Who this is for: Oilfield hands, offshore crews, inspectors, and other workers paid a flat amount per day, with no overtime.
What's going on: The company says the day rate is "like a salary," or that the pay is too high for overtime.
What you can do: Pull your pay stubs. If your check rises and falls with the number of days you worked, read on.
A worker paid only by the day is not paid on a salary basis, so the executive, administrative, and professional exemptions don't apply no matter how high the pay, and the worker is owed overtime for hours over 40 unless the employer also guarantees a weekly salary that meets a separate federal rule.1
Paying by the day is legal. Using it to skip overtime usually isn't.
Michael Hewitt worked on an offshore oil rig for Helix Energy, typically 84 hours a week, at a day rate of $963 to $1,341, and earned over $200,000 a year with no overtime. The Supreme Court held that pay like that is not a salary: "We hold that such an employee is not paid on a salary basis, and thus is entitled to overtime pay."2
Big money didn't save the exemption. Even the highly compensated employee test requires that "“Total annual compensation” must include at least $684 per week paid on a salary or fee basis".3 A day rate doesn't count as that salary.
A federal regulation sets the math.4 When the day rate is your only pay, "his regular rate is determined by totaling all the sums received at such day rates or job rates in the workweek and dividing by the total hours actually worked. He is then entitled to extra half-time pay at this rate for all hours worked in excess of 40 in the workweek."
Illustrative, not a prediction. $500 a day, 12-hour days:
| Week | Day-rate pay | Hours | Regular rate | OT hours | Half-time owed for the week |
|---|---|---|---|---|---|
| 6 days on | $3,000 | 72 | $41.67 | 32 | $666.67 |
| 7 days on | $3,500 | 84 | $41.67 | 44 | $916.67 |
A 14-day hitch at 84 hours a week is about $1,833 in unpaid overtime per hitch, before liquidated damages. Each week is counted on its own: the law "does not permit averaging of hours over 2 or more weeks".5 Nondiscretionary job bonuses go into the regular rate too, which raises the number: “Most attendance bonuses, individual or group production bonuses, bonuses for quality and accuracy of work ... must be included in the regular rate of pay.”11
The half-time math assumes the day rate covered every hour you worked. If your offer letter said the rate covered a 10- or 12-hour day, the overtime math can be different. See how much is my overtime claim worth.
There is one way a day-rate worker can still be exempt. Under that rule,1 pay "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."
Two conditions. Both must be met:
A $700 weekly guarantee paired with a $1,000 day rate for a 7-day week is not "roughly equivalent." Helix admitted Hewitt's pay didn't meet that rule. Then it lost. And the employer still has to prove the duties side of an exemption. The Department of Labor reads the regulation to supply “a range of permissible ratios from 1.2-to-1 to 1.5-to-1” of actual earnings to the weekly guarantee, and says the regulations do not make 1.5-to-1 “the absolute maximum permissible ratio.”12
Other exemptions, like the Motor Carrier Act exemption for some drivers, are separate questions Helix didn't decide.
Siegel Law Group has recovered more than $100 million for workers in federal overtime cases, including a $38.7 million class and collective settlement in Pruess v. Presbyterian Health Plan,6 where the firm was lead counsel. Past results do not guarantee future outcomes.
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No. It's illegal to pay a day rate and skip overtime, unless an exemption truly applies.
Maybe. Look at the guarantee. It has to be at least $684 a week, paid no matter how many days you work, and roughly equal to what you usually earn.
Yes. The salary-basis rule applies to every white-collar exemption, at every pay level.
No. Each workweek stands alone.
Unpaid overtime plus an equal amount as liquidated damages.8 State law can add more. See state overtime laws.
Free, confidential case review: (214) 790-4454.
We take overtime cases on contingency. We advance the costs of the case, and if we recover, those costs are repaid out of the recovery. If we do not recover, you owe us nothing — no attorney's fee and no costs.
Automated chat. Not legal advice, not a substitute for an attorney, and using it does not create an attorney-client relationship. Send your job title and how you are paid — no documents, no detailed case facts. An inquiry does not by itself stop the firm from representing someone else in a related matter.
Attorney advertising. Jack L. Siegel of Siegel Law Group PLLC, Dallas, Texas, is responsible for this content.
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