Fifth Circuit Issues Important Overtime Exemption Opinion

The Fifth Circuit recently issued an important ruling regarding the applicability of the administrative exemption with respect to oilfield workers.  The case is styled Dewan v. M-I, L.L.C.  It was filed in the Southern District of Texas in Houston.  The Defendant, M-I SWACO is an oilfield service company and a subsidiary of Schlumberger.  M-I specializes in engineering drilling-fluid systems and additives designed to improve performance for oil and gas well drilling operations.  M-I employs Drilling Fluid Specialists, or “Mud Engineers” as part of its business.  Two mud engineers sued M-I, claiming that they were owed unpaid overtime.  The district court granted the Defendant’s motion for summary judgment, ruling that the employees were not entitled to overtime because they fell under the administrative exemption to the Fair Labor Standards Act.

For the administrative exemption to apply, the employee must be one (1) who is “[c]ompensated on a salary or fee basis at a rate of not less than $455 per week;” (2) “[w]hose primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers;” and (3) “[w]hose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.” 29 C.F.R. § 541.200.

The Fifth Circuit found that while the first element of the administrative exemption was satisfied, as the employees received more than $455/week, the other two elements were fact-intensive and required analysis of “the facts to determine the employee’s primary duty, how the work directly relates to certain parts of the employer’s business, and whether the duty involves some discretion and independence.”  Thus, the case will proceed to trial, where the jury will determine the applicability of the exemption and, thus, whether the mud engineers qualify for overtime under the FLSA.  This opinion is a victory for the oilfield workers who brought the case and for other oilfield workers who will file similar claims, as it demonstrates that in many instances the applicability of the administrative exemption is a fact issue that cannot be determined on summary judgment.

About the author: Josh Borsellino is a Texas attorney who represents workers, particularly those in the oil and gas industry, for unpaid overtime claims.  Mr. Borsellino is admitted to practice in every federal district in Texas and regularly files cases in west Texas, east Texas and south Texas.   Over the past three years, Mr. Borsellino has filed dozens of lawsuits on behalf of oillfield workers and others in the oil and gas industry.  If you have questions regarding unpaid overtime, call Josh at 817.908.9861 or 432.242.7118.  Josh does not charge for initial consultations, and if he accepts an unpaid overtime case he handles it on a contingency basis, meaning that he charges the client nothing and only gets paid if there is a recovery by the client.