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News | Jan 20, 2018

Overtime Lawyer Alert: FLSA’s “Highly Compensated Exemption” Requires a “Guaranteed” Weekly Payment

The Sixth Circuit Court of Appeals — which covers Kentucky, Michigan, Ohio, and Tennessee — recently issued an important overtime rights opinion in Hughes v. Gulf Interstate Field Services, Inc., No. 17-3112 (6th Cir. Dec. 19, 2017).    This case involved pipeline welding inspectors employed in the fracking industry.  The inspectors made over $100,000 per year but did not receive extra overtime pay for hours worked over 40 per week.  The pipeline company asserted that the inspectors were not entitled to overtime pay because they fell within the FLSA’s  “highly-compensated employee” exemption, which can be found at 29 C.F.R. 541.601.  An Ohio district court judge agreed, and threw out the case.  The Sixth Circuit reversed, explaining that, based on the evidence, a jury could reasonably find that the inspectors were “day-rate” employees, rather than employees paid on a “salary or fee basis” and “guaranteed” to make at least $455/week.   In my view, the important takeaway from Hughes is that, under the highly-compensated exemption, it is not enough for an employee to merely make over $100,000 annually.  He/she must also be guaranteed “guaranteed” to earn a minimum weekly payment.  Thus, few “day-rate” employees can fall within the exemption.

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