Labor & Employment Law Daily Wrap Up, WAGE-HOUR—EXEMPTIONS—6th Cir.: Pipe inspector, paid $100 per hour, was not salaried under FLSA, (Apr 2, 2025)

By Jason Albright, J.D.

“On average, he worked for just under 52 hours per week….”

A former pipe inspector who worked for an employment agency, paid a “guaranteed weekly salary” of $800 based on eight hours of pay at a $100 hourly rate, was not an overtime-exempt salaried worker, the Sixth Circuit held. To be paid on a weekly basis, an employee must be paid for a regular week’s worth of work, and unlike a weekly rate, the inspector was paid for either an hour’s work or eight hours’ work. Nor did his eight-hourly “salary” come close to compensating him for his regular 52-hour workweek. Judge Kethledge concurred, and Judge Murphy concurred in part and dissented in part (Pickens v. Hamilton-Ryker IT Solutions, LLC, Nos. 24-5407/5459 (6th Cir. Apr. 1, 2025)).

Pipe inspector. The plaintiff, according to the appeals court, inspects pipes. From 2018 to 2019, he worked for an employment agency called Hamilton-Ryker IT Solutions, which assigned him to a natural-gas export terminal in Texas.

“[G]uaranteed weekly salary.” For any week in which the pipe inspector worked, Hamilton-Ryker paid him a “guaranteed weekly salary” of $800, a figure based on eight hours of pay at his $100 hourly rate.

Additional time at flat rate. If he worked more than eight hours in any given week—which he always did—he received additional compensation at his $100 hourly flat rate. Over the course of his employment, he worked 28 hours in his slowest week (receiving $2,800), and fully 83 hours in his busiest (receiving $8,300).

Average of 52-hours per week. On average, he worked for just under 52 hours per week, making his usual earnings $5,200 per week, what would come to annualized earnings of $270,400.

Classified as salaried. When he worked more than 40 hours in a week, Hamilton-Ryker did not pay him overtime—a i.e. time-and-a-half at $150 per hour—because the employment agency considered him as a salaried worker and thus exempt from the requirements of the FLSA.

Lawsuit. The pipe inspector viewed this arrangement differently, prompting him to sue the company in 2020 on the ground that he was a non-exempt hourly employee. Fourteen coworkers opted in to the lawsuit, filed as a collective action under the FLSA. The pipe inspector and his coworkers moved for summary judgment, as did Hamilton-Ryker, and the district court granted summary judgment to the employer, treating the pipe inspector as a salaried employee.

The court dismissed the pipe inspector’s coworkers on the ground that the court had not determined that they were “similarly situated” to him. The pipe inspector, his coworkers, and Hamilton-Ryker appealed to the Sixth Circuit.

Preliminary preclusion matter. As a preliminary matter, the appeals court first considered whether a Fifth Circuit case arising from the same pay arrangements for other Hamilton-Ryker employees resolved the issues. In a nearly identical lawsuit filed by the pipe inspector’s coworkers against Hamilton-Ryker, the Fifth Circuit held that comparable workers deserved overtime pay. Gentry v. Hamilton-Ryker IT Sols., LLC, 102 F.4th 712, 722–23 (5th Cir. 2024). He claimed that issue preclusion prevented Hamilton-Ryker from relitigating the point in this case, but the court was unpersuaded, observing that nothing prevented him from joining or consolidating his claims with those of the plaintiff in the first lawsuit, and that he did not present any cognizable circumstances that warrant an exception to the rule that issue preclusion generally is unavailable “in cases where a plaintiff could easily have joined in the earlier action.”

Salary basis test. Turning to the salary basis test to determine whether an employee works in an overtime-exempt bona fide executive, administrative, or professional capacity under the FLSA, the appeals court observed that “[a]n employee will be considered to be paid on a ‘salary basis,’” within the meaning of 29 C.F.R. § 541.602(a), “if the employee regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of the employee’s compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed.”

