Filed: Dec. 21, 2020
Latest Update: Dec. 22, 2020
Case: 19-20023 Document: 00515681284 Page: 1 Date Filed: 12/21/2020
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
No. 19-20023 December 21, 2020
Lyle W. Cayce
Clerk
Michael J. Hewitt,
Plaintiff—Appellant,
versus
Helix Energy Solutions Group, Incorporated; Helix
Well Ops, Incorporated,
Defendants—Appellees.
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:17-CV-02545
Before Wiener, Higginson, and Ho, Circuit Judges.
James C. Ho, Circuit Judge:
Our prior opinion in this case is withdrawn, and the following is
substituted in its place. The petition for rehearing en banc remains pending.
***
The Fair Labor Standards Act establishes a standard 40-hour work
week by requiring employers to pay a 50 percent overtime penalty for any
time worked over 40 hours per week. See 29 U.S.C. § 207(a). Many people
do not think of overtime pay as a penalty on the employer, but as a benefit to
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the employee. But that is not the only way—and perhaps not even the proper
way—to understand the Act. Historically, the FLSA has been understood to
“reduce unemployment,” as well as to protect workers from excessive hours,
by encouraging employers to hire two workers to work 40 hours rather than
one worker to work 80 hours. Hence the use of the term “penalty.” See, e.g.,
Mechmet v. Four Seasons Hotels, Ltd., 825 F.2d 1173, 1176 (7th Cir. 1987)
(Posner, J.) (explaining that Congress enacted the FLSA in part “to spread
work and thereby reduce unemployment, by requiring an employer to pay a
penalty for using fewer workers to do the same amount of work as would be
necessary if each worker worked a shorter week”). See also Overnight Motor
Transp. Co. v. Missel,
316 U.S. 572, 577 (1942) (“[O]ne of the fundamental
purposes of the Act was to induce worksharing and relieve unemployment by
reducing hours of work.”) (quotations omitted).
These principles apply, of course, only to those workers who are in
fact covered by the Act. Congress exempted “bona fide executive,
administrative, [and] professional” employees from the overtime laws. 29
U.S.C. § 213(a)(1). And it expressly authorized the Secretary of Labor to
promulgate regulations to further “define[] and delimit[]” those terms. Id.
This case involves a worker who is purportedly an “executive”
employee under the regulations—and a “highly compensated” one at that,
earning over $200,000 per year. See 29 C.F.R. § 541.100 (executive
employees);
id. § 541.601 (highly compensated employees). But the
precedent we establish here will equally govern lower paid “administrative”
and other employees as well, who receive “not less than $684 per week,” or
$35,568 per year. See
id. § 541.200 (administrative employees).
That is because this appeal turns on a legal question common to all
executive, administrative, and professional employees—and to the modestly
and highly compensated alike: whether a worker is paid “on a salary basis”
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under § 541.602. See id. § 541.100(a)(1); id. § 541.200(a)(1);
id.
§ 541.300(a)(1); id. § 541.601(b)(1). (The regulations also exempt employees
paid on a “fee basis,” but that is not an issue in this appeal.)
Helix Energy Solutions Group paid Michael Hewitt a daily rate.
Under the regulations, an employee whose pay is computed on a daily basis—
rather than on a weekly, monthly, or annual basis—could in theory be
regarded as paid on a “salary basis” under § 541.602. But the regulations are
explicit that special rules apply when it comes to daily rate workers:
An exempt employee’s earnings may be computed on an hourly,
a daily or a shift basis, without losing the exemption or violating the
salary basis requirement, if the employment arrangement also
includes a guarantee of at least the minimum weekly required
amount paid on a salary basis regardless of the number of
hours, days or shifts worked, and a reasonable relationship
exists between the guaranteed amount and the amount actually
earned.
Id. § 541.604(b) (emphasis added).
So a daily rate worker can be exempt from overtime—but only “if”
two conditions are met: the minimum weekly guarantee condition and the
reasonable relationship condition. The employer here does not even purport
to meet both of these conditions. Instead, the employer candidly asks us to
ignore those conditions.
But “if” means “if”—not “irrespective of.” And respect for text
forbids us from ignoring text. Respect for text thus requires us to hold that
Helix is subject to the requirements of § 541.604(b). We accordingly reverse
and remand for further proceedings.
I.
Hewitt worked as a tool pusher for Helix for over two years. In that
position, Hewitt managed other employees while on a “hitch”—that is,
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while working offshore on an oil rig. Each hitch lasted about a month.
According to the summary judgment record, Helix paid Hewitt based solely
on a daily rate.
Helix concedes that it required Hewitt to work over forty hours per
week. Helix nevertheless attempts to avoid the FLSA overtime penalty by
characterizing Hewitt as either an executive or highly compensated
employee—both of which are exempt from the FLSA overtime
requirements. See id. § 541.100 (executive employees);
id. § 541.601 (highly
compensated employees). 1
To prevail under either formulation, Helix must show that it paid
Hewitt on a “salary basis” as defined by the regulations. Id.
§§ 541.100(a)(1), .600(a), .601(b)(1). (Alternatively, Helix could attempt to
invoke the highly compensated employee exemption by showing that it paid
Hewitt on a “fee basis”—but it has made no such argument in this appeal.
See
id. §§ 541.601(b)(1), .605.)
Hewitt contends that Helix did not pay him on a “salary basis”
because the company calculated his pay using a daily rate but did not satisfy
the requirements of § 541.604(b). Helix responds that it was not required to
comply with § 541.604(b).
The district court agreed with Helix and granted the company
summary judgment. Hewitt v. Helix Energy Sols. Grp., 2018 WL 6725267, at
*3–*4 (S.D. Tex. Dec. 21, 2018). This appeal followed. We review the
1
We note that “highly compensated employees” are simply a subset of exempt
executive, administrative, or professional employees. See, e.g., Coates v. Dassault
Falcon Jet Corp., 961 F.3d 1039, 1042 n.2 (8th Cir. 2020) (“Although the parties and
the district court refer to a ‘highly compensated employee exemption,’ this is a less
burdensome way to prove an executive, administrative, or professional exemption, not
a separate exemption.”); see generally 29 C.F.R. § 541.601(c).
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district court’s interpretation of the applicable Labor Department
regulations de novo. See Davis v. Signal Int’l Texas GP, L.L.C., 728 F.3d 482,
488 (5th Cir. 2013).
II.
There are multiple components to the salary basis test, as articulated
in various Labor Department regulations. There is the “[g]eneral rule”—
and then there are various exceptions and provisos to that general rule. To
properly understand and apply the salary basis test, we must examine not
only the general rule, but also any exceptions or provisos that bear upon a
particular fact pattern—such as the daily rate issue presented in this appeal.
A.
The “[g]eneral rule” begins as follows: “An employee will be
considered to be paid on a ‘salary basis’ within the meaning of this part if the
employee regularly receives each pay period on a weekly, or less frequent basis,
a predetermined amount constituting all or part of the employee’s
compensation.” 29 C.F.R. § 541.602(a) (emphasis added). The general rule
further provides that “an exempt employee must receive the full salary for
any week in which the employee performs any work without regard to the
number of days or hours worked.” Id. § 541.602(a)(1) (emphasis added).
The emphasis on being paid “on a weekly, or less frequent basis”—
and “without regard to the number of days or hours worked”—begs the
question: What if an employee’s compensation is computed on a daily
basis—rather than on a weekly, monthly, or annual basis? In other words,
what if the employee is not paid “on a weekly, or less frequent basis,” but
instead with “regard to the number of days or hours worked”?
