Last week in Helix Energy Solutions Group, Inc. v. Hewitt, the Supreme Court affirmed employees must be paid a fixed salary of $684.00 per week to be considered “exempt” under the popular administrative, executive, and professional exemptions. The case involved Michael Hewitt, an oil rig worker who was paid rates that varied on a daily basis. Even though he made over $200,000 per year, this did not allow his employer to escape the fixed weekly requirement.   Justice Kagan, writing for the majority stated: “Most simply put, an employee paid on an hourly basis is paid by the hour, an employee paid on a daily basis is paid by the day, and an employee paid on a weekly basis is paid by the week.”  Based on this decision, Helix will need to audit relevant periods of Hewitt’s employment and calculate all the overtime to which he was entitled but was not paid.  In addition to backpay, Helix will also be responsible for Hewitt’s attorneys’ fees and liquidated damages totaling three times the backpay award.

What should you do in response to this decision? It is a good time for all employers to conduct an internal audit to make sure they are properly classifying employees as “exempt” and “non-exempt” in accordance with state and federal law.  This means not only paying certain exempt employees a fixed weekly salary, but also making sure those employees are actually performing the duties required for the exemption.  In addition, employers should ensure non-exempt employees are being properly paid for all hours worked, and overtime when applicable.