Helix, had
to employ multiple tool pushers at $200,000 per year,
they could very likely go bankrupt. And then Hewitt
would be out of work. Surely, this is not the purpose
behind the FLSA. In fact, Congress has confirmed that
this is so.38
In sum, the district court was correct in concluding that
Hewitt’s salary satisfied the highly compensated
employee exemption because he was paid on a salary
basis.
***
I respectfully submit that this case should be reheard
by our en banc court. If the panel majority’s opinion is
allowed to stand, it will likely have devastating effects
on all employers, especially in the oil and gas arena, in
our circuit. Employers like Helix will have to pay
highly skilled supervisors like Hewitt considerable
overtime wages. Amici estimate that Hewitt, who
already makes more than $200,000 per year, would
have overtime wages of at least $52,000 per year if the
panel majority’s holding stands. As amici aptly point
out, “[a]ppending these types of costs to expensive
38
See supra notes 806–07 – –––– and accompanying text.
51a
hydrocarbon exploration in the Fifth Circuit will put
the region, and the industry, at a significant
disadvantage to other exploration operations elsewhere
in the country and the world.”
Consistent with two other circuits, I would not apply
the reasonable relationship test to highly compensated
employees. And there is no question in my mind that
Hewitt was a highly compensated employee because he
clearly was paid on a salary basis. Neither is it
disputed that Hewitt met the other requirements to be
considered a highly compensated employee. The district
court held as much, and I would affirm the judgment of
that court.
Finally, with utmost respect for my friend and
colleague who authored the special concurrence, my
only response is to quote Macbeth: “full of sound and
fury, signifying nothing.”39
For the foregoing reasons, I respectfully dissent.
39
William Shakespeare, Macbeth act 5, sc. 5, lines 15–17. To be
sure, the harshness of the full quotation is unwarranted, and, thus,
I only quote what is appropriate.
52a
APPENDIX 3
U.S. Department of Labor
Wage and Hour Division
Washington, DC 20210
[SEAL]
FLSA2020-13
[Filed: September 1, 2020]
August 31, 2020
Dear Name*:
This letter responds to your request for an opinion
regarding the applicability of the learned professional
exemption and the highly compensated employee test
to part-time employees who provide corporatemanagement training and are paid a day rate with
additional hourly compensation. This opinion is based
exclusively on the facts you have presented. You
represent that you do not seek this opinion for any
party that the Wage and Hour Division (WHD) is
currently investigating or for use in litigation that
began before your request. We conclude that the
employees likely perform learned professional duties;
that their day rate does not constitute payment on a
salary basis; that if the employees were otherwise
exempt, the payment of additional hourly
compensation would not affect their exempt status; and
that they would not qualify as highly compensated
53a
employees if they receive only a pro rata portion of the
required total annual compensation amount based on
the number of weeks worked.
BACKGROUND
You write on behalf of a company that furnishes
executive education to a variety of companies. The
company’s employees perform two types of duties. The
first, which you refer to as delivery work, generally
consists of presenting the education program to the
client companies, operating the interactive models that
are part of the program, and evaluating the results of
the participants’ activities. The second, which you refer
to as development work, consists of creating new
content and interactive models for the programs. You
state that the delivery work is the employees’ primary
duty and that it requires “a constant and consistent
exercise of discretion and judgment[.]”
The employees’ work for the company is almost
exclusively part time, though some work on a nearly
full-time basis and others work as few as 15 days per
year. You describe them as highly educated and state
that they must have advanced knowledge in business
finance and adult education. Among the qualifications
prescribed for the employees are a master’s degree in
finance, accounting, adult learning, or “business
discipline”; a Ph.D. is preferred, but not required. The
employees are also required to have, among other
qualifications, at least 10 years of practical business
experience in an executive leadership role and “deep
hands-on experience in Microsoft Word, PowerPoint,
and Excel, including VBA programming.”
54a
The company’s employment agreement states that the
company will offer to each employee opportunities for
delivery or development work “from time to time.” The
employees are not required to accept an offered
opportunity; the company is not required to offer a
minimum number of opportunities. For delivery work,
the company pays a flat daily rate of $1,500, exclusive
of board, lodging, and other facilities. Each delivery
work program lasts at least one day. For development
work, the company pays $50 per hour, again exclusive
of board, lodging, and other facilities. Employees are
not paid during weeks in which they perform neither
delivery nor development work.
