Sixth Circuit Wrestles with Meaning of “Weekly Basis” Under the FLSA

On April 1, 2025, in Lynwood Pickens v. Hamilton-Ryker IT Solutions, LLC, the Sixth Circuit Court of Appeals clarified what it means to pay a salary on a “weekly basis” under federal regulation 29 C.F.R. § 541.602(a) for purposes of classifying an employee as exempt from overtime under the Fair Labor Standards Act (FLSA). In a divided opinion, the Sixth Circuit held that to be paid on a “weekly basis” means that an employee is paid for “a regular week’s worth of work.” As a result, the court held that an employer did not pay an employee on a “weekly basis”—and therefore owed the employee overtime—when the weekly guaranteed pay to the employee was only the equivalent of one day’s pay and the employee was paid an hourly rate for every hour worked beyond the first eight hours in the week.

As a general rule, under the FLSA, an employer must pay employees overtime if they work more than 40 hours per week. To be classified as “exempt” from being paid overtime, employees generally must, among other things, be paid on a “salary basis.” Under the FLSA’s regulations, an employer has two basic options for paying an employee on a “salary basis”: (1) pay the employee a predetermined salary on a “weekly or less frequent basis” that is not subject to reduction (with some exceptions) based on the quality or quantity of the work performed, 29 C.F.R. § 641.602(a), or (2) pay the employee on an hourly, daily, or shift basis but also pay a guaranteed minimum amount per week that bears a “reasonable relationship” to the amount actually earned, meaning an amount that is “roughly equivalent to the employee’s usual earnings at the assigned hourly, daily or shift rate for the employee’s normal scheduled workweek,” 29 C.F.R. § 541.604(b).

In Lynwood Pickens v. Hamilton-Ryker IT Solutions, LLC, pipe inspector Lynwood Pickens was classified as exempt by his employer. Each week, Pickens was guaranteed $800, with all hours worked beyond the first eight paid at his hourly rate of $100. If Pickens worked more than 40 hours in a week, Hamilton-Ryker did not pay him overtime. The hours Pickens worked weekly fluctuated, but on average, he worked just under 52 hours per week (for an average pay of approximately $5,200 per week).

Pickens sued his employer in 2020 alleging that the company failed to pay him overtime compensation for the hours he worked beyond 40 per week and was joined by several co-workers in a collective action under the FLSA. On summary judgment, the district court determined that Pickens was an exempt worker under the FLSA, and dismissed the co-worker claims because they were not “similarly situated” to Pickens. Pickens and his co-workers appealed.

The Sixth Circuit Court of Appeals reversed and remanded, holding that Pickens had not been correctly classified as exempt. Relying heavily on the Supreme Court’s recent opinion in Helix Energy Sols. Grp. v. Hewitt, 598 U.S. 39 (2023), the Sixth Circuit held that to be paid a salary on a “weekly basis” under § 641.602(a), an employee must be guaranteed a “regular week’s worth of work.” In other words, an employer cannot merely “call[ ] the per-day rate an employee receives for his first day at work each week his ‘weekly salary.’” Instead, a weekly salary must compensate an employee “for the general value of services performed” over the entire week. Otherwise, the court explained, § 541.604(b) and its “reasonable relationship” test would be rendered meaningless. In sum, the court concluded that Pickens was not paid on a “salary basis” under § 641.602(a)—Hamilton-Ryker did not try to argue that his pay satisfied § 541.604(b)—and therefore was owed overtime.

Hamilton-Ryker argued that this conclusion does not adequately address circumstances where, such as with Pickens, the employee’s weekly hours fluctuate so much that his usual weekly earnings cannot be easily approximated pursuant to § 541.604(b)’s “reasonable relationship” test. The court explained that when § 541.604(b)’s approach is not feasible, the employer can either pay the employee pursuant to § 641.602(a), or pay the employee overtime if the employee works over 40 hours in a week. What the employer may not do is neither pay employees a true salary nor pay them overtime.

The FLSA’s many requirements can be difficult to comply with, and misclassifying employees can lead to costly consequences, as it did in Lynwood. Stites & Harbison’s employment attorneys are equipped to help employers ensure they are in compliance with the FLSA and its regulations. If you have any questions regarding classification of employees, please contact a Stites & Harbison employment attorney to discuss.