Energy services company obtains reversal of adverse overtime exemption ruling

Client(s) Energy services company

In an interlocutory appeal, the Fifth Circuit agreed with Jones Day that a district court had erred by holding that safety managers employed by Jones Day's client were ineligible for exemptions from the Fair Labor Standards Act ("FLSA") overtime rules. The district court believed the employees were not paid on a "salary basis" within the meaning of the applicable regulations because they were only paid their weekly salary for weeks in which they performed work, and also received additional compensation above their weekly salary for time spent beyond the ordinary workweek. The Fifth Circuit reversed and remanded. As the unanimous panel explained, the FLSA regulations expressly provide that salaried employees need not be paid for weeks in which they perform no work, and expressly allow for additional compensation beyond a salary, including on an hourly basis. This decision reaffirms the conventional understanding of the regulations, providing important certainty for employers, especially those in the energy industry where this sort of compensation structure is not uncommon.