The U.S. Supreme Court sided 6-3 with an oil rig supervisor, who sued for overtime pay even though his daily rate already earned him up to a quarter-million dollars a year.

Michael Hewitt worked for Helix Energy Solutions Group as a “toolpusher” on an offshore oil rig. Reporting to the captain, Hewitt oversaw various aspects of the rig’s operations and supervised 12 to 14 workers. He typically, but not invariably, worked 12 hours a day, seven days a week – so 84 hours a week – during a 28-day “hitch.” He then had 28 days off before reporting back to the vessel.

Helix paid Hewitt on a daily-rate basis, with no overtime compensation. The daily rate ranged, over the course of his employment, from $963 to $1,341 per day. His paycheck, issued every two weeks, amounted to his daily rate times the number of days he had worked in the pay period. So if Hewitt had worked only one day, his paycheck would total (at the range’s low end) $963; but if he had worked all 14 days, his paycheck would come to $13,482. Under that compensation scheme, Helix paid Hewitt over $200,000 annually.

In 2017 Helix fired Hewitt for performance issues. Hewitt responded by filing an action against his employer seeking overtime pay under the Fair Labor Standards Act of 1938, which guarantees overtime pay to covered employees when they work more than 40 hours a week.

Helix claimed that Hewitt was exempt from the FLSA because he qualified as “a bona fide executive.” 29 U. S. C. §213(a)(1).

The District Court agreed with Helix’s view that Hewitt was compensated on a salary basis, and accordingly granted the company summary judgment. The Court of Appeals for the Fifth Circuit, sitting en banc, reversed that judgment, deciding that Hewitt was not paid on a salary basis and therefore could claim the FLSA’s protections.

The decision of the Court of Appeals was affirmed by the Supreme Court of the United States in the case of Helix Energy Solutions Group, Inc v Hewitt – No. 21-984 (February 2023)

The Fair Labor Standards Act of 1938 (FLSA) guarantees that covered employees receive overtime pay when they work more than 40 hours a week. But an employee is not covered, and so is not entitled to overtime compensation, if he works “in a bona fide executive, administrative, or professional capacity,” as those “terms are defined” by agency regulations.

The FLSA, however, exempts certain categories of workers from its protections, including the overtime-pay guarantee. The statutory exemption relevant here applies to “any employee employed in a bona fide executive, administrative, or professional capacity . . . (as such terms are defined and delimited from time to time by regulations of the Secretary [of Labor]).”

Under applicable regulations, an employee is considered a bona fide executive excluded from the FLSA’s protections if the employee meets three distinct tests: (1) the “salary basis” test, which requires that an employee receive a predetermined and fixed salary that does not vary with the amount of time worked; (2) the “salary level” test, which requires that preset salary to exceed a specified amount; and (3) the job “duties” test..

The Secretary of Labor has implemented the bona fide executive standard through two separate and slightly different rules, one “general rule” applying to employees making less than $100,000 in annual compensation, and a different rule addressing “highly compensated employees” (HCEs) who make at least $100,000 per year. 29 CFR §§541.100, 541.601(a), (b)(1).

The general rule considers employees to be executives when they are “[c]ompensated on a salary basis” (salary-basis test); “at a rate of not less than $455 per week” (salary-level test); and carry out three listed responsibilities – managing the enterprise, directing other employees, and exercising power to hire and fire (duties test). §541.100(a).

The HCE rule relaxes only the duties test, while restating the other two.As litigated in this case, whether Hewitt was an executive exempt from the FLSA’s overtime pay guarantee turns solely on whether Hewitt was paid on a salary basis.

The question here is whether a high-earning employee is compensated on a “salary basis” when his paycheck is based solely on a daily rate – so that he receives a certain amount if he works one day in a week, twice as much for two days, three times as much for three, and so on.

The Supreme Court concluded that Hewitt was not paid on a salary basis, and thus is entitled to overtime pay.

California faces a statewide shortfall for primary care providers. Mid-range forecasts indicate the state would need about 4,700 additional primary care clinicians in 2025 and about 4,100 additional primary care clinicians in 2030 to meet demand.

One of the top recommendations to solve this problem from the California Health Workforce Commission, representing thought leaders from business, health, employment, labor and government, after it spent a year looking at how to improve California’s ability to meet healthcare workforce demands, was to allow full practice authority for Nurse Practitioners.

