Supreme Court ruling implications on overtime
Gadsden, AL – February 23 2023 –Recently the United States Supreme Court issued a ruling that could have significant implications for some employers regarding overtime pay.
“The U.S. Supreme Court held that an employee is entitled to overtime pay even though receiving a fixed daily rate well in excess of the minimum salary threshold,” said Catherine “Ree” Harper, general counsel and vice president of human resources at Lyons HR.
“The Court ruled in Helix Energy Solutions Group, Inc. et al., that even when a worker receives a daily rate greater than the weekly threshold, the worker is eligible for overtime pay because he was not paid on a salary basis.”
In Helix, the worker was paid a daily rate and earned more than $200,000 a year.
In a 6-3 decision, the Court held that an employee paid exclusively on a day rate does not meet the salary basis test under the FLSA.
In the words of Justice Kagan, “[A]n employee paid on an hourly basis is paid by the hour, and employee paid on a daily basis is paid by the day, and an employee on a weekly basis is paid by the week … a daily rate worker does not qualify under §602(a) [of the FLSA] as a salaried employee – even if his daily rate is high.”
Harper offers suggestions on what steps employers should take in response to this decision.
“Review your employee exemptions to ensure they meet applicable federal and state requirements, especially employers in industries that commonly use a daily pay rate,” she noted. “Employee classifications for any highly compensated employees paid on a daily rate, or any rate other than weekly, should be reviewed to determine if changes are needed to comply with this decision.”
She added that for employees that satisfy the highly compensated exemption (earning at least $100,000 a year), employers might consider guaranteeing a substantial portion of the employee’s compensation on a weekly (salary) basis. Harper noted that not all states recognize the highly compensated exemption.
“Also, be on the lookout for updates on the Department of Labor’s proposed increase to the weekly salary threshold” said Harper.
Employers should take note of this ruling and review their policies and practices related to overtime pay. It is important for employers to understand the FLSA’s requirements and to ensure that they are in compliance with the law.
An employer’s failure to comply with the FLSA’s overtime requirements can result in substantial financial liabilities.
About Lyons HR
Lyons HR is a Certified Professional Employer Organization (CPEO), certified by the Internal Revenue Service and is accredited by the Employer Services Assurance Corporation (ESAC), a distinction earned by fewer than five percent of all PEOs. Founded in 1995 in Florence by Bill Lyons, the company has seven operation centers throughout Alabama, Florida, Georgia and Tennessee, serving thousands of clients and more than 15,500 workplace employees across 47 U.S. states.
Lyons HR provides comprehensive human resources management solutions for small and medium-sized businesses with services including payroll and tax administration, employee benefits, HR consulting, regulatory compliance, and risk management.
Aligned Holdings Inc, a member of Lyons & Company Inc. group of businesses which holds Lyons HR, acquired Aligned Insurance in 2020 and Aligned Tek in 2022, through which the company offers a full array of business and personal insurance, technology solutions and website development and hosting.