You ask four related questions. First, are the
employees’ primary duties those of learned
professionals under 29 C.F.R. § 541.301?1 Second, do
the company’s payments for delivery work satisfy the
salary basis requirement of 29 C.F.R. § 541.300(a)(1)
for the learned professional exemption? Third,
assuming the employees are otherwise exempt from the
Fair Labor Standards Act’s (FLSA) overtime pay
requirements, does the hourly development work
compensation affect their exempt status? Fourth, can
a part-time employee qualify as exempt if the
employee’s pay for the number of weeks worked is
proportional to the minimum annual amount required
under the highly compensated employee test as set
forth in 29 C.F .R. § 541.601?
1
You phrase this as, “Are the Company’s employees learned
professionals[?]” Because this phrasing subsumes your second
question, we rephrase it as indicated.
55a
Based on the facts as you have represented them, we
conclude that the employees likely satisfy the duties
test required to qualify as exempt learned
professionals, but do not satisfy the salary basis test for
that exemption or the highly compensated employee
test under any of the scenarios you present.
GENERAL LEGAL PRINCIPLES
Under the FLSA, employees are entitled to be paid a
minimum wage for each hour worked and to be paid
one and a half times their regular rate of pay for each
hour in excess of 40 hours worked in a workweek.2
Certain employees are exempt from these
requirements, including employees who are “employed
in a bona fide executive, administrative, or professional
capacity ... or in the capacity of outside salesman.”3 The
Secretary of Labor, exercising the power delegated to
define and delimit those terms, created a three-part
test to determine which employees qualify as exempt
professionals.4
• First, the salary basis test: With certain
exceptions not applicable here, the employee
must be compensated on a salary or fee basis.5
Compensation on a salary basis means receiving
each pay period (1) a predetermined amount
2
29 U.S.C. §§ 206(a), 207(a).
3
29 U.S.C. § 213(a)(1).
4
Id.; 29 C.F.R. § 541.300.
5
29 C.F.R. § 541.300(a)(1).
56a
that is all or part of the employee’s
compensation (2) on a weekly or less frequent
basis (3) that is not subject to reduction because
of variations in the quantity or quality of work
performed.6
• Second, the salary level test: The salary paid
must meet a minimum specified amount. With
certain exceptions not applicable here, that
amount must be at least $684 per week.7
• Third, the duties test: The employee’s primary
duty must be to perform work that requires
either (1) “knowledge of an advanced type in a
field of science or learning customarily acquired
by a prolonged course of specialized intellectual
instruction” or (2) “invention, imagination,
originality[,] or talent in a recognized field of
artistic or creative endeavor.”8
An alternative to this three-part test is the highly
compensated employee test. Because a “high level of
compensation is a strong indicator of an employee’s
exempt status,” the highly compensated employee test
“eliminate[s] the need for a detailed analysis of the
employee’s job duties.”9 Under that test, an employee
qualifies as exempt if the employee customarily and
6
29 C.F.R. § 541.602(a).
7
29 C.F.R. § 541.300(a)(1).
8
29 C.F.R. § 541.300(a)(2).
9
29 C.F.R. § 541.601(c).
57a
regularly performs at least one exempt executive,
administrative, or professional duty and receives total
annual compensation of at least $107,432.10 The total
annual compensation must include at least $684 per
week paid on a salary or fee basis.11
The FLSA’s exemptions are “as much a part of the
FLSA’s purpose as the [minimum-wage] and overtimepay requirement[s],” and, therefore, must receive a
“fair (rather than a narrow) interpretation[.]”12 WHD,
therefore, interprets the Act neither expansively nor
narrowly, but according to conventional canons of
statutory construction.
OPINION
A. The employees likely perform exempt learned
professional duties.
Learned professional duties are those that (1) require
advanced knowledge (2) in a field of science or learning
(3) that is customarily acquired by a prolonged course
of specialized intellectual instruction.13 Based on your
description, we conclude that the employees’ duties
likely qualify.
10
29 C.F.R.. § 541.601(a)-(b).
11
Id.
12
Encino Motorcars, LLC v. Navarro, 138 S. Ct. 1134, 1142 (2018)
(internal citations and quotation marks omitted).