The California Legislature responded in 2020 by passing AB 890 which was signed by Governor Gavin Newsom. This law created two new categories of Nurse Practitioners (NPs) that can function within a defined scope of practice without standardized procedures. These new categories of NPs are:

– – 103 NP – Works under the provisions outlined in Business and Profession Code Section 2837.103. This NP works in a group setting with at least one physician and surgeon within the population focus of their National Certification
– – 104  NP – Works under the provisions outlined in Business and Professions Code Section 2837.104. This NP may work independently within the population focus of their National Certification.

Previously, although Nurse Practitioners have had more clinical independence than Registered Nurses, California law limited their extended scope of practice to implementation of standardized procedures with physician oversight.

AB 890 required that the California Board of Registered Nursing pass appropriate implementation regulations before the law would go into full effect. The Board conducted widespread outreach and engagement prior to developing the proposed regulatory language to implement AB 890. Extensive and frequent input was received from Board members, advisory committee members, and community stakeholders.

The regulatory language to implement AB 890 has been approved by the Office of Administrative Law on December 30, 2022, and went into effect January 1, 2023. While they do not significantly extend or alter the current NPs scope of practice, the new categories do have additional authority to work without standardized procedures.

All NPs who wish to practice without standardized procedures, must apply to the BRN for a special certification before they can do so. This new authority is not automatically granted to all NPs in California on January 1st.

The law requires a licensee to first work as a 103 NP in good standing for at least 3 years prior to becoming a 104 NP. Consequently, the Board is only able to certify 103 NPs at this time and will not be able to certify 104 NPs until 2026.

According to Business and Profession Code Section 2837.103, the following criteria must be met to become a 103 NP:

– – Has been certified as an NP by the California Board of Registered Nursing.
– – Holds a National Certification in a recognized population focus consistent with 16 CCR 1481 by a national certifying body accredited by the National Commission for Certifying Agencies or the American Board of Nursing Specialties and recognized by the Board.
– – Has completed a transition to practice within the category of their National Certification in California of a minimum of three full-time equivalent years of practice or 4600 hours within 5 years of the date of an application.

An estimated 20,000 nurse practitioners will be eligible to apply for the first phase of expanded authority Nurse Practitioners who meet the requirements for either pathway under AB 890 will have the authority to undertake the following specified functions:

– – Conduct an advanced assessment;
– – Order, perform, and interpret diagnostic procedures;
– – Order diagnostic radiologic procedures and utilize the findings or results in treating a patient;
– – Establish primary and differential diagnoses;
– – Certify disability after physical examination;
– – Delegate tasks to a medical assistant; and
– – Prescribe, order, administer, dispense, procure, and furnish therapeutic measures, including controlled substances, among other pharmacological and non-pharmacological interventions.

The legislation elevates the need to reexamine intersecting statutes, regulations, payer policies, clinical agency operations, interprofessional team structures, health care finance, and employment relationships and align them to fully realize the goals and intent of AB 890.

Accordingly, the California Health Care Foundation published its study: Aligning Nurse Practitioner Statutes in California. The research team reviewed a comprehensive, but not exhaustive, list of California statutes that govern heal- ing arts practitioners and identified opportunities for better alignment between existing laws and new leg- islation or regulatory action.

Labor Code § 3209.10 (a). authorizes NPs functioning pursuant to standardized procedures and acting under the review or supervision of a physician and surgeon, to provide medical treatment in the workers’ compensation insurance program.

Low back pain is currently the leading cause of disability worldwide and the most common reason for workers’ compensation claims.

A new study from the Workers Compensation Research Institute (WCRI) finds that workers’ compensation patients with low back pain reported lower improvements in functional status score following physical therapy than patients covered by other payment systems, such as private insurance, auto insurance, and Medicaid among others.

The study, Patient-Reported Functional Outcomes after Low Back Pain – A Comparison of Workers’ Compensation and Other Payors, examined the difference in the functional recoveries reported by workers’ compensation patients with low back pain, compared with non-workers’ compensation patients.

The study was based on a patient-reported outcome measure that assesses the patient’s functional status during the episode of physical therapy.

The study results are not unexpected. There have been decades of similar reports in the medical literature. Studies have demonstrated that receiving WC is associated with a negative prognosis following treatment for a vast range of health conditions.

For example, on June 7, 2021, the International Journal of Environmental Research and Public Health published its study “Does Workers’ Compensation Status Affect Outcomes after Lumbar Spine Surgery? A Systematic Review and Meta-Analysis” (Int J Environ Res Public Health. 2021 Jun; 18(11): 6165. )

In their study, a systematic search was performed on Medline, Scopus, CINAHL, EMBASE and CENTRAL databases. The review included studies of patients undergoing lumbar spine surgery in which compensation status was reported. A total of 26 studies with a total of 2668 patients were included in the analysis.

