The boom in domestic oil and gas production over the past decade has corresponded with widespread violations of overtime laws by employers in the oil and gas industry. Oil and gas industry employers often require their employees to work grueling schedules, only to pay them on a "day rate" without any overtime compensation when they work more than forty hours in a workweek. This practice may violate the Fair Labor Standards Act (FLSA), which requires employers to pay employees one-and-one-half times employees’ regular rate of pay for all hours worked over forty in a workweek. Employers in the oil and gas industry have avoided paying overtime wages by classifying certain employees as exempt from receiving overtime pay, or classifying them as independent contractors. Over the past two years there has been a surge in lawsuits brought by oil and gas industry employees challenging their exempt classification and seeking unpaid overtime wages. Although many of these cases have settled without a finding of liability, the Fifth Circuit Court of Appeals recently decided that one type of worker, marine superintendents, were misclassified as exempt and entitled to unpaid overtime wages.
In Zannikos v. Oil Inspections (U.S.A.), Inc., No. 14-20253 (5th Cir. Mar. 27, 2015), the Fifth Circuit held that the administrative exemption did not apply to a group of marine superintendents. The defendant was a business that specialized in the oversight and monitoring of oil cargo transfers in accordance with industry standards and customer specifications. As marine superintendents, the plaintiffs monitored, inspected, and reported compliance with various safety and quality protocol throughout the oil cargo transfer process. The defendant did not pay the plaintiffs overtime wages when they worked more than forty hours in a week, contending that they were exempt from the overtime pay requirement under the FLSA’s administrative exemption.
Workers qualify for the administrative exemption and are not entitled to overtime pay if they meet the following criteria: (1) are paid a salary of at least $455 per week; (2) have a primary job duty that is the performance of office or non-manual work directly related to the management of general business operations of the employer or the employer’s customers; and (3) have a primary job duty that includes the exercise of discretion and independent judgment with respect to matters of significance.
After analyzing the marine superintendents’ duties at length, the Fifth Circuit concluded that the plaintiffs’ primary duties did not include the exercise of discretion and independent judgment with respect to matters of significance and that, as a result, the administrative exemption did not apply and the plaintiffs were entitled to recover unpaid overtime wages. In reaching this conclusion, the Court analogized the marine superintendents’ job duties to those of inspectors and examiners, who are considered non-exempt employees under federal regulations. The Court also noted that there is an important distinction between the exercise of discretion and the application of skill; while a marine superintendent’s job required skill in a number of respects, that skill was applied to assuring compliance with applicable standards and reporting noncompliance, but was not applied to making discretionary determinations based upon independent judgment.
Nichols Kaster represents various types of oil and gas employees in lawsuits to recover overtime pay against a number of different employers, including solids control technicians at Kayden Industries, solids control technicians at McLachlan Drilling (for more information, click here), HSE field specialists at BHP Billiton Petroleum, and field engineers at Baker Hughes.
We are also investigating overtime violations for oil and gas workers who held the following positions (for more information, click here):
| Coil operator | Frac sand coordinator | Pump supervisor |
| Coil tubing operator | Grease operators | Reverse pump operators |
| Derrickhand | Land agent | Reverse pump supervisors |
| Directional driller | Logging while drilling (LWD) | Roughneck |
| Driller | Measurement while drilling (MWD) | Roustabout |
| Drilling fluids engineer | Mud engineer | Safety inspector |
| Drilling fluids specialist | Mud logger | Sit hand |
| Drilling fluids technician | Mud logging technician | Solids control |
| Field engineer | Mud man | Solids control technician |
| Field hand | MWD/LWD/directional drilling (any combination) | Toolpusher |
| Field sand coordinator | Plug technician | Wireline operator |
| Field specialist | Pressure control operator | |
| Flowback hand | Pump operator |
If you work or worked in the oil and gas industry in the past three years as a salaried or day rate employee and were not paid for all of your overtime hours, regardless of whether you agreed to be paid a day rate or salary, please contact us for a free consultation about whether you have a potential claim for overtime wages.