Highly paid oil rig worker merits overtime, U.S. Supreme Court says

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(Reuters) – An oil rig supervisor who earned more than $200,000 a year working for Houston-based Helix Energy (NYSE:HLX) Solutions Group Inc is entitled to overtime pay, the U.S. Supreme Court ruled on Wednesday in a decision with costly implications for the oil and gas industry.

The court in a 6-3 decision authored by liberal Justice Elena Kagan decided that because the rig supervisor, Michael Hewitt, was paid a daily rate of $963 and not a salary, an overtime pay exemption in federal wage law for highly paid workers did not apply to him.

The justices affirmed a 2021 ruling by the New Orleans-based 5th U.S. Circuit Court of Appeals that Helix must face Hewitt’s 2017 lawsuit seeking overtime pay. That lawsuit now goes back to a federal judge in Houston. 

A 1940 regulation holds that highly compensated workers – currently defined as those earning $107,000 a year or more – would not receive overtime pay if they have supervisory duties and are paid at least $455 per week in the form of a salary.

Kagan said the text of the regulation made clear that it did not apply to employees who are paid based on how many days they work and are not guaranteed minimum weekly wages.

Ed Sullivan, a lawyer for Hewitt, said that “my client and team are appreciative that the Supreme Court applied the plain text of the law to his case.”

Helix did not immediately respond to a request for comment.

Helix was backed in the case by oil and gas trade groups including the American Petroleum Institute, which said in briefs to the justices that supervisors in the industry are routinely paid daily rates and work long hours. A ruling favoring Hewitt would require companies to pay overtime premiums and invite a flood of lawsuits from highly paid workers, the groups added.

Conservative Justices Clarence Thomas, Amy Coney Barrett and John Roberts joined the court’s three liberal members in the ruling.

Justice Brett Kavanaugh, in a dissent joined by fellow conservative Justice Samuel Alito, wrote that because Hewitt earned a set daily rate, he knew he would be paid at least that much for any week in which he worked. That coupled with his management duties made him exempt from overtime pay, Kavanaugh said.

Conservative Justice Neil Gorsuch in a separate dissent said Helix’s appeal should have been dismissed for procedural reasons.