WC patients had higher post-operative pain and disability, as well as lower satisfaction after surgery when compared to those without WC. Furthermore, WC patients demonstrated to have a delayed return to work.

“According to our results, compensation status is associated with poor outcomes after lumbar spine surgery. Contextualizing post-operative outcomes in clinical and work-related domains helps understand the multifactorial nature of the phenomenon.”

Indeed, the authors say that several studies have demonstrated that receiving WC is associated with a negative prognosis following treatment for a vast range of health conditions.

Moreover, they claim that interactions of claimants with compensation authorities are often referred to by workers as stressful experiences that might induce poor mental health.

On the other hand, the authors say several procedural and bureaucratic features (e.g., delays in the claim processing times, strict and rigid procedures, lack of communication between workers and authorities) of the WC administrative process can increase the disability duration, thus delaying the reintegration of people into the workforce

California enacted Assembly Bill 51 (AB 51) in October 2019, to protect employees from what it called “forced arbitration” by making it a criminal offense for an employer to require an existing employee or an applicant for employment to consent to arbitrate specified claims as a condition of employment.

But AB 51 criminalizes only contract formation; an arbitration agreement executed in violation of this law is enforceable. California took this approach to avoid conflict with Supreme Court precedent, which holds that a state rule that discriminates against arbitration is preempted by the Federal Arbitration Act (FAA).

The Federal Arbitration Act (FAA)  embodies a “national policy favoring arbitration,” and the Supreme Court has interpreted its scope broadly, see Allied-Bruce Terminix Cos., Inc. v. Dobson, 513 U.S. 265, 274 (1995). Over the years, the Supreme Court has struck down a number of California laws or judge-made rules relating to arbitration as preempted by the FAA.

Mindful of this history, the California legislature engaged in a prolonged effort to craft legislation that would prevent employers from requiring employees to enter into arbitration agreements as a condition of employment, while avoiding conflict with the FAA.

Governor Brown vetoed Assembly Bill 465 in 2015 on the ground that such a “blanket ban” had been consistently struck down in other states as violating the Federal Arbitration Act.” Three years later, the state legislature passed AB 3080 and Governor Brown exercised his veto power again, explaining that AB 3080 “plainly violates federal law.”

After Governor Brown left office, the California Assembly tried again, introducing AB 51 in December 2018. AB 51 added Section 432.6 to Article 3 of the California Labor Code. Section 432.6(a) prohibits employers from requiring employees to waive, as a condition of employment, the right to litigate certain claims. California’s new governor, Gavin Newsom, signed the bill into law, even though AB 51 was identical in many respects to the vetoed AB 3080. (Cal. Lab. Code §§ 432.6(a)-(c), 433; Cal. Gov’t Code § 12953)

The California Senate Judiciary Committee report on AB 51 asserted that AB 51 “successfully navigates around” Supreme Court precedent and avoids preemption by applying only to the condition in which an arbitration agreement is made, as opposed to banning arbitration itself.

However, the 9th Circuit Court of Appeals in the published case of Chamber of Commerce v Bonta -20-15291 (February 2023) disagreed with the Judiciary Committee. The panel held that AB 51’s penalty-based scheme to inhibit arbitration agreements before they are formed violates the “equal-treatment principle” inherent in the Federal Arbitration Act and is the type of device or formula evincing hostility towards arbitration that the FAA was enacted to overcome.

On December 9, 2019, a collection of trade associations and business groups filed a complaint for declaratory and injunctive relief against various California officials. The Chamber of Commerce sought a declaration that AB 51 was preempted by the FAA, a permanent injunction prohibiting California officials from enforcing AB 51, and a temporary restraining order. The district court granted the motion for a temporary restraining order, and after a hearing, issued a minute order granting the motion for a preliminary injunction.

This appeal raises the question whether the FAA preempts a state rule that discriminates against the formation of an arbitration agreement, even if that agreement is ultimately enforceable.

On September 15, 2021, the 9th Circuit published an opinion in this same case concluding that it was not preempted by the FAA, and reversed the district court. In the 2021 decision U.S. Circuit Judge Sandra Segal Ikuta, wrote a dissenting opinion. She commenced her dissent by claiming “Like a classic clown bop bag, no matter how many times California is smacked down for violating the Federal Arbitration Act (FAA), the state bounces back with even more creative methods to sidestep the FAA.”

However, the 9th U.S. Circuit Court of Appeals made an unusual move on Aug. 22, 2022, deciding to rehear this case. “The opinion and dissent filed on September 15, 2021, Dkt. 38, are withdrawn, and the case is resubmitted. The petition for rehearing en banc, Dkt. 41, is DENIED as moot.” After resubmission, the 9th Circuit reversed , and in the new February 15, 2023 opinion, concluded that AB 51 was indeed preempted by the FAA.

