Fifth Circuit: Clarity on Highly Compensated Employee Exception to FLSA Overtime Requirements
All Employers with LA, MS, and TX Employees
August 21, 2019
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In Faludi v. U.S. Shale Solutions, the Fifth Circuit Court of Appeal confirmed that an employee’s guaranteed day rate satisfied the Fair Labor Standard Act’s (FLSA) highly compensated employee (HCE) exemption, even though the employee was only paid twice monthly. The HCE threshold—which currently requires the employee to be paid more than $100,000 per year and at least $455 a week on a salary or fee basis—only requires that the employee “regularly receive[s]” the predetermined amount on a weekly or less frequent basis. There is no requirement that the cash amount be calculated on weekly or less basis.
In addition, the Fifth Circuit also stated that the amount the HCE is paid is not required to bear a “reasonable relationship” to the amount actually earned. Employers should take care when setting highly compensated exempt employee pay to ensure compliance with FLSA requirements.
- Have highly compensated exempt employee pay reviewed for consistency with this ruling.
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Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.
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