The Fifth Circuit recently clarified how courts should evaluate the “highly compensated employee” (“HCE”) exemption under the Fair Labor Standards Act (“FLSA”) in Gilchrist v. Schlumberger Technology Corp. (5th Cir. July 14, 2025). To qualify for the HCE exemption, an employee must earn at least $100,000 annually and must “customarily and regularly” perform at least one duty from the executive, administrative, or professional exemptions. While the bar is lower than for standalone white-collar exemptions, salary alone does not automatically exempt an employee from overtime requirements. The court emphasized that an employee’s high compensation is a strong indicator of exempt status, but only when the job duties meet the necessary criteria.
In this case, the plaintiffs were Measurement-While-Drilling (“MWD”) Field Specialists who earned more than $200,000 per year. They were responsible for providing real-time drilling data to Schlumberger’s clients—data that was critical to the success and safety of drilling operations. The district court concluded that their tasks were too routine and production-focused to qualify as exempt administrative duties, and ruled they were owed overtime. The Fifth Circuit reversed, finding that the MWDs’ quality control work and client-facing responsibilities met the “customarily and regularly” standard, and that their role involved decision-making and judgment impacting the client’s drilling strategy.
The Fifth Circuit further noted that the district court applied the stricter standard reserved for standalone exemptions, rather than the more flexible HCE test. The appellate court emphasized that the HCE exemption does not require that exempt duties be an employee’s “primary duty”—only that such duties are performed more than occasionally. This case serves as a critical reminder that employers must evaluate both compensation and duties when applying the HCE exemption, and that a fact-specific inquiry remains essential in any exemption analysis.
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