In sum: Can a daily rate employee ever be regarded as being paid on a
“salary basis” and therefore exempt from overtime pay under the FLSA?
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To answer that question, we must look beyond the “[g]eneral rule,”
and turn instead to one of the provisos promulgated by the Secretary. And
as it turns out, the answer is yes—a daily rate employee can qualify under the
salary basis test—but only “if” certain other conditions are met.
The Sixth and Eighth Circuits have so held. And we agree: “The text
of § 541.602(a) does not tell us what to do when an employee’s salary is not
clearly calculated ‘on a weekly, or less frequent basis.’” Hughes v. Gulf
Interstate Field Servs. Inc., 878 F.3d 183, 189 (6th Cir. 2017). Instead, we must
turn to a “helpful” “neighboring provision”—namely, § 541.604(b).
Id.
Similarly, the Eighth Circuit concluded that the “general definition” of
salary basis as set forth in § 541.602(a) is “subject to numerous interpretive
rules.” Coates v. Dassault Falcon Jet Corp.,
961 F.3d 1039, 1042 (8th Cir.
2020). And the first example that circuit gave was § 541.604(b). See
id.
(quoting § 541.604(b)); see also
id. at 1048 (relying on Hughes and
§ 541.604(b)).
So we turn to § 541.604(b). That regulation makes clear that an
employer can pay an exempt employee an amount “computed on . . . a daily
. . . basis, without losing the exemption or violating the salary basis
requirement.” 29 C.F.R. § 541.604(b). But that is so only “if” two
conditions are met. Id. Those conditions are as follows: First, “the
employment arrangement also includes a guarantee of at least the minimum
weekly required amount paid on a salary basis regardless of the number of
hours, days or shifts worked.”
Id. Second, “a reasonable relationship exists
between the guaranteed amount and the amount actually earned.”
Id.
This two-prong test protects employees in two ways. First, the
“minimum weekly” guarantee ensures that a daily rate employee still
receives a guaranteed amount each week “regardless of the number of hours,
days or shifts worked.”
Id. In other words, it sets a floor for how much the
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employee can expect to earn, “regardless” of how many hours, days, or shifts
the employee works. Id. Second, the reasonable relationship test ensures
that the minimum weekly guarantee is not a charade—it sets a ceiling on how
much the employee can expect to work in exchange for his normal paycheck,
by preventing the employer from purporting to pay a stable weekly amount
without regard to hours worked, while in reality routinely overworking the
employee far in excess of the time the weekly guarantee contemplates. And
as the Labor Department has explained, without the reasonable relationship
test, “employees could routinely receive weekly pay of $1,500 or more and
yet be guaranteed only the minimum required $455 (thus effectively allowing
the employer to dock the employee for partial day absences).” Dep’t of
Labor, Defining and Delimiting the Exemptions for
Executive, Administrative, Professional, Outside Sales
and Computer Employees; Final Rule, 69 Fed. Reg. 22,121,
22,184 (2004). But “[s]uch a pay system would be inconsistent with the
salary basis concept and the salary guarantee would be nothing more than an
illusion.”
Id. (emphasis added). See also Brock v. Claridge Hotel & Casino,
846 F.2d 180, 185 (3rd Cir. 1988) (explaining that an employee is not paid on
a “salary basis” if “the employee’s usual weekly income” calculated on an
hourly basis “far exceeds the ‘salary’ guarantee” the employer provided).
So an employer can pay a daily rate under § 541.604(b) and still satisfy
the salary basis test of § 541.602—but only if the employer complies with
both the minimum weekly guarantee requirement and the reasonable
relationship test.
Helix does not comply with either prong. First, it pays Hewitt a daily
rate without offering a minimum weekly required amount that is paid
“regardless of the number of hours, days or shifts worked.” 29 C.F.R.
§ 541.604(b). Rather, Helix theorizes that the daily rate that it pays Hewitt
is a minimum weekly guaranteed amount—even though it is the very
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opposite of an amount that is paid “regardless of the number of . . . days . . .
worked.” Id. Second, Helix does not comply with the reasonable
relationship test. To the contrary, it pays Hewitt orders of magnitude greater
than the minimum weekly guaranteed amount theorized by Helix—namely,
Hewitt’s daily rate. Not surprisingly, Helix does not even bother to contend
that it satisfies the reasonable relationship test.
Instead, Helix contends that it is not required to comply with
§ 541.604(b), because Hewitt is a “highly compensated employee” under
§ 541.601. In other words, in Helix’s view, if an employee satisfies § 541.601,
there is no need to additionally satisfy § 541.604(b).
But the text of § 541.601 says precisely the opposite. It makes clear
that it’s not enough that the employee receives a “total annual compensation
of at least $107,432.” Id. § 541.601(a)(1). It also requires that that “‘[t]otal
annual compensation’ must include at least $684 per week paid on a salary . . .
basis.”
Id. § 541.601(b)(1) (emphases added). So Hewitt cannot be a “highly
compensated employee” under § 541.601 unless his total annual
compensation satisfies the salary basis test. And as we’ve already explained,
the only way for an employee paid on a daily rate to satisfy the salary basis
test is to comply with the two conditions of § 541.604(b).
Moreover, the same “salary basis” language that appears in the highly
compensated employee regulation also appears in the regulations governing
all executive, administrative, and professional employees—including
employees who make far less than $107,432 per year. Id. § 541.601(a)(1).
Like their “highly compensated” counterparts, all other executive,
administrative, and professional employees are exempt if they are
“[c]ompensated on a salary basis.”
Id. § 541.100(a)(1). See also
id.
§ 541.200(a)(1) (same); id. § 541.300(a)(1) (same). And that is so even
though they receive much less compensation—“not less than $684 per
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week,” or $35,568 per year. Id. § 541.100(a)(1); § 541.200(a)(1) (same);
id.
§ 541.300(a)(1) (same). We can find no textual or other principled basis for
exempting highly compensated employees, but not all other executive,
administrative, and professional employees, from § 541.604(b).
B.
Our reading of the regulations finds support not only from the Sixth
and Eighth Circuits, but also in repeated statements by the Labor
Department. Those statements confirm that a daily rate employee falls
outside the general rule, and thus must qualify under some other exception
or proviso such as § 541.604(b).
For example, when the Department promulgated § 541.604(b) in
2004, it explained that the “[p]roposed section 541.604(b) provided that an
exempt employee’s salary may be computed on an hourly, daily or shift basis,
if the employee is given a guarantee of at least the minimum weekly required
amount paid on a salary basis regardless of the number of hours, days or shifts
worked, and ‘a reasonable relationship exists between the guaranteed amount
and the amount actually earned.’” Defining and Delimiting the
Exemptions, 69 Fed. Reg. at 22,183. “[T]he reasonable relationship
requirement applies . . . when an employee’s actual pay is computed on an
hourly, daily or shift basis.” Id.
And just this year, the Labor Department reaffirmed this point within
the specific context of “highly compensated employees” who are “paid a day
rate.” U.S. Dep’t of Labor, Wage & Hour Div., Opinion Letter FLSA2020-
13,
2020 WL 5367070, at *1 (Aug. 31, 2020). In an opinion letter, the
Administrator of the Wage and Hour Division agreed with our previous
ruling in this case, noting that “[t]he Fifth Circuit recently addressed a
similar question, holding that an employee paid a daily rate, with no minimum
weekly guarantee, is not paid on a salary basis” under “the plain language of
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the salary basis test.” Id. at *4 (emphasis added) (citing Hewitt v. Helix
Energy Sols. Grp.,
956 F.3d 341, 342–43 (5th Cir. 2020)). “The Hewitt
plaintiff, like the employees here, was paid per day of work.”
