The U.S. Supreme Court’s decision this week that a day worker earning $200,000 a year is entitled to overtime pay under the Fair Labor Standards Act (FLSA) turned on how frequently the wages were calculated, not how frequently they were paid out. 

The court found that Michael Hewitt, a highly compensated employee who had supervisory duties, was considered a wage earner, not a salaried executive, even though he earned a predetermined amount above a threshold level for each week that he worked, because his pay wasn’t calculated on a weekly basis; it was calculated on a daily basis.

The daily-basis of his wage calculation meant he had to show, to be considered salaried under a Department of Labor rule, that he was guaranteed to earn, for any week that he worked, an amount that was over $455 and had a “reasonable relationship” to a week’s worth of pay, even if he only worked a day or two.

Since he didn’t meet that standard, he was a wage earner. 

“A daily-rate worker does not qualify under [the general rule] as a salaried employee — even if (like Hewitt) his daily rate is high,” Justice Elena Kagan said in writing for the majority in the 6-3 opinion. 

Counsel for Helix Energy Solutions, the oil rig company for which Hewitt worked and that asked the Supreme Court to look at the case, argued he didn’t need to meet the salary standard under the one rule, because he was paid every two weeks. As long as he earns a predetermined amount that is all or part of his weekly pay, for any week that he worked, he meets the criteria of a salaried employee. He met that criteria, because he always earned at least his minimum daily pay, which exceeded $455, whenever he worked at least one day in a week. 

Hewitt, Helix counsel said in its brief last year, “was guaranteed $963 per week for any week in which he worked at least one day. That is all the regulation requires.”

That’s incorrect, Kagan said in the opinion. 

“An employee paid on a daily basis is paid by the day, and an employee paid on a weekly basis is paid by the week — irrespective of when or how often his employer actually doles out the money,” she said. “The inclusion of the word ‘receives’ in [the rule] does not change that usual meaning.”

That means the rule for those paid by the day, the hour, or shift, applied in this case. As a result, he needed to be guaranteed an amount each week that he worked that bore a reasonable relationship to a full week’s worth of work.   

In his dissent, Justice Brett Kavanaugh said the general rules applicable to highly compensated employees, which meet a $100,000 a year threshold and require a supervisory role, both of which Hewitt met, should apply. That means, as long as he earned above the $455 threshold for any week he worked, he would have been considered salaried.

“Because Hewitt performed executive duties, earned at least $100,000 per year, and received a guaranteed weekly salary of at least $455 for any week that he worked, I would hold that Hewitt was not legally entitled to overtime pay under the regulations,” he said. Justice Samuel Alito joined him.

In a separate dissent, Justice Neil Gorsuch said the decision to hear the case was improvidently granted because it was framed as a question over whether the exception for highly compensated employees is subject to the general rules, but the case turned on how the general rules should be applied.