Because all provisions of AB 51 work together to burden the formation of arbitration agreements, the panel in the February 2023 decision rejected California’s argument that the court could sever Section 433 of the California Labor Code under the severability clause in Section 432.6(i), and then uphold the balance of AB 51.

It reasoned that “AB 51 provides no authority to delete Section 433, because the severability clause in Section 432.6(i) applies only to Section 432.6.” In any event, the panel could not presume that the California legislature would want to invalidate a generally applicable provision such as Section 433.

The 9th Circuit panel concluded in the February 2023 opinion that “the district court did not abuse its discretion when it granted the Chamber of Commerce’s motion for a preliminary injunction” with Circuit Judge Lucero dissenting.

It held that such a rule is preempted by the FAA. “Because the FAA’s purpose is to further Congress’s policy of encouraging arbitration, and AB 51 stands as an obstacle to that purpose, AB 51 was therefore preempted.”

U.S. Circuit Judge Carlos Lucero, sitting by designation from the Tenth Circuit, dissented and said the Supreme Court and the authors of the Federal Arbitration Act had always intended for arbitration clauses to be “voluntary and consensual.”

“My colleagues’ misinterpretation leaves state legislatures powerless to ensure that arbitration clauses in these employment agreements are freely and openly negotiated.”

New federal Department of Labor figures regarding the massive looting of the nation’s unemployment insurance systems during the pandemic show that California’s improper payment figure has climbed again and is now estimated to be nearly $40 billion.

Labor Department Inspector General Larry Turner testified in front of Congress that an estimated 21.5% of the $888 billion paid out in unemployment benefits across the country were improper.  That means $191 billion dollars were lost to fraud and other more typical bureaucratic incompetencies nationwide.

According to a new report by the California Globe, what that means for California is that nearly $40 billion – or about $1,000 per state resident – was lost.

The new figures also show that, while having only 12% percent of the nation’s residents, California accounted for about 21% of all unemployment expenditures during the pandemic and about 22% of the fraud and other improper payments made nationwide.

This raises the specter of international gangs specifically targeting the state because they quickly became aware of how lax the system was, a system the EDD took more than seven months to put in even the most basic safeguards. Identity experts have said previously that the EDD, even with its antiquated tech systems, could have added a “bolt on” security program for a few million dollars in about a week’s time very early in the pandemic.

In the past, the EDD has claimed that “95%” of the fraud losses were directly related to the federal PUA (pandemic unemployment assistance) program.

PUA – which offered assistance to those who would not normally qualify for benefits like independent contractors, freelancers, etc. – was only one of the federal unemployment programs created at the start of the pandemic and accounted for about 15% of the overall national (state and federal) payment total of $888 billion. Regular state funds, the FPUC (the $600 then $300 weekly supplement that was available for about a year during the pandemic,) and other programs made up the rest.

Turner added the fraud estimate percentage for the PUA itself – unlike all of the other programs – has not yet been determined though he expects it to be higher than the 21.5 % averaged by all other payment types.

Exactly how much California received – and lost – as part of the PUA system should become clearer when the Department of Labor completes its PUA audit in the coming months.

At the end of January, new EDD chief Nancy Farias told the Sacramento Bee that she blamed the problem on the Trump administration for neglecting “state efforts to combat domestic and foreign criminals collecting billions of dollars fraudulently from overwhelmed unemployment systems.”

Exactly how the Trump administration could have been at fault remains unclear – for example, when the EDD finally added some security “friction” to the system, Trump was still president and his administration clearly did not stop them from hiring ID.me and, therefore, undoubtedly would not have stopped them from doing so earlier on in the pandemic.

It should also be noted the Trump administration provided the EDD with an additional $788 million just to cover the department’s additional administrative costs caused by the pandemic.  With a typical annual administration/operations budget estimated to be in the one billion dollar range, that amounts to an annual budget bump of about 40% during the pandemic.

A Department of Labor spokeswoman said they will be spending about $1.6 billion around the nation in the coming months in an attempt to modernize and secure unemployment benefit systems. The OIG has made several recommendations to DOL and Congress to improve the efficiency and integrity of the UI program.

While action has been taken to resolve some recommendations, further action is still needed. The OIG report provided summaries of key recommendations that remain open on page 19 of the 28 page report.

As of February 9, the EDD owes the feds $18,507,914,539.74 in principal and $107,155,511.76 in interest, money that will be paid back by increasing the unemployment insurance taxes state businesses pay.