Under this approach, an employee receives a “salary” if the employee is paid “a predetermined amount” “on a weekly[] or less frequent basis.” An employee must receive that amount—the employee’s “full salary”—“for any week in which [the employee] performs any work.” The employee’s pay may not be docked “for time when work is not available,” if the employee happens to call in sick for a day or two, or if the employee takes a few hours off “for personal reasons.” 29 C.F.R. § 541.602(a).

Paid on “weekly basis.” To be paid on a weekly basis, the Sixth Circuit concluded, “an employee must be paid for a regular week’s worth of work. In this context, the word ‘basis’ refers to the ‘foundation’ of a particular payment.”

Week as foundational. And “the fact that the payment is weekly must not be merely incidental to the payment; the week must serve as the fundamental unit around which the payment is structured,” observed the appeals court. “A weekly salary must compensate an employee ‘for the general value of services performed’ over the week, as opposed to merely serving as a minor auxiliary to an employee’s substantial hourly or daily pay. 2004 Final Rule, 69 Fed. Reg. 22,122, 22,177 (Apr. 23, 2004).”

Helix Energy. Citing the U.S. Supreme Court’s decision in Helix Energy Solutions Group v. Hewitt, 590 U.S. 39 (2023), the appeals court observed that a person is paid a salary under § 602(a) only if “he gets a ‘predetermined amount’ that cannot be changed ‘because of the number of days or hours’ he labors”—that is, if he receives “what ordinary people think of as a salary.”

This case “could be captioned Helix II,” according to the Sixth Circuit.

Not salaried. The plaintiff, just like the employee in Helix, was guaranteed payment for a single day’s work. But he was not paid a salary. Unlike a weekly rate, which compensates an employee for a week’s work, no matter the number of hours worked, the rate he received compensated him for either an hour’s work or eight hours’ work. His eight-hourly “salary,” observed the appeals court, “did not come close to compensating him for his regular 52-hour workweek.” And because the company did not pay him a “full salary for any week in which” he “perform[ed] any work,” and instead paid him “with[] regard to the number of... hours worked,” it did not pay him on a salary basis under § 602(a).

The rest of the collective? Having determined that the pipe inspector was not overtime exempt, the appeals court declined to reach Hamilton-Ryker’s cross-appeal, which focused on whether the district court was required to reject not only his claim but also those of his former coworkers who opted into the collective action. All we decide today is that pipe inspector is entitled to summary judgment on his individual claim. The Sixth Circuit left it for the district court below to decide in the first instance whether the pipe inspector’s action should proceed on a collective basis and, if so, how the present decision bears on the claims of his coworkers.

Partial dissent. Judge Murphy, concurring in part and dissenting in part, agreed that issue preclusion does not apply, and that “Hamilton-Ryker IT Solutions structured [the plaintiff’s] compensation in a strange way solely to exempt [him] from the overtime requirements of the Fair Labor Standards Act.”

Unlike the majority, however, Murphy argued that “an unambiguous regulation gave Hamilton-Ryker every right to do so.” Specifically, under 29 C.F.R. § 541.602(a), a salaried employee “must receive the full salary for any week in which the employee performs any work” but employees “need not” receive this salary “for any workweek in which they perform no work.” Id. § 541.602(a)(1).

In Murphy’s view, “this regulation’s unambiguous language compels us to hold that it covers [the pipe inspector’s] (unusual) compensation scheme.”

Concurrence. Judge Kethledge, concurring, wrote briefly to observe that he does not see any “regulatory ambiguity” in § 602(a). “We do not interpret phrases in isolation, and in my view—for the reasons stated in Chief Judge Sutton’s opinion—the best interpretation of § 602(a) is the one we adopt today.”

The case is Nos. 24-5407/5459.

Judge: Sutton, J.

Attorneys: Richard J. Burch (Bruckner Burch) for Lynwood Pickens. Ashlee Cassman Grant (Baker & Hostetler) for Hamilton-Ryker IT Solutions, LLC.

Companies: Hamilton-Ryker IT Solutions, LLC

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