13
29 C.F.R. § 541.301(a).
58a
• Advanced knowledge: Work requires advanced
knowledge if it is predominantly intellectual in
character and includes the consistent exercise of
discretion and judgment.14 This work generally
includes analyzing, interpreting, or making
deductions from varying facts or
circumstances.15 The employees’ primary duty
here—delivery work—which involves lecturing
on a number of leadership and related business
disciplines, presenting hypothetical scenarios to
corporate executives, and critiquing and
evaluating the executives’ responses, meets
these criteria.16
• Field of science or learning: These include
traditional professions and occupations similar
to those professions that have a recognized
professional status, as distinguished from the
mechanical arts or skilled trades. Our
regulations cite accounting, teaching, and
actuarial computation as examples.17 As the
employees’ delivery duties include teaching
14
29 C.F.R. § 541.301(b).
15
Id.
16
While you ask us to assume that the employee’s delivery duties
involve the “constant and consistent exercise of discretion and
judgment,” we note WHD’s longstanding position that teaching, by
its very nature, requires exercising discretion and judgment. See,
e.g., WHD Opinion Letter FLSA2008-11, 2008 WL 5483049, at *1
(Dec. 1, 2008) (quoting WHD Fact Sheet 17D).
17
29 C.F.R. § 541.301(c).
59a
advanced, finance- and business-related
material to executives, and evaluating and
quantifying the executives’ work, we conclude
that the advanced knowledge required to
perform those duties is in a field of science or
learning.
• Specialized intellectual instruction: This
restricts the learned professional exemption to
occupations where “specialized academic
training is a standard prerequisite....”18 This
prerequisite is satisfied here, as the employees
are required to have a master’s degree in a
relevant field to qualify for employment. We
have routinely concluded that a position that
requires a degree in a specific field directly
related to the position’s duties and requires the
employee to apply the advanced knowledge
gained in the course of earning that degree
satisfies this requirement.19
18
19
29 C.F.R. § 541.301(d).
See, e.g., WHD Opinion Letter FLSA2005-28, 2005 WL 3308599,
at *3-4 (Aug. 26, 2005) (sales engineers who were required to have
engineering degrees and whose primary duties could not be
performed without that specific knowledge); WHD Opinion Letter
FLSA2005-50, 2005 WL 3308621, at *2 (Nov. 4, 2005) (social
workers who were required to have master’s degrees in one of six
specific fields and who worked in the field of their degree); see also
29 C.F.R. § 541.301(e)(1)-(9) (examples of employees who generally
do or do not meet the duties test for learned professionals).
60a
B. The company’s payments for delivery work do
not satisfy the salary basis test.
Under the plain language of the regulation, to satisfy
the salary basis test, an employee must receive each
pay period a predetermined amount that is all or part
of the employee’s compensation on a weekly or less
frequent basis that is not subject to reduction because
of variations in the quantity or quality of work
performed.20 The company’s payments for delivery work
do not meet this test. First, the payments for delivery
work are not a predetermined amount. They may be as
low as $1,500 during a workweek in which the
employee performs one day of work; they may be more
than $10,000 per week. Second, the amounts are not
calculated on a weekly or less frequent basis. They are
based instead on the number of days worked.
The Fifth Circuit recently addressed a similar question,
holding that an employee paid a daily rate, with no
minimum weekly guarantee, is not paid on a salary
basis.21 The Hewitt plaintiff, like the employees here,
was paid per day of work.22 The court summarized the
plain language of the salary basis test as requiring
“that an employee know the amount of his
compensation for each weekly (or less frequent) pay
20
29 C.F.R. § 541.602(a).
21
Hewitt v. Helix Energy Sols. Group, Inc., 956 F.3d 341 (5th Cir.
2020).
22
Id. at 342.
61a
period during which he works, before he works.”23 The
Hewitt plaintiff, however, “had to take the number of
days he worked (past tense) and multiply by the
operative daily rate to determine how much he earned,”
thus knowing “his pay only after he worked through the
pay period.”24 “[H]e did not receive a ‘predetermined
amount’ ‘on a weekly, or less frequent basis’—rather,
he received an amount contingent on the number of
days he worked each week” and was therefore “not paid
on a ‘salary basis[.]”’25
The court further supported its conclusion by noting
that an “exempt employee must receive the full salary
for any week in which the employee performs any work
without regard to the number of days or hours
worked.”26 The Hewitt plaintiff, however, like the
employees here, “was paid on a daily rate—so he was
paid ‘with’ (not ‘without’) ‘regard to the number of days
or hours worked,’ in direct conflict with the plain
language” of the salary basis test.27
23
Id. at 343 (citing 29 C.F.R. § 514.602(a)).