Id. “[S]o he
was paid ‘with’ (not ‘without’) ‘regard to the number of days or hours
worked,’ in direct conflict with the plain language of the salary basis test.”
Id. (some quotations omitted).
Moreover, the Administrator further explained that this “conclusion
is further supported by [the Department] having specified certain instances
when exempt executive, administrative, or professional employees may be
paid a daily rate while not more generally permitting a day rate to satisfy the
salary basis test.”
Id. at *4 n.27 (noting as an example 29 C.F.R. § 541.709,
which exempts certain motion-picture employees from complying with the
salary basis test at all). So the Department “knows how to include in the
exemption certain employees whose pay is calculated on a daily basis; it has
chosen not to do so broadly.”
Id. “The familiar ‘easy-to-say-so-if-that-is-
what-was-meant’ rule of interpretation has full force here.”
Id. (cleaned up)
(quoting C.I.R. v. Beck’s Estate,
129 F.2d 243, 244 (2nd Cir. 1942)). And that
same logic of course applies to other daily rate provisions like § 541.604(b).
We see no reason not to agree with the respected Administrator.
C.
Helix contends that our understanding of the salary basis test conflicts
with Litz v. Saint Consulting Group, Inc., 772 F.3d 1 (1st Cir. 2014), and Anani
v. CVS RX Services, Inc.,
730 F.3d 146 (2nd Cir. 2013). To be sure, there is
some language in Anani that appears to be in tension with the approach taken
here. See
Anani, 730 F.3d at 149 (“We perceive no cogent reason why the
requirements of C.F.R. § 541.604 must be met by an employee meeting the
requirements of C.F.R. § 541.601.”); see also
Litz, 772 F.3d at 5 (quoting
Anani but noting that “[p]laintiffs ‘do not take a position on this issue’”).
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But on closer analysis, we see no actual conflict here. Unlike Hewitt,
the employees in Litz and Anani were paid a weekly guaranteed salary
“regardless of the number of hours, days or shifts worked.” 29 C.F.R.
§ 541.604(b). See Litz, 772 F.3d at 2 (employees were “guaranteed a
minimum weekly salary of $1,000 whether they bill[ed] any hours or not”)
(emphasis added);
Anani, 730 F.3d at 148 (employee’s “base weekly salary
was guaranteed, i.e. to be paid regardless of the number of hours . . . actually
worked”) (emphasis added). In other words, Litz and Anani were in fact
weekly rate cases. So those cases have nothing to say about Hewitt, who was
paid solely based on a daily rate.
Indeed, the Sixth Circuit has made precisely this observation already.
As that court explained, “the situations in which [Litz and Anani] ignore
§ 541.604(b) are situations in which the textual requirements of 29 C.F.R.
§§ 541.601, 541.602(a) are already clearly met.” Hughes, 878 F.3d at 189. In
other words, “Anani and Litz involved plaintiffs who . . . were undisputedly
guaranteed weekly base salaries above the qualifying level.”
Id. at 189–90.
We agree with the Sixth Circuit: There is no split. 2
D.
Amici offer two additional points in hopes of bolstering Helix’s
position.
2
Moreover, if there is a split, it’s one that has existed since 2017, when the
Sixth Circuit decided Hughes. What’s more, it seems telling that, since Hughes, no
circuit has seen fit to join the First and Second Circuits in this alleged split. Quite the
opposite, in fact: Just this year, both the Eighth Circuit and the Labor Department
sided with the Sixth Circuit (and with our circuit) over Litz and Anani. See Coates, 961
F.3d at 1048 (relying on Hughes and § 541.604(b)); Opinion Letter FLSA2020-13,
2020
WL 5367070 (relying on Hewitt). Even the dissent acknowledges as much. Post, at 31–
32 (noting Hughes and Coates);
id. at 32–33 (noting Opinion Letter FLSA2020-13).
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First, amici suggest that, because Hewitt was already well
compensated, extending overtime protection to him conflicts with the
purpose of the FLSA.
But that is wrong as a matter of both text and purpose. To begin with,
it should go without saying that we are governed by the text of the regulation,
not some unenumerated purpose. See Encino Motorcars, LLC v. Navarro, 138
S. Ct. 1134, 1142 (2018). If the Secretary had wanted to exempt employees
based solely on the fact that they are well compensated, the regulations could
have been written accordingly. In fact, as the Labor Department has publicly
noted, “a number of commenters” have “urge[d] the Department to
abandon the salary basis test entirely, arguing that [the] requirement serves
as a barrier to the appropriate classification of exempt employees.”
Defining and Delimiting the Exemptions, 69 Fed. Reg. at
22,176. But the Secretary has so far rejected those requests, and instead
required both that the employee be paid at least a certain amount of
compensation and that the compensation be paid “on a salary basis.” See
id.
(“[T]he Department has decided that [the salary basis test] should be
retained.”). See also 3 Employ. Coordinator Comp. § 3:26 (“Note
that a highly compensated employee must still meet the requirements of the
salary basis test, being paid at least $684 on a salary basis, to be exempt from
the overtime requirements. Thus, an employee earning over $100,000 will
not necessarily be a highly compensated employee if the employee’s
compensation is paid on an hourly basis.”).
Moreover, amici’s purposivist argument is not just anti-textual—it
also fails on its own terms. Amici suggest that Hewitt is well paid, so he has
no right to complain about his hours. But it should surprise no one that many
people value more free time over more money. And honoring that preference
has always been at the heart of the FLSA. As we noted at the outset, courts
have historically understood overtime pay not so much as a benefit to
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employees (although it obviously is), but as a “penalty” to employers—a
penalty specifically designed to make it more expensive for an employer to
hire one worker to work 80 hours than two workers to work 40 hours. See,
e.g., Overnight Motor Transp., 316 U.S. at 577;
Mechmet, 825 F.2d at 1176. The
overtime penalty helps “reduce unemployment” by encouraging employers
to add more workers rather than more hours.
Id. So amici’s approach is not
just contrary to text—it also undermines a core purpose of the FLSA.
Second, amici complain that faithful application of the regulatory text
will wreak havoc on the oil and gas industry.
But of course, the salary basis test applies across countless industries,
not just oil and gas—and if the oil and gas industry doesn’t like it, it can seek
an industry exemption, just as other industries have done. See, e.g., 29 C.F.R.
§ 541.709 (exempting certain motion-picture employees from complying
with the salary basis test).
Perhaps one reason why no oil and gas exemption exists to date is
because it is unclear why that particular industry would be uniquely harmed
by the ordinary application of the Secretary’s salary basis test. After all, there
would appear to be any number of ways that companies like Helix could avoid
paying overtime under the FLSA. They could pay Hewitt a comparable
weekly or monthly salary, rather than a daily rate. Or they could pay him a
fee for each hitch—or comply with the “fee basis” test in some other way.
See id. §§ 541.601(b)(1), .605. (Alternatively, they could hire more tool
pushers, so that none of them has to work more than forty hours. Admittedly,
that would increase costs to the company. But that would also serve a core
objective of the FLSA, namely, to increase employment. If the industry does
not like that result, its complaint lies not with Hewitt—or this court—but
with Congress.)
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Barring all of that, the industry can lobby Congress or the Secretary of
Labor to amend the salary basis test—either on behalf of all employers, or for
just those in the oil and gas business. But what the industry cannot do to ask
judges to “alter the text [of the regulations] in order to satisfy . . . policy
preferences.” Barnhart v. Sigmon Coal Co., 534 U.S. 438, 462 (2002).
