Who’s a Highly Compensated Employee?

Gilchrist v. Schlumberger Tech. Corp., 143 F.4th 620 (5th Cir. 2025).

By Arthur A. Crais, Adjunct Professor of Law

            Employees who work offshore do not follow the standard land-based 8-hour shift from 9:00 a.m. to 5:00 p.m. and five days a week. Most work a hitch of two weeks on and two weeks off in 12-hour shifts. The complex rules of who is an exempt employee not entitled to time and a half when working more than 40 hours in a workweek were highlighted when the U.S. Supreme Court addressed the issue in Helix Energy Sols. Grp., Inc. v. Hewitt.[1]

            Under the Fair Labor Standards Act,[2] “highly compensated employees” are exempt from overtime pay. Section 213(a) provides various categories of employment that are exempt from overtime pay. The parties agreed that the claimants were paid more than required by the regulation (over $100,000 annually) and that they did not perform manual labor.[3] The remaining issue was whether they regularly performed the exempt duties of an administrative or executive employee.[4] Schlumberger asserted that the employees regularly performed administrative duties of quality control, advising, and consulting with clients concerning the drilling operations.[5]

            The trial judge held that the employees “did not perform the administrative duty of quality control,”[6] relying on Hobbs v. EVO Inc.[7] which was error.[8]

            Similarly, the trial court erred in holding that the employees were advisers to Schlumberger’s clients and satisfied the advising and consulting requirement.[9]

            The panel did not address the third challenge raised by Schlumberger to the trial court’s ruling, “by considering the ‘discretion and independent judgment’ prong conjunctively rather than disjunctively in its HCE duties analysis.”[10]

            The appellate court reversed the trial court, holding that the employees are highly compensated employees and not entitled to overtime pay.

            A copy of the per curiam opinion is attached.

[1] 598 U.S. 39, 47 (2023). In Helix, the employees made over $200,000 annually but were not exempt as “highly compensated employees” and thus entitled to overtime pay. The Supreme Court held that the employees were not compensated on a salary basis and thus were non-exempt. Id. at 49.

[2] 29 U.S.C. §§ 201-219.

[3] Gilchrist, 143 F.4th at *7.

[4] Id.

[5] Id. at *11.

[6] Id. at *12.

[7] 7 F.4th 241 (5th Cir. 2021).

[8] Gilchrist, 143 F.4th at *19.

[9] Id. at *24.

[10] Id. at *25.