Paul DeCamp, Member of the Firm in the Employment, Labor & Workforce Management practice, in the firm’s Washington, DC, office, was quoted in Law360 Employment Authority, in “How Salary Regs' History May Color High Court OT Ruling,” by Daniela Porat. (Read the full version – subscription required.)

Following is an excerpt:

Modern salary pay regulations for high earners are rooted in the Fair Labor Standards Act's early days, and that history offers valuable context for grappling with what promises to be a consequential high court decision on whether a worker earning six figures is entitled to overtime, attorneys say.

The U.S. Supreme Court is reviewing a September 2021 Fifth Circuit decision that found an oil rig worker earning $200,000 who satisfied the duties test for the executive overtime exemption of the FLSA was nonetheless entitled to overtime because he was not paid on a salary basis.

The case, Helix Energy Solutions Group Inc. et al. v. Michael J. Hewitt, has raised complex questions about what constitutes a salary and how the decades-old standards for salary pay apply specifically to highly compensated employees, who fall under a subset rule of the so-called white collar exemptions. …

Early Salary Definitions Reverberate Today

The idea that a salary is a key indicator of an employee's position as a white collar worker stems from what is known as the 1940 Stein report, one of three DOL reports that studied the mechanics of the white collar exemptions. …

An important thing to keep in mind when thinking about salary pay is that the salary level test was originally meant to filter out workers whose compensation was so low it's unlikely they would be doing duties consistent with an exemption, said Paul DeCamp, former administrator for the DOL's Wage and Hour Division and a member of management-side firm Epstein Becker Green.

"In other words, the purpose of the salary basis standard and the salary level had been primarily to save everybody the time and effort necessary to do a detailed evaluation of job duties," he said. "Weed out the clearly nonexempt and then take a closer look at the job duties for people who might be in the zone for exempt status." …

The Fate of High Earners

During October oral arguments in the case, the conservative wing of the court focused on the gut-level confusion of a six-figure-earning worker being entitled to overtime and suggested that Helix could win the case if it were focused on the statute alone and not its regulations — a question not before the court.

"The difficulty is just, for the average person, looking at it, when someone makes over $200,000 a year, they normally think of that as an indication that it's a salary," Justice Clarence Thomas said.

DeCamp said he was surprised by the line of questioning from justices on both sides of the ideological spectrum.

"It struck me that they seemed not particularly well situated in the minutiae of the history of the regulation, the history of the statute and how this all hangs together here," he said. "The justices are extraordinarily bright people. They have extraordinarily bright clerks working for them. But they seemed like they didn't really get it."

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