Supreme Court: High earners can still collect overtime

One issue that people often face when it comes to understanding and protecting their rights in the workplace is oversimplifying certain matters. When workers do this, they could be missing out on money and benefits that an employer could owe them.

For instance, a common oversimplification is that high earners are not eligible for overtime. However, as a recent U.S. Supreme Court ruling highlights, the issue of overtime pay can be far more nuanced than many workers realize.

All executives are not exempt

The case in question involved an offshore oil rigger who regularly worked more than 80 hours per week. His company classified him as a bona fide executive and claimed he was, therefore, exempt from receiving overtime per the Fair Labor Standards Act.

However, one of the key tests parties must meet to qualify for this executive employee exemptionis that the worker is paid on a salary basis. In the case involving the oil rig worker, the Supreme Court determined that while the oil rigger earned more than $200,000 a year, his employer compensated him for a daily rate, not on a salary basis.

Although the company argued the employee met special criteria for daily-rate workers to be paid on a salary basis, the Court disagreed. Justices determined the man was entitled to receive time-and-a-half for all hours over 40 worked in a week.

Avoiding similar conflicts in your workplace

Whether you are an employer or employee, oversimplifying issues like overtime exemption can trigger costly consequences.

That said, executives can generally be exempt from overtime if they direct others, make hiring and firing decisions and work in a management capacity.

The relevant distinction here is that the employer must pay these parties a predetermined amount, and they must receive the full amount regardless of how many hours they work per week. If the pay varies hourly or daily, the worker could be eligible for overtime, no matter how much they earn.

Meeting one criterion for exemption but not others affects eligibility, so it is crucial to seek legal guidance regarding questions or concerns about overtime.