Labor & Employment Law Daily Wrap Up, WAGE-HOUR—EXEMPTIONS—5th Cir.: Oil well monitoring employees qualified for highly compensated employee exemption, (Jul 15, 2025)

By Ronald Miller, J.D.

The MWDs “customarily and regularly” performed quality control functions because they constantly monitored the well data throughout their twelve-hour shifts.

Two employees employed by an oilfield services company qualified as highly compensated employees (HCE) exempt from the FLSA’s overtime pay requirement because they performed administrative duties, ruled the Fifth Circuit. The appeals court found that the district court erred in determining that the employees did not perform the administrative duty of quality control and holding that they did not customarily and regularly perform work directly related to the management or general business operations of their customers. Accordingly, the appeals court held that the employees fell within the HCE exemption from the FLSA’s overtime payment requirement (Gilchrist v. Schlumberger Technology Corp., No. 22-50257 (5th Cir. July 14, 2025)).

The employer, Schlumberger Technology, provides oilfield services to clients engaged in the exploration and development of oil and natural gas. The employees worked as Measurements While Drilling Field Specialists (MWDs). MWDs give Schlumberger clients “‘downhole’ information such as drilling trajectory, pressure, and temperature,” which the clients use “to determine how to continue drilling.”

The year after their tenures with the employer ended, two employees sued Schlumberger, arguing that they were not exempt from the FLSA provisions requiring overtime pay. Both employees earned well over $200,000 annually, but neither was paid any overtime while employed as an MWD.

After a bench trial but before the district court rendered its decision, the identity of two potentially relevant witnesses whom the employer had failed to identify came out in a related case, and the employees moved to reopen the evidence. The Fifth Circuit ultimately determined that the witnesses’ testimony was privileged, and the district court denied the employees’ motion.

Highly compensated employee exemption. The district court then determined that the employer failed to prove that the employees were exempt under the various FLSA exemptions urged at trial, including the Highly Compensated Employee (HCE) exemption. The employer appealed.

On appeal, the employer urged the application of the HCE exemption. The parties agreed that the employees were annually compensated more than the amount required by the regulation. The only outstanding element on appeal is whether they customarily and regularly performed any of the exempt duties of an administrative or executive employee.

Administrative employees. Under the standalone administrative exemption employees cannot qualify as bona fide administrators unless (1) their “‘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 (2) the ‘primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.’” But under the HCE exemption, “higher-income employees need ‘regularly perform’ only ‘one’ of those administrative or executive ‘responsibilities’ to so qualify.”

Further pertinent to the HCE exemption is that an employee performs a task “customarily and regularly” if the frequency of that performance is “greater than occasional,” though it need not be constant.

General business operations. The Fifth Circuit first considered whether the district court erred in finding that the employees “did not perform any work directly related to the general business operations of [Schlumberger] or its customers” and thus did not perform any administrative duties.

Quality control duties. Here, the MWDs performed quality control of surveys “by double-checking the information from the tools against the well plan and expected inclination and azimuth of the client... as the client was drilling.” Before sending final surveys to the client, the MWD and the directional driller would conduct “kind of like a QC [quality check]” wherein the MWD would “run [their data] through an Excel file, make sure all the numbers match” for various data points.

In this case, quality control meant controlling the quality of the data provided to clients. The employees’ testimony showed that they did just that.

Additionally, the MWDs “customarily and regularly” performed quality control functions because they constantly monitored the well data throughout their twelve-hour shifts, quality checked the survey data for each of the fifteen to fifty surveys that they took every hour and reviewed and edited data at the end of every job.

Because the district court overlooked the MWDs’ role in quality checking data logs and improperly relied on Hobbs v. EVO Inc., 7 F.4th 241 (5th Cir. 2021), and the inspection example in regulation § 541.203(g), it erred in determining that the MWDs did not perform the administrative duty of quality control.

Advisory and consulting duties. “‘[E]mployees acting as advisers or consultants to their employer’s clients or customers’ qualify for the administrative exempt standard” because they perform “work directly related to the management or general business operations of the employer’s customers.” Following Venable v. Smith International, Inc., 117 F.4th 295, 301 (5th Cir. 2024), the Fifth Circuit held that the MWDs acted as advisers to the employer’s clients.

The MWDs’ work resembles the tasks described in Venable because the MWDs advised the employer’s clients by providing them with essential information during the drilling process. Although the MWDs testified that they “didn’t have much involvement with the company man on location, their data ensured that the directional driller kept the well on its predetermined path, and so crucially informed the client’s precise drilling of the well.

Thus, the appeals court concluded that the MWDs fit comfortably in the adviser category alongside reamers on offshore drilling rigs in Venable. Consequently, the MWDs acted as advisers to the employer’s clients and performed “work directly related to the management or general business operations of [their] employer’s customers.”

Moreover, the MWDs performed this duty “customarily and regularly.” The bulk of a MWD’s working time is spent monitoring data from the well with the directional driller. Because the employer proved that the MWDs customarily and regularly performed work directly related to the management or general business operations of their customers it satisfied the duty requirement of the HCE exemption. Therefore, the MWDs fell within the HCE exemption from the FLSA’s overtime payment requirement, and the district court erred in determining otherwise.

Accordingly, the appeals court reversed the judgment of the district court and remanded with instructions to dismiss.

The case is No. 22-50257.

Judge: Per curiam.

Attorneys: Jimmy Derek Braziel (Braziel Dixon) for John Gilchrist. Robert Peter Lombardi (The Kullman Firm) for Schlumberger Technology Corp.

Companies: Schlumberger Technology Corp.

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