UPDATE ON MINIMUM WAGE AND PAID MEDICAL LEAVE

By: Terence P. Durkin

The Michigan Court of Appeals blocked the minimum wage increase and paid medical leave laws from taking effect on February 19, 2023. On February 10, Mothering Justice filed an Application for Leave to the Michigan Supreme Court. It is unclear if the Court will accept or decline the application. We will provide any updates as soon as they become available.

HIGHLY COMPENSATED EMPLOYEE ENTITLED TO OVERTIME

By: Terence P. Durkin

The U.S. Supreme Court ruled that a former oil rig worker earning $200,000 per year, whose company classified him as a “bona fide executive”, was eligible for overtime pay because he was paid on a daily basis.

Employees are entitled to overtime pay at 1.5 times their regular rate for all hours worked over 40 in a work week unless they qualify for an exemption under the Fair Labor Standards Act’s (FLSA) overtime rules. The FLSA allows employers to exempt bona fide executives from overtime pay requirements provided they are paid on a salary basis of at least $684 per week and perform other certain duties. Employees are considered to be “highly compensated” if they earn at least $107,432 per year, which includes at least $684 per week on a salary basis. It bears noting that during the relevant time period in the case at issue, the weekly salary threshold was $455 and the highly compensated exemption was at least $100,000 per year.

In Helix Energy Solutions, Inc. v Hewitt, U.S. No. 21-984 (February 22, 2023), Michael Hewitt was paid a day rate of at least $963 and his yearly salary exceeded $200,000. It was Helix’s position that Mr. Hewitt was an executive, performed executive duties, earned a yearly salary of approximately $200,000, and received a minimum salary of $963 per day, thus satisfying the requirements to be an executive and exempt from overtime pay.

The issue before the Court was whether a highly compensated employee is paid on a salary basis when that employee’s compensation is based on a daily rate. In a 6-3 decision, the Court held that Mr. Hewitt, regardless of his income level, did not satisfy the FLSA’s requirements of an executive because he was paid on a daily rate and not on a salary basis. Therefore, Mr. Hewitt was entitled to overtime pay.

Based on the Court’s ruling, employers will need to act to insure that their compensation plans for highly compensated employees are paid on a salary basis and not on a daily rate, in order to meet the requirements of the wage and hour and regulations.

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Employment Law: Update On Minimum Wage & Paid Medical Leave; Supreme Court Ruling on Overtime

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