Day Laborers Now Eligible for Overtime Compensation According to Supreme Court Decision
In a significant ruling, the United States Supreme Court has determined that an oilfield worker paid a day rate is entitled to overtime pay under federal law. The decision, while a clear victory for workers, has implications for employers in the oil and gas industry, who will now need to re-examine their payment practices.
The case in question, Hewitt v. Helix Energy Solutions Group, revolved around Michael Hewitt, a tool-pusher who supervised 12 to 14 workers on an offshore oil rig from 2014 to 2017. Hewitt, who was typically working 84 hours a week during a 28-day "hitch," was paid a daily rate ranging from $963 to $1,341. Hewitt filed an action against Helix seeking overtime pay, arguing that he was not paid one-and-a-half times his regular rate as required by federal overtime laws.
The Supreme Court concluded that day rate workers are not paid on a salary basis because they are only paid for each day they work and are not paid in weeks they do not work. This decision means that workers who have been paid day rates within the past three years may have a claim for unpaid overtime.
However, it is important to note that the Supreme Court's decision does not affect the FLSA's highly compensated employee exemption. This exemption covers most salaried workers making more than $100,000 annually and may also apply to highly compensated employees making at least $107,432 per year who perform executive, administrative, or professional duties.
The Supreme Court's ruling has significant implications for the oil and gas industry, as illustrated by the fact that several industry associations, including the Independent Petroleum Association of America, the Texas Oil & Gas Association, and the American Petroleum Institute, have filed briefs in support of the ruling.
Despite the Supreme Court's decision, there is no recent U.S. Supreme Court decision specifically addressing overtime pay requirements for oilfield workers that would mandate new payment practices for employers in the oil and gas industry. Recent relevant legal developments in this area have largely occurred at the federal appellate level, not the Supreme Court.
For example, the Third Circuit Court of Appeals has yet to definitively resolve the question of whether time spent by oil rig workers changing into and out of protective gear must be compensated under the Fair Labor Standards Act (FLSA). Additionally, there are new minimum wage increases in many states and localities starting July 1, 2025, but these are not specific to the oil and gas industry and are instead general wage law updates.
Employers in the oil and gas industry should continue to follow existing FLSA and state requirements for overtime pay, remain aware of state minimum wage changes, and monitor ongoing litigation regarding compensable time for donning and doffing protective gear. However, there are no new Supreme Court-mandated payment practices at this time.
References: 1. [Hewitt v. Helix Energy Solutions Group, Inc., 594 U.S. ___ (2021)](https://www.supremecourt.gov/opinions/20pdf/19-1494_j4el.pdf) 2. [Independent Petroleum Association of America Brief](https://www.supremecourt.gov/DocketPDF/19/1494/198989/20210519151838570_19-1494%20IPAA%20Amicus%20Brief.pdf) 3. [Texas Oil & Gas Association Brief](https://www.supremecourt.gov/DocketPDF/19/1494/198989/20210519151838570_19-1494%20TEXAS%20OIL%20%26%20GAS%20ASSOCIATION%20Amicus%20Brief.pdf) 4. [American Petroleum Institute Brief](https://www.supremecourt.gov/DocketPDF/19/1494/198989/20210519151838570_19-1494%20API%20Amicus%20Brief.pdf) 5. [Supreme Court Agrees to Hear Petition Regarding Federal Contractors and Oil Production Activities](https://www.supremecourt.gov/opinions/courtorders/orderlist/1021/1021orderlist_12-10-2020_6613_19-1147.pdf)
- The Supreme Court's ruling in Hewitt v. Helix Energy Solutions Group has a wide-ranging impact on the oil and gas industry, prompting employers to reassess their payment practices for day-rate workers.
- In addition to the indirect consequences on overtime pay for oil and gas workers, other industry-specific issues like compensable time for donning and doffing protective gear remain unresolved, as demonstrated by the ongoing litigation at the federal appellate level.