“These are battles that should be fought among the political branches and
the industry. Those parties should not seek to amend the [regulations] by
appeal to the Judicial Branch.”
Id.
***
If we were limited to the statutes enacted by Congress, we might very
well have ruled for Helix in this matter. But we are also bound by regulations
issued by the Secretary of Labor. And those regulations exempt daily rate
employees from overtime—but only “if” that employee’s compensation
meets certain conditions. Helix asks us to ignore those conditions. But we
are not at liberty to do so. And certainly not on the ground that the oil and
gas industry warrants special treatment not supported by the text, or because
Hewitt already makes enough money and thus doesn’t deserve FLSA
protection. Our duty is to follow the law, not to vindicate anyone’s policy
preferences. Our ruling today construes the salary basis for everyone—not
just the oil and gas industry. Likewise, the salary basis test applies not only
to highly compensated employees like Hewitt, but also to all other executive,
administrative, and professional employees—including those who earn less
than a fifth of what Hewitt makes.
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We reverse the grant of summary judgment to Helix and remand for
further proceedings consistent with this opinion. 3
3
On remand, Helix may be able to demonstrate that it paid Hewitt on a “fee
basis” under 29 C.F.R. § 541.605, or that it complied with another regulatory
exemption from the overtime requirements. The parties can resolve those issues, along
with any other factual disputes, on remand.
Hewitt also asks for liquidated damages. See 29 U.S.C. § 216(b). But the
district court decided this case on summary judgment. Issues relating to liability,
including whether liquidated damages are appropriate, see, e.g., Lowe v. Southmark
Corp., 998 F.2d 335, 337 (5th Cir. 1993), are best left to the district court in the first
instance.
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James C. Ho, Circuit Judge, concurring:
The dissent begins by expressing “due respect” to the majority—and
then ends with a well-known literary quote about idiots. Post, at 24, 37 & n.39.
It concludes that my opinion in this case is worth “nothing.” Id. at 37.
To some, statements like these may be reminiscent of the wisdom of
Ricky Bobby. See Talladega Nights: The Ballad of Ricky
Bobby (2006) (“What? I said ‘with all due respect!’”). To others, it may
call to mind a recent observation by one of our respected colleagues: “More
often than not, any writing’s persuasive value is inversely proportional to its
use of hyperbole and invective.” Keohane v. Fla. Dep’t of Corrs. Sec’y, __
F.3d __, __ (11th Cir. 2020) (Newsom, J., concurring in the denial of
rehearing en banc).
As the adage goes, the loudest voice in the room is usually the weakest.
***
“Reasonable jurists can apply traditional tools of construction and
arrive at different interpretations of legal texts.” Gamble v. United States, 139
S. Ct. 1960, 1986 (2019) (Thomas, J., concurring). For example, in JCB, Inc.
v. Horsburgh & Scott Co.,
912 F.3d 238 (5th Cir. 2018), I observed that “Judge
Duncan and I emphatically agree that the proper function of the judiciary is
to construe statutory texts faithfully . . . . We nevertheless reach different
conclusions as to the particular text before us, as textualists sometimes do.”
Id. at 242 (Ho, J., concurring). Some laws are “capable of competing
plausible interpretations among reasonable jurists of good faith.”
Id.
But with “due respect,” if there is a reasonable textual basis for
refusing to apply 29 C.F.R. § 541.604(b) in cases governed by § 541.601
involving highly compensated employees, I cannot find one in the dissent.
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1. The dissent’s entire textual basis for refusing to apply
§ 541.604(b) in cases involving § 541.601 amounts to this: § 541.601 does not
mention § 541.604. To quote the dissent: “§ 541.601 is devoid of any
reference to § 541.604(b). It instead mentions only § 541.602.” Post, at 26.
See also id. at 34 (same).
But if the dissent is right that we shouldn’t apply § 541.604(b) to any
provision that does not explicitly mention it, then we should also refuse to
apply § 541.604(b) to any executive, administrative, or professional
employee—regardless of how much or little he is compensated. After all, the
regulations governing executive, administrative, and professional employees
are all indistinguishable from § 541.601: All of them cite § 541.602—and
none of them cite § 541.604(b). See 29 C.F.R. §§ 541.100, .200, .300.
Indeed, under the dissent’s reading, we would never apply § 541.604(b)—
because §§ 541.602 and 541.604(b) do not expressly cross-reference each
other. The dissent’s theory would thus render § 541.604(b) a dead letter—
contrary to the canon against surplusage.
I suggest that the following is a better reading of the text: None of
these provisions needs to cite § 541.604(b), because § 541.604(b) itself makes
clear that it is modifying the “salary basis” test of § 541.602. See id.
§ 541.604(b) (laying out the circumstances in which an “exempt employee’s
earnings may be computed on an hourly, daily, or a shift basis[] without . . .
violating the salary basis requirement”) (emphasis added).
Besides which, there is nothing remarkable about reading one legal
provision in light of another—even in the absence of an express cross-
reference. See, e.g., Lockhart v. United States, 546 U.S. 142, 148 (2005)
(Scalia, J., concurring) (collecting cases holding that “Congress . . . may
[enact] exempt[ions] . . . by ‘fair implication’—that is, without an express
statement”) (emphasis added) (citing, e.g., Warden v. Marrero,
417 U.S. 653,
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659-660 n.10 (1974); Marcello v. Bonds, 349 U.S. 302, 310 (1955); Hertz v.
Woodman,
218 U.S. 205, 218 (1910); Great N. Ry. Co. v. United States,
208
U.S. 452, 465 (1908)). Indeed, it is a bedrock principle of statutory
interpretation that “text[s] must be construed as a whole.” Antonin
Scalia & Bryan A. Garner, Reading Law: The
Interpretation of Legal Texts 167 (2012). See also
id. (“Perhaps
no interpretive fault is more common than the failure to follow the whole-
text canon, which calls on the judicial interpreter to consider the entire text,
in view of its structure and of the physical and logical relation of its many
parts.”).
Under the dissent’s brand of textualism, by contrast, courts may read
a provision out of the law altogether, on the ground that no other provision
of law expressly cites it. That is a peculiar approach to textualism. It is no
wonder that the dissent does not cite a single court that has ever embraced
its cross-referencing theory of interpretation.
2. The dissent offers a second justification for its interpretation.
It suggests that applying § 541.604(b) here would somehow render § 541.601
“superfluous.” Post, at 28 (quoting Anani v. CVS RX Services, Inc., 730 F.3d
146, 149 (2nd Cir. 2013)).
But that can’t be right. The dissent forgets that § 541.604(b) only
applies to those whose pay is “computed on an hourly, a daily or a shift
basis.” 29 C.F.R. § 541.604(b). It doesn’t apply to weekly, monthly, and
annually salaried workers at all. So how can applying § 541.604(b) to daily
rate workers render § 541.601 surplusage—when § 541.604(b) would have
no effect on highly compensated weekly, monthly, and annually salaried
workers governed by § 541.601? The answer is that it can’t.
So what gives? I can’t help but wonder if the dissent’s surplusage
argument is premised on a basic misunderstanding of § 541.601. Perhaps the
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dissent believes that the Secretary of Labor promulgated § 541.601 so that
the highly compensated don’t have to comply with salary basis requirements
like § 541.604(b). Because if that’s the premise, then applying § 541.604(b)
to cases involving § 541.601 might very well render the latter provision
surplusage.
