Day Rate Overtime After Helix v. Hewitt: Why a High Day Rate Isn't Exempt

Paying a flat amount per day worked — a "day rate" — is common in oil and gas, construction, healthcare travel, and other project-based industries. Employers often assume that a worker earning a high daily rate, sometimes producing six-figure annual pay, is exempt from overtime. The Supreme Court's 2023 decision in Helix Energy Solutions v. Hewitt confirmed that assumption is usually wrong. Here is what day-rate employers and workers need to know.

What Helix v. Hewitt decided

Michael Hewitt worked on an offshore oil rig and was paid a daily rate, earning over $200,000 a year. Helix argued he was an exempt executive and therefore owed no overtime. In February 2023 the Supreme Court held 6–3 that he was not exempt, because he was not paid on a "salary basis" as the FLSA regulations require.

The Court's reasoning was narrow but important: to be exempt under the standard white-collar tests, an employee must receive a predetermined amount for any workweek in which they perform work, without regard to the number of days or hours worked (29 CFR §541.602). A pure day rate fails this test — a worker paid per day does not receive a guaranteed weekly amount; their pay rises and falls with the number of days worked. High earnings did not cure the defect.

Why a high day rate still means overtime is owed

The salary-basis test is a threshold requirement. If it is not met, the employee is non-exempt regardless of how much they earn or how skilled their work is. A day-rate worker earning $1,000/day is non-exempt on the same reasoning as one earning $200/day, unless the pay arrangement is restructured to satisfy the salary-basis rule.

There are two ways an employer can lawfully pay a day rate and still claim an exemption, both set out in 29 CFR §541.604:

1. Add a guaranteed weekly salary of at least $684 that is paid regardless of days worked, with the day rate on top — provided a "reasonable relationship" exists between the guarantee and the usual earnings.
2. Meet the salary-basis test some other way. A bare day rate, standing alone, does not.

Absent one of these, the day-rate worker is owed overtime for hours past 40.

How to calculate overtime on a day rate

When a non-exempt employee is paid a day rate, 29 CFR §778.112 sets out the method. The day rate (plus any other includable pay) is totaled for the week, then divided by the total hours actually worked to find the regular rate. Overtime is then an additional half-time premium on the hours over 40 — because the day rate already compensated straight time for all hours worked.

weekly_total = day_rate × days_worked (+ other includable pay)
regular_rate = weekly_total ÷ total_hours_worked
overtime_premium = regular_rate × 0.5 × (total_hours − 40)
total_pay = weekly_total + overtime_premium

Worked example

A field technician is paid $300/day and works 6 days totaling 60 hours in a week.

1. Weekly total: $300 × 6 = $1,800
2. Regular rate: $1,800 ÷ 60 = $30.00/hr
3. Overtime hours: 60 − 40 = 20
4. Overtime premium: $30 × 0.5 × 20 = $300
5. Total pay: $1,800 + $300 = $2,100

The premium is half-time, not time-and-a-half, because the $1,800 already paid straight time for all 60 hours. This is the same structural logic as the fluctuating workweek and blended rate methods.

Who this affects most

Day-rate pay is concentrated in a handful of industries, and Helix has driven a wave of back-pay claims in each:

• Oil and gas — rig workers, tool pushers, drilling consultants
• Construction and skilled trades — project-based specialists
• Healthcare — traveling nurses and technicians on daily stipends
• Consulting and inspection — field engineers and inspectors

In these settings a worker misclassified as exempt on a day rate may be owed substantial back overtime. Because the FLSA reaches back two years — three for willful violations — and doubles the award through liquidated damages, the exposure per worker is often large. Our Back Pay Calculator can estimate it.

What employers should do

1. Review every day-rate arrangement against the salary-basis test. A bare day rate does not satisfy it.
2. If you intend to keep an exemption, add a compliant weekly guarantee under §541.604 and document it.
3. If the worker is non-exempt, track hours and pay the half-time premium on hours past 40 using §778.112.
4. Remember that the exemption also requires the duties test — the salary-basis fix alone is not enough if the duties do not qualify. Check with our Exempt vs. Non-Exempt Calculator.

Key takeaways

• Helix v. Hewitt (2023) confirmed that a pure day rate fails the salary-basis test, so day-rate workers are usually non-exempt — no matter how much they earn.
• Overtime on a day rate is a 0.5× premium on hours over 40, because the day rate already covered straight time.
• Employers can preserve an exemption only by adding a compliant weekly salary guarantee and meeting the duties test.

Sources

• Helix Energy Solutions Group, Inc. v. Hewitt, 598 U.S. 39 (2023)
• 29 CFR §541.602 — Salary basis
• 29 CFR §541.604 — Minimum guarantee plus extras
• 29 CFR §778.112 — Day rates and job rates