Regulatory Roundup February 2023March 03, 2023
February saw the resolution of an important Supreme Court case regarding overtime exemption for highly compensated employees.
February, the shortest month of the year, had only one legislative update, passed in the form of a decision from the Supreme Court regarding eligibility for overtime compensation. Learn more about this update below in this month's Regulatory Roundup.
Overtime Eligibility Ruling
In the case of Helix Energy Solutions Group v. Hewitt, the court examined salary basis requirements of employees exempt from overtime compensation, specifically if being paid on an hourly or daily basis is enough to warrant that exempt status. Despite the employee in question earning over $200,000 a year, the fact that he was paid on a flat, daily rate did not meet the law's requirements for a salary exempt status, and therefore he is entitled to overtime compensation.
The court reasoned that how often an employee receives compensation (bi-weekly in this case) isn't the same as how often the employee worked for compensation. To qualify for overtime exemption under the Fair Labor Standards Act (FLSA) an employee must receive a predetermined salary calculated on (at least) a weekly rate, not daily or hourly. The quantity of this employee's total pay was irrelevant as it was still calculated on a daily rate and therefore did not meet all FLSA requirements for overtime exemption. If, however, an employer provides such daily or hourly employees a guaranteed weekly wage of approximate value to what the employees usually earn (and all other FLSA requirements are met), that is sufficient to exempt the employees from overtime compensation.
Get more details on the compliance updates from February here:
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This information is provided as a courtesy, may change, and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney, or Advisor.
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