But if that’s the dissent’s premise, it’s demonstrably wrong. As the
majority notes, ante, at 8, § 541.601 still requires the highly compensated to
be “paid on a salary . . . basis.” 29 C.F.R. § 541.601(b)(1). So the Secretary
did not promulgate § 541.601 to alter the salary basis requirement for the
highly compensated—rather, the Secretary promulgated § 541.601 to alter
the “executive, administrative, or professional” duties requirement for the
highly compensated. Indeed, § 541.601 expressly tells us so in subsection (c):
“A high level of compensation is a strong indicator of an employee’s exempt
status, thus eliminating the need for a detailed analysis of the employee’s job
duties.” Id. § 541.601(c) (emphasis added).
So it’s not surprising that the Eighth Circuit sides with our majority
here, and not the dissent. See, e.g., Coates v. Dassault Falcon Jet Corp., 961
F.3d 1039, 1042 n.2 (8th Cir. 2020) (“[the] ‘highly compensated employee
exemption[]’ . . . is a less burdensome way to prove an executive,
administrative, or professional exemption”) (citing 29 C.F.R. § 541.601(c)).
It’s likewise unsurprising that the Sixth Circuit sides with our majority
over the dissent. The dissent’s sole authority for its surplusage theory is
Anani. But Anani involved a weekly, not daily, rate employee—as both the
Sixth Circuit and the majority here have pointed out, and the dissent itself
concedes. See Hughes v. Gulf Interstate Field Servs. Inc., 878 F.3d 183, 189–90
(6th Cir. 2017) (“Anani . . . involved [a] plaintiff[] who . . . [was] undisputedly
guaranteed [a] weekly base salar[y] above the qualifying level.”); ante, at 11
(same); post, at 28 (Anani involves an “employee with a guaranteed weekly
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amount”). This case, by contrast, involves a daily rate employee—as the
dissent admits. See post, at 30 (noting “Hewitt’s [] daily rate”).
3. The dissent acknowledges that its approach has been rejected
by the Sixth and Eighth Circuits. It simply accuses the Sixth Circuit of
following “false premise[s],” and dismisses the Eighth Circuit as
“misguided.” Id. at 32.
The dissent likewise admits that its approach has been rejected by the
Labor Department. It concedes that a recent opinion letter issued by the
Department “directly address[es] the question presented in this case.”
Id.
at 32–33. The dissent nevertheless minimizes its importance, claiming that
the letter was simply following our circuit’s prior opinion in this case. To
quote the dissent, “[t]he DOL opinion letter did not ‘call the play’—it is
merely cheerleading after the fact.”
Id. at 33.
It is unclear to me how the dissent thinks this metaphor serves its
cause. I would have thought that the whole point of being a “cheerleader” is
to take sides in a competition between opposing sides. And that is precisely
what the Labor Department did here: If there is a circuit split as the dissent
claims, then the Department took sides in that split by siding with us, as well
as with the Sixth and Eighth Circuits—and not with the dissent.
4. The dissent accuses the majority of engaging in
purposivism. Id. at 34–35. But this is projection. For it is the dissent that
seems to embrace purposivism. The majority disavows it—discussing
legislative intent and purpose only to explain how amici’s purposivist
arguments (echoed by the dissent) fail on their own terms. Ante, at 11–14.
a. For example, the dissent begins its analysis by appealing to
“common sense.” Post, at 25. But as the majority responds, it is common
sense that many people prefer more free time over more money. Ante, at 12.
It is common sense that workers like Hewitt might not want to work a 16-
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hour day (or an 80-hour week), for the exact same pay that they would have
earned working far fewer hours over the same number of days. It is common
sense that free time is valuable to workers at every level of compensation—
and not just to lesser paid employees. And so it is unsurprising that these
principles would be reflected in FLSA regulations.
b. The dissent insists that “[i]t would be redundant and a waste
of resources” to force the oil and gas industry to hire more tool pushers. Post,
at 35. Yet the dissent admits that “the FLSA was enacted to encourage
employers to hire more employees.” Id.
Besides which, what’s so hard about a daily rate worker complying
with § 541.604(b) anyway? All you have to do is meet the minimum weekly
guarantee and reasonable relationship requirements. Heck, the regulation
even provides a helpful example of how to do this: “[A]n exempt employee
guaranteed compensation of at least $725 for any week in which the employee
performs any work, and who normally works four or five shifts each week,
may be paid $210 per shift without violating the $684-per-week salary basis
requirement.” 29 C.F.R. § 541.604(b).
So all it takes here is just one simple adjustment. Helix paid Hewitt
$963 per day. So imagine that Helix also assured Hewitt that he would never
earn less than, say, $4,000 per week—even during those weeks in which he
worked four days or less. That simple adjustment would be enough to satisfy
the salary basis test by satisfying both prongs of § 541.604(b): Hewitt would
be paid a minimum weekly guarantee of $4,000, regardless of the number of
hours, days, or shifts worked. And that guaranteed weekly pay would be
reasonably related to the amount actually earned—consistent with the
example provided in § 541.604(b) itself.
In sum, it is not at all clear why our holding would necessarily require
the industry to hire more tool pushers or otherwise endure significantly
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higher expenses. See also ante, at 13 (noting other potential measures that the
industry could adopt).
c. Perhaps strangest of all, the dissent quotes a snippet of
legislative history from 1997 to support its contention that overtime pay just
shouldn’t apply to high earners. Post, at 34 & nn.35–36. The dissent neglects
to mention that the sentiment it imputes to “Congress” is nothing more than
a floor statement by a lone House member, in support of a proposed FLSA
amendment that never got so much as a vote.
This is not even good purposivism, let alone good textualism.
***
The dissent used to side with the majority on these issues. See Hewitt
v. Helix Energy Sols. Grp., 956 F.3d 341 (5th Cir. 2020)). It once agreed that
“an employer may compute an employee’s earnings on an hourly, a daily or
a shift basis, . . . so long as the employment arrangement also includes a
guarantee of at least the minimum weekly required amount paid on a salary
basis.”
Id. at 344 n.4 (cleaned up) (citing 29 C.F.R. § 541.604(b)).
But now the dissent calls for rehearing en banc. So what’s changed?
Certainly none of the relevant legal texts have changed. To the
contrary, our view has since been reinforced by the Labor Department, as well
as by a(nother) unanimous circuit decision (the Eighth Circuit in Coates).
The only change I’m aware of is that an armada of oil industry amici
now urges us to take this case en banc. According to one amicus, applying
§ 541.604(b) here would “threaten[] the country’s hydrocarbon industry.”
According to other amici, applying § 541.604(b) will “negatively impact[] a
vital industry.” The dissent openly echoes amici’s themes—speaking on
behalf of “[t]hose of us who were born, bred, and educated in the ‘oil
patch.’” Post, at 24. See also, e.g., id. at 26 (applying § 541.604(b) “will have
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lasting, negative repercussions . . . on the petroleum industry”); id. at 36
(applying § 541.604(b) “will likely have devastating effects . . . in the oil and
gas arena”);
id. (quoting amici).
But with “due respect” to “[t]hose of us who were born, bred, and
educated in the ‘oil patch,’”
id. at 24: Those of us who were born, bred, and
educated in textualism are unfamiliar with the “bad for business” theory of
statutory interpretation offered by the dissent under the purported flag of
textualism.
No one of course doubts the importance of the energy industry to the
health and prosperity of our nation. But these are policy arguments that
should be presented to Congress and the Secretary, not the judiciary.
“These are battles that should be fought among the political branches and
the industry”—“not . . . by appeal to the Judicial Branch.” Barnhart v.
Sigmon Coal Co., 534 U.S. 438, 462 (2002). See also ante, at 14 (same).