24
Id. at 344 (emphasis in original).
25
Id. (emphasis in original).
26
Id. (quoting 29 C.F.R. § 541.602(a)(1)) (emphasis added in
opinion).
27
Id. (emphasis in original). Our conclusion is further supported by
WHD’s having specified certain instances when exempt executive,
administrative, or professional employees may be paid a daily rate
while not more generally permitting a day rate to satisfy the salary
basis test. In some circumstances, employees in the motion-picture
industry who are paid per day of work may qualify as exempt
62a
C. The development work payments would not
affect the status of an otherwise exempt
employee.
If the employees were otherwise exempt learned
professionals, the development work payments would
not affect that status. We take your use of “otherwise
exempt” to mean only that: If the employees qualified
as exempt learned professionals (i.e., if they satisfied
the salary and duties tests) when the development
work payments were not considered, would they retain
that status if those hourly payments were considered?
If the employees were exempt, they would be paid a
fixed amount on a weekly or less frequent basis that
would not vary based on the quantity or quality of their
work. Adding to that fixed salary amount additional
payments for each hour of development work they
performed would not change their status. As long as
the employee is guaranteed to receive at least the
minimum required salary for each workweek on a
salary basis, the employer may pay the employee
additional compensation on a commission, flat, bonus,
executive, administrative, or professional employees. 29 C.F.R.
§ 541.709. That is, WHD knows how to include in the exemption
certain employees whose pay is calculated on a daily basis; it has
chosen not to do so broadly. Compare 29 C.F.R. § 541.602(a) with
29 C.F.R. § 541.709. “The familiar ‘easy-to-say-so-if-that-is-whatwas-meant’ rule of [] interpretation has full force here.” C.I.R. v.
Beck’s Estate, 129 F.2d 243, 244 (2d Cir. 1942) (footnote omitted).
See also Amazon.com, Inc. v. C.I.R., 934 F.3d 976, 991 (9th Cir.
2019) (agency’s express use of certain language in one provision
showed that it “clearly knew how to write its regulations” to
accomplish a certain goal, and supported a conclusion that the
language did not apply to provisions from which it was absent).
63a
straight-time, or other basis.28 This would include a
per-hour payment for each hour of development work
performed. The employees here, however, are not paid
on a salary basis, so the premise of this question would
not be satisfied.
D. Proportional
payments
to
part-time
employees do not satisfy the highly
compensated employee test.
There are two compensation requirements to qualify as
exempt under the highly compensated employee test.
Neither of them varies based on an employee’s parttime or full-time status. First, the employee must
receive at least the minimum salary level, currently
$684 per week, on a salary or fee basis.29 Second, the
employee must receive annual compensation of at least
$107,432.30 The only exception to this requirement is
that an employee who begins work after the year starts
or leaves work before the year ends may be paid total
compensation proportional to the amount of the year
that the employee worked for the employer.31
The regulations include no exception for part-time
employees—neither in the sense of working fewer than
40 hours per week nor in the sense of working during
some weeks but not others. An employee satisfies the
28
29 C.F.R. § 541.604(a).
29
29 C.F.R. § 541.601(b)(1).
30
29 C.F.R. § 541.601(a)(1).
31
29 C.F.R. § 541.601(b)(3).
64a
highly compensated employee test only by satisfying in
full the weekly and annual compensation
requirements.
CONCLUSION
For these reasons, we conclude that the employees
likely perform exempt learned professional duties, that
the employer’s payments for delivery work do not
satisfy the salary basis test, that the development work
payments would not result in the loss of an otherwiseapplicable professional exemption, and that the highly
compensated employee test cannot be satisfied by
payments proportional to the amount of work
performed by a part-time employee.
This letter is an official interpretation by the
Administrator of WHD for purposes of the Portal-toPortal Act.32 This interpretation may be relied upon in
accordance with section 10 of the Portal-to-Portal Act,
notwithstanding that after any such act or omission in
the course of such reliance, the interpretation is
“modified or rescinded or is determined by judicial
authority to be invalid or of no legal effect.”33
We trust that this letter responds to your inquiry.
Sincerely,
/s/ Cheryl M. Stanton
Cheryl M. Stanton
Administrator
32
See 29 U.S.C. § 259.
33
Id.
65a
*Note: The actual name(s) was removed to
protect privacy in accordance with 5 U.S.C.
§ 552(b).
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.