I remain, as always, willing—indeed, duty bound—to go wherever the
text leads. For it is the text enacted by the political branches that leads—and
the judiciary that follows. If our panel has erred, I will be the first to admit it.
But nothing in the dissent persuades me that anything in the text directs us
to ignore § 541.604(b), or to reject the opinions of the Sixth and Eighth
Circuits and the Labor Department. To the contrary, this case seems by
every indication to fall well within the plain terms of § 541.604(b). Indeed,
why did the Secretary bother to promulgate this provision, if not to govern
daily rate cases just like this? The dissent offers no good reason. And I
cannot conceive of one myself. Accordingly, I concur.
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Jacques L. Wiener, Jr., Circuit Judge, dissenting:
With due respect for my esteemed colleagues in the majority, who in
good faith attempt to apply the regulatory text as written, I am compelled to
dissent.
Those of us who were born, bred, and educated in the “oil patch,”
and who practiced mineral law for decades, are quite familiar with the levels
of personnel who work the various on-shore and off-shore oil rigs and
platforms. First come the geologists and petroleum engineers who make trips
to oil and gas rigs, but who spend most of their time in offices analyzing and
advising owners and promoters. They are analogous to colonels or even
generals in the military. Next, among those who spend all of their worktime
on oil rigs and platforms, the superintendent ranks highest—the equivalent
of captains or even majors. Then come the so-called tool pushers (who never
“push” a “tool”), the equivalent of first or second lieutenants. Tool pushers
oversee and maintain direct contact with the common laborers on the oil and
gas rigs—universally called “roughnecks,” the equivalent of privates or
PFCs.
***
Plaintiff-Appellant Michael Hewitt worked for Defendant-Appellee
Helix Energy Solutions Group, Inc. (“Helix”) as a tool pusher, supervising
approximately twelve to fourteen roughnecks at any given time. The parties
agree that Hewitt made $963 per day for every day that he worked, regardless
of the number of hours per day he worked. 4 His salary totaled more than
4
Hewitt’s pay fluctuated from as low as $871.65 per day to as high as $1,912.32
per day. His daily rate, however, was predetermined by an employment agreement. So
his daily rate was always “predetermined.” See 29 C.F.R. § 541.602(a). At oral
argument the parties referred to his salary as $963 per day, regardless of the number of
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$200,000 per year. Common sense dictates that he was a “highly
compensated employee,” 5 and a very high one indeed. In fact, Hewitt made
more than twice as much as the threshold amount of $100,000 required to be
a highly compensated employee at the time of the then-applicable
regulation. 6 So why, you ask, would such a highly compensated employee be
entitled to overtime? The answer is clear to the panel majority: because (1)
he was not entitled to a guaranteed weekly rate, and (2) there was no
“reasonable relationship” between his take-home pay and his daily rate. To
me, this conclusion ignores common sense.
To determine whether Hewitt was a highly compensated employee
and thus not entitled to overtime under the Fair Labor Standards Act
(“FLSA”), however, we cannot rely on mere common sense; we must look
to the text of the regulation governing this type of employee. The highly
compensated employee exemption states that “an employee with total
annual compensation of at least $107,432 is deemed exempt . . . if the
employee customarily and regularly performs any one or more of the exempt
hours per day he worked. In any event, his salary was indisputably more than $455 per
day—the minimum amount that must be earned by highly compensated employees
under the relevant regulation at the time the incident arose. See id. § 541.601(b)(1)
(2014).
5
See id. § 541.601(a)(1) (2020).
6
See id. § 541.601(b)(1) (2014). The 2014 version of the regulation was the
version in place at the time of Hewitt’s employment. On June 8, 2020, however, the
total annual compensation was changed to at least $107,432, including at least $684 per
week. See
id. § 541.601 (2020). Hewitt’s daily rate of $963 and annual compensation of
$200,000 satisfy either version of the regulation. Throughout the rest of this dissent, I
refer to and use the numbers from the 2020 version of the regulation.
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duties or responsibilities of an executive, administrative or professional
employee.” 7
The parties agree that Hewitt met all of these conditions. So why does
the panel majority require more? It is clear to me as a textualist that if one
looks at § 541.601, there is no requirement that an employee meet §
541.604(b)’s reasonable relationship test. In fact, § 541.601 is devoid of any
reference to § 541.604(b); it states only that the “‘[t]otal annual
compensation’ must include at least $684 per week paid on a salary . . . basis
as set forth in []§ 541.602.” 8 (Note that there is no requirement that the
employee’s pay satisfy § 541.604(b).) The panel majority chooses to look
beyond the text of the regulation at issue and look to an inapplicable
regulation, viz., § 541.604(b).
This was not the law prior to the panel majority’s opinion. And I fear
that the result of the panel majority’s opinion will have lasting, negative
repercussions, not just on the petroleum industry, but on all industries in this
region and in any region that finds the panel majority’s opinion persuasive.
Moreover, it creates an unnecessary circuit split, 9 while purporting not to do
so, by bringing in cases that are inapplicable to the case at hand. 10
7
Id. § 541.601(a)(1).
8
Id. § 541.601(b)(1) (emphasis added).
9
See Anani v. CVS RX Servs., Inc., 730 F.3d 146, 149 (2d Cir. 2013) (“We
perceive no cogent reason why the requirements of C.F.R. § 541.604 must be met by
an employee meeting the requirements of C.F.R. § 541.601.”); Litz v. Saint Consulting
Grp., Inc.,
772 F.3d 1, 2 (1st Cir. 2014) (holding that the reasonable relationship test
does not apply to highly compensated employees and citing Anani).
10
The panel majority says Coates v. Dassault Falcon Jet Corp. and Hughes v. Gulf
Interstate Field Services, Inc. are applicable to this case and that “[t]here is no split”
between these cases, Hewitt’s case, and Anani and Litz. This is wrong, as explained
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I begin, as does the panel majority, by applying the unambiguous
language of the regulation at issue: the highly compensated employee
exemption. Section 541.601 states that “an employee with total annual
compensation of at least $107,432 is deemed exempt[.]” 11 There is one, and
only one, condition: The “[t]otal annual compensation must include at least
$684 per week paid on a salary . . . basis as set forth in []§541.602.” 12
Importantly, the Secretary points us to § 541.602 (the salary basis test), not
to § 541.604(b) (the reasonable relationship test).
By requiring employees meeting the requirements of § 541.601 to also
meet the requirements of § 541.604(b), the panel majority creates tension
where there need not be any. And why is there no tension between
§ 541.604(b) and § 541.602? Because these provisions apply to different
groups of employees. To quote Anani:
below. Moreover, in Hughes, the employees’ daily rate was below the regulatory
minimum, so § 541.604(b) was clearly applicable. See 878 F.3d 183, 185–86 (2017)
(noting that the employees received a letter stating that they were entitled to a daily
rate of $337 per day in addition to their weekly per diem and computer stipend). The
Hughes court also applied the reasonable relationship test because the employees’
salary was not computed on a “weekly, or less frequent basis.”
Id. at 189. Hewitt’s
salary, however, was computed on a “weekly, or less frequent basis,” see 29 C.F.R.
§ 541.602(a), because, although his salary was based on a daily rate, it was computed
and paid based on the total number of days he worked each week. In Coates, the
employees were paid $285.56 per day bi-weekly ($74,244.96 divided by 52 weeks per
year divided by 5 days per week). See
961 F.3d 1039, 1044 n.5 (8th Cir. 2020). So for
the same reason as the Hughes court, the Coates court was required to apply the
reasonable relationship test. In short, there is no circuit split between Hughes, Coates,
Anani, and Litz, but the panel majority creates a split by applying the reasonable
relationship test to Hewitt’s salary, which was more than the regulatory minimum.
11
29 C.F.R. § 541.601(a)(1).
12
Id. § 541.601(b)(1).
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We perceive no cogent reason why the requirements of C.F.R.
§ 541.604 must be met by an employee meeting the
requirements of C.F.R. § 541.601. Indeed, C.F.R. § 541.601 is
rendered essentially meaningless if a “highly compensated
employee” must also qualify for the exemption under C.F.R. §
541.604 or, to state the converse, would lose the “highly
compensated employee” exemption by failing to qualify under
C.F.R. § 541.604. To be sure, C.F.R. § 541.604 deals with
employees who earn the “[m]inimum [g]uarantee plus
extras,” but every employee with a guaranteed weekly amount
exceeding $455 who earns over $100,000, and is therefore
purportedly exempted by C.F.R. § 541.601, also fits the
description of having a “minimum guarantee plus extras.”
Appellant's interpretation thus renders C.F.R. § 541.601
superfluous. The reading that gives full meaning to both C.F.R.
§ 541.601 and C.F.R. § 541.604 is that each deals with different
groups of employees who receive a “minimum guarantee plus
extras.” The first exemption deals with those employees who
earn over $100,000 annually while the second exemption deals
with employees whose guarantee with extras totals less than
$100,000 annually. 13
Continuing to follow the text, then, we look to § 541.602 only—the
“condition” of a highly compensated employee. That “salary basis test”
requires that:
the employee [1] regularly receives each pay period [2] on a
weekly, or less frequent basis, [3] a predetermined amount [4]
constituting all or part of the employee’s compensation, [5]
which amount is not subject to reduction because of variations
in the quality or quantity of the work performed. 14
13
730 F.3d at 149 (alterations in original).
14
29 C.F.R. § 541.602(a).
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Hewitt’s bi-weekly pay clearly and indisputably satisfied the salary
basis test. He received his paycheck every two weeks. He thus “regularly
receive[d] each pay period on a weekly, or less frequent basis.” 15 Hewitt’s
pay—$963 per day—was predetermined: Prior to performing any work, he
knew the amount he would be paid for each day, regardless of how few or how
many hours he worked. His daily rate did not constitute all of his
compensation, but the salary basis test only requires that the predetermined
amount—here, $963 per day for each day on which he worked—constitute
“all or part” of Hewitt’s compensation. It is thus possible, as in Hewitt’s
case, that a daily rate employee, who has only a partially predetermined total
compensation, could satisfy the salary basis test.
Furthermore, Hewitt’s salary, or his base pay, was not subject to
reduction “because of variations in the quality or quantity of the work
performed.” 16 Hewitt could have been less productive than Helix desired,
but he would still be paid his daily rate for any day during which he performed
any work. And he could have significant variations in the quantity of days and
hours he worked, but his guaranteed daily minimum of $963 would not vary.
A final requirement of the salary basis test is that “an exempt
employee must receive the full salary for any week in which the employee
15
Id. (emphasis added). But see
Hughes, 878 F.3d at 189 (holding that a daily
rate is not received “on a weekly, or less frequent basis” because a daily rate is
“calculated more frequently than weekly”). Hughes seems to be an outlier in holding
that a daily rate is calculated more frequently than weekly. See, e.g.,
Coates, 961 F.3d at
1046 (explaining that a human resources employee “gave an accurate general
description of [the defendant’s] hourly-based payroll records, a system which, as we
have explained, is not inconsistent with the Secretary’s salary-basis regulations,”
which require that the employee be paid on a weekly, or less frequent basis).
16
29 C.F.R. § 541.602(a).
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performs any work without regard to the number of days or hours worked.” 17
The panel majority concludes that Hewitt was paid with regard to the number
of days worked. This is a flawed reading of the regulation. If Hewitt
performed any work—even for just one hour—he was paid his full daily rate.
He was thus paid at least $963 for each and every week he worked—even if
he worked only one hour—without regard to the number of days or hours
worked. He clearly met the requirements of 29 C.F.R. § 541.602(a).
The First and Second Circuits have similarly concluded that an
employee who is guaranteed an amount each week that exceeds the $455
weekly threshold is paid on a salary basis. In Litz, the employees earned
between $40 and $60 for every hour billed but were guaranteed a weekly
“stipend” of $1,000, regardless of hours worked. 18 The First Circuit
concluded that the employee was paid on a salary basis because the $1,000
weekly guarantee was both (1) “predetermined” and (2) “not subject to
reduction because of variations in the quality or quantity of the work
performed.” 19 The Second Circuit in Anani concluded that a pharmacist who
received a guaranteed $1,250 weekly salary and significant additional
compensation based on number of hours worked was paid on a salary basis.20
Similarly, Hewitt’s $963 daily rate was a guarantee if he performed any work
at all. His rate was predetermined and not subject to reduction absent
operational changes.
17
Id. § 541.602(a)(1) (emphasis added).
18
772 F.3d at 2.
19
Id. at 5 (quoting 29 C.F.R. § 541.602(a)).
20
730 F.3d at 147–48.
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The panel majority distinguishes Litz and Anani by focusing on the
weekly guarantee in those cases. But the panel majority misses the forest for
the trees. The weekly “stipend” in Litz and the “weekly guarantee” in Anani
are analogous to Hewitt’s $963 daily rate, which was also guaranteed if he
performed any work at all. The regulations require only that the employee be
paid on a “weekly, or less frequent basis.” 21 And Hewitt was paid his daily
rate every week in which he performed any work at all. The fact that the
“stipend” in Litz and the “weekly guarantee” in Anani were guaranteed
makes no difference. These opinions focused less on the guarantee and more
on the fact that the sum was paid on a weekly (or bi-weekly) basis. And
Hewitt’s $963 daily rate was guaranteed as well if he performed any work at
all. Furthermore, the regulation requires only that the guarantee not be
subject to reduction because of the variations in the quality or quantity of
work performed. 22 So too here. Hewitt’s guaranteed $963 was not subject to
reduction based on the quantity or quality of the work he performed. Finally,
the Litz and Anani courts did not rely on § 541.604(b) in requiring a weekly
guarantee; they simply relied on § 541.602, which requires no weekly
guarantee. 23 The weekly guarantee is thus immaterial. But even if it was
material, Hewitt also had a weekly guarantee if he performed any work at all,
as explained above.
The panel majority relies heavily on Hughes and Coates for the
principle that a court must apply § 541.604(b)—specifically a weekly
guarantee—to daily rate employees. It states that Coates was decided after
21
29 C.F.R. § 541.602(a)
22
See id.
23
See
Litz, 772 F.3d at 5;
Anani, 730 F.3d at 147–48.
31
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Hughes and thus it is entitled to more authority than Litz and Anani. I
disagree.
For one thing, the Hughes court misinterpreted § 541.602(a) because
it held that a daily rate pay cannot be paid on a weekly or less frequent basis. 24
It therefore begins with a false premise because a daily rate can be paid on a
weekly or less frequent basis. The Coates court was thus misguided when it
relied on that opinion. Furthermore, the Coates court merely concluded that
there was insufficient evidence before the district court to decide the case as
a matter of law when there was evidence of reductions in salary. 25 The Hughes
court reached a similar conclusion. 26 When looking to § 541.604(b), the
Coates court focused only on the fact that a salary must be “guaranteed” at a
minimum amount not subject to reduction. 27 It did not focus on the second
clause of the reasonable relationship test, as the panel majority does in this
case.
The panel majority makes much of an August 2020 opinion letter
issued by the Department of Labor (“DOL”). After our now withdrawn
opinion was entered, the Wage and Hour Division of the Department of
Labor (“WHD”) issued an opinion letter directly addressing the question
24
878 F.3d at 189.
25
961 F.3d at 1045–46.
26
See Hughes, 878 F.3d at 189 (reversing grant of summary judgment in favor
of employer because the record did not establish that “the employment arrangement
also include[d] a guarantee of at least the minimum weekly required amount paid on a
salary basis” (quoting 29 C.F.R. § 541.604(b))).
27
961 F.3d at 1048.
32
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presented in this case. 28 The WHD concluded that a daily rate employee does
not meet the salary basis test. This conclusion, however, was based on our
subsequently-revoked opinion. The DOL opinion letter did not “call the
play”—it is merely cheerleading after the fact.
Furthermore, because neither the panel majority nor I deem the
regulation ambiguous, we need not provide Chevron deference to the opinion
letter. 29 (In fact, it is questionable whether we even need to provide Skidmore
deference to the opinion letter. Here, the 2020 opinion letter does not have
the “power to persuade” because it is based on our now-revoked opinion;
furthermore, the regulation at issue is not ambiguous.) 30
A report issued by the DOL addressing this specific issue—the Weiss
Report—is even more instructive,31 and the DOL continues to rely on it. 32
28
See Opinion Letter FLSA2020-13, 2020 WL 5367070, at *3–4 (Aug. 31,
2020) (citing Hewitt v. Helix Energy Sols. Grp.,
956 F.3d 341 (5th Cir. 2020)).
29
See Owsley v. San Antonio Indep. Sch. Dist., 187 F.3d 521, 525 (5th Cir. 1999)
(“Opinion letters, which are issued without the formal notice and rulemaking
procedures of the Administrative Procedure Act, do not receive the same kind of
Chevron deference as do administrative regulations.”); accord Christensen v. Harris
Cnty.,
529 U.S. 576, 587 (2000); see also Belt v. EmCare, Inc.,
444 F.3d 403, 408 (5th
Cir. 2006) (“If the regulation is unambiguous, we may still consider agency
interpretation, but only according to its persuasive power.”).
30
Cf. Christensen, 529 U.S. at 587 (granting Skidmore deference to an opinion
letter based on its “power to persuade” (quoting Skidmore v. Swift & Co.,
323 U.S. 134,
140 (1944))).
31
See Reports and Recommendations on Proposed Revisions of Regulations,
Part 541, by Harry Weiss, Presiding Officer, Wage & Hour & Pub. Contracts Divs.,
U.S. Dep’t of Labor (June 30, 1949) [hereinafter the “Weiss Report”].
32
See Defining and Delimiting the Exemptions for Executive, Administrative,
Professional, Outside Sales and Computer Employees, 69 Fed. Reg. 22122, 22124 (Apr.
33
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The Weiss Report states that, for “an employee paid on a daily or shift basis”
(as was Hewitt), the salary basis test will be met “if the employment
arrangement includes a provision that he will receive not less than the
amount specified in the regulations in any week in which he performs any
work.” 33 As stated above, Hewitt was a daily rate employee who would
receive $963—more than twice the regulatory threshold amount—for any
week in which he performed any work at all.
Finally, the panel majority looks to the regulatory purpose of the
reasonable relationship test to justify its position that Hewitt was not paid on
a salary basis. Again, I disagree. We must be wary of the dangers of looking
to regulatory purpose when the text of the regulation clearly demands a
different outcome. And here, the text of § 541.601 is devoid of any reference
to § 541.604(b). It instead mentions only § 541.602. 34 Furthermore, purpose
and policy do support Hewitt’s salary satisfying the salary basis test. The
panel majority’s holding is in fact inconsistent with Congress’s express intent
under the FLSA. Congress has stated that “there is no reason that the FLSA,
which was passed to protect laborers who ‘toil in factory and on farm,’ and
who are ‘helpless victims of their own bargaining weakness,’ should ever be
interpreted to protect workers making high five-figure or six-figure
incomes.” 35 Congress went on to say that “the courts need to refocus their
efforts” away from protecting these highly paid workers. 36
23, 2004) (“The Department notes, however, that much of the reasoning of the Stein,
Weiss and Kantor reports remains as relevant as ever.”).
33
Weiss Report at 26.
34
See 29 C.F.R. § 541.601(b)(1).
35
143 Cong. Rec. E317-04, E317-18, 1997 WL 79643, at *2 (Feb. 26, 1997).
36
Id.
34
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Hewitt was a very highly paid worker, and I seriously doubt that
Congress’s purpose was to allow him overtime under the FLSA.
Finally, the panel majority states that § 541.604(b)
sets a ceiling on how much the employee can expect to work in
exchange for his normal paycheck, by preventing the employer
from purporting to pay a stable weekly amount without regard
to hours worked, while in reality routinely overworking the
employee far in excess of the time the weekly guarantee
contemplates. 37
But here, Helix did not routinely overwork Hewitt without providing
him adequate pay. In fact, it did just the opposite: Hewitt worked on a
“hitch” that lasted about a month, and he made a staggering $200,000 or
more per year.
The panel majority correctly states that the FLSA was enacted to
encourage employers to hire more employees. It creates a “penalty” for not
doing so, viz., overtime wages. But that regulatory purpose falls flat on its
face in the fact pattern before us. Hewitt was paid more than $200,000 per
annum as a tool pusher. He would have been paid significantly more with
overtime. So why not hire more tool pushers? The answer is clear: Tool
pushers are employed as overseers, not as manual laborers. It would be
redundant and a waste of resources to hire multiple overseers to perform the
work of this particular position. Furthermore, if a company, such as Helix,
had to employ multiple tool pushers at $200,000 per year, they could very
likely go bankrupt. And then Hewitt would be out of work. Surely, this is not
the purpose behind the FLSA. In fact, Congress has confirmed that this is so. 38
37
Majority Opinion (“Ante”) at 7.
38
See supra notes 32–33 and accompanying text.
35
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In sum, the district court was correct in concluding that Hewitt’s
salary satisfied the highly compensated employee exemption because he was
paid on a salary basis.
***
I respectfully submit that this case should be reheard by our en banc
court. If the panel majority’s opinion is allowed to stand, it will likely have
devastating effects on all employers, especially in the oil and gas arena, in our
circuit. Employers like Helix will have to pay highly skilled supervisors like
Hewitt considerable overtime wages. Amici estimate that Hewitt, who
already makes more than $200,000 per year, would have overtime wages of
at least $52,000 per year if the panel majority’s holding stands. As amici aptly
point out, “[a]ppending these types of costs to expensive hydrocarbon
exploration in the Fifth Circuit will put the region, and the industry, at a
significant disadvantage to other exploration operations elsewhere in the
country and the world.”
Consistent with two other circuits, I would not apply the reasonable
relationship test to highly compensated employees. And there is no question
in my mind that Hewitt was a highly compensated employee because he
clearly was paid on a salary basis. Neither is it disputed that Hewitt met the
other requirements to be considered a highly compensated employee. The
district court held as much, and I would affirm the judgment of that court.
36
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Finally, with utmost respect for my friend and colleague who authored
the special concurrence, my only response is to quote Macbeth: “full of
sound and fury, signifying nothing.” 39
For the foregoing reasons, I respectfully dissent.
39
WILLIAM SHAKESPEARE, MACBETH act 5, sc. 5, lines 15–17. To be sure, the
harshness of the full quotation is unwarranted, and, thus, I only quote what is
appropriate.
37
