What the Fifth Circuit's Hybrid Pay Ruling Means for Oilfield Day Rates
The short answer. In June 2026, the Fifth Circuit held in Guilbeau v. Schlumberger Technology Corp. that a guaranteed salary plus day rates and bonuses can satisfy the FLSA salary basis test, even when the variable pay is most of what the employee takes home. That is good news for oilfield service companies using hybrid pay. But the ruling only protects a plan that is built and run correctly: a real guaranteed salary, never docked, clearly separated from the variable pay. Most of the risk now lives in payroll execution, not plan design.
I wrote earlier this summer about how day rates, salaries, and per diem create overtime risk. Since the Supreme Court's 2023 decision in Helix Energy Solutions v. Hewitt, a lot of companies have moved field leads and specialists from straight day rates to a salary plus a day rate. Guilbeau is the first big appellate answer on whether that works.
What the Court Decided
The case involved a directional driller and an MWD hand. Each was paid a fixed biweekly salary, plus rig day rates, standby rates, and bonuses. In one case, total pay ran almost six times the guaranteed salary. The employees argued the day rates were the real pay, so the salary basis test should fail the same way it did in Helix.
The court disagreed. It analyzed the pay under the general salary basis rule in 29 C.F.R. § 541.602(a): a predetermined amount paid each period that is not reduced because of the quality or quantity of work. A large variable component on top of that salary did not change the answer.
A few limits matter:
- The ruling addressed the salary basis piece of the highly compensated employee exemption. It did not decide whether every field employee meets the duties test or the total compensation threshold.
- It was an interlocutory appeal, and fact questions remain for other employees in the case. The plaintiffs also asked for rehearing, so watch for updates.
- It is binding in the Fifth Circuit (Texas, Louisiana, and Mississippi). Other circuits may see it differently.
Where Companies Still Get Burned
The legal structure is only as good as the payroll run behind it. In my experience with oilfield payroll, these are the problems that undo a hybrid plan:
- Docking the salary. A slow week, a weather delay, or a hand who left a hitch early, and someone reduces the base. That is exactly the kind of deduction that puts the salary basis at risk.
- Offer letters that blur the line. If the paperwork suggests the salary depends on days or shifts worked, you invite the stricter test the court did not apply here.
- Day rates tracked in a side spreadsheet. Base pay sits in the payroll system, day rates and bonuses live in someone's workbook, and nobody can produce a clean history when asked.
- Classifying by title. Calling someone a supervisor does not satisfy the duties test. Hands doing hands-on manual work are a hard fit for these exemptions regardless of how they are paid.
- Billing and payroll that disagree. When the stage count on the invoice does not match the stage count on the payroll sheet, you have a customer problem and a wage problem at the same time.
| Pay Structure | Exemption Position | Main Risk | Admin Load |
|---|---|---|---|
| Straight day rate | Generally nonexempt after Helix unless strict conditions are met | Unpaid overtime on long hitches | High: regular rate and overtime math every week |
| Salary only | Can be exempt if duties and salary tests are met | Recruiting and retention when hands want day-rate upside | Low |
| Hybrid, run in spreadsheets | Supported by Guilbeau if the salary is guaranteed and undocked | Formula errors, salary docking, no audit trail | High |
| Hybrid, run through a structured workflow | Same legal position, with records to prove it | Duties and threshold questions still apply | Lower: data entered once |
Getting Payroll to Match the Plan
The fix is less about legal theory and more about where the numbers come from. When rig days, standby days, and bonuses are captured on a digital field ticket and approved by a supervisor, payroll gets one verified set of numbers instead of a stack of texts and a spreadsheet.
In a Microsoft 365 setup, that looks like a mobile ticket form, an approval step in Teams, and a Power Automate flow that sends approved variable pay to payroll as its own line items. The guaranteed salary sits in the payroll system as a fixed amount that the workflow never touches. I walk through that build in more detail in the companion post on hybrid pay and digital field ticketing.
Four Steps to Take Now
- Review job duties for everyone on hybrid pay. Make sure the people you treat as exempt are doing exempt work, and that their total pay clears the threshold for the exemption you rely on.
- Rewrite offer letters and pay plans. State the guaranteed salary plainly and keep it separate from day rates, standby, and bonuses.
- Lock the base salary in payroll. Remove anyone's ability to reduce it for days not worked, weather, or standby, and document how true exceptions are handled.
- Capture variable pay at the source. Digital field tickets with supervisor approval give you a record that matches what you billed.
Frequently Asked Questions
What did the Fifth Circuit decide in Guilbeau v. Schlumberger?
The court held that oilfield employees paid a fixed biweekly salary plus day rates and bonuses were paid on a salary basis under 29 C.F.R. § 541.602(a), even though the variable pay often made up most of their compensation. The decision addressed the salary basis part of the highly compensated employee exemption and left other questions, like job duties, for further proceedings.
Can Texas oilfield employers pay a straight day rate without paying overtime?
Generally, no. After Helix Energy Solutions v. Hewitt, a straight day rate does not meet the salary basis test unless strict conditions are met, including a weekly guarantee that bears a reasonable relationship to usual earnings. Nonexempt day-rate employees are owed overtime at one and a half times their regular rate for hours over 40 in a workweek.
How do oilfield companies keep hybrid pay compliant day to day?
Keep the guaranteed salary fixed in payroll and never reduce it for days not worked. Capture day rates, standby, and bonuses on approved digital field tickets so payroll uses the same verified numbers as billing. Keep offer letters clear about which pay is guaranteed and which is variable.
Running hybrid pay out of a spreadsheet? Book a free 15-minute Workflow Review and we'll look at how your field days get from the ticket to the paycheck.
Sources: Jackson Lewis: Fifth Circuit Allows Employer's Hybrid Pay Plan for Exempt Oilfield Workers, Holland & Knight: Hybrid Pay and FLSA Overtime Exemptions, 29 CFR 541.602, Helix v. Hewitt. This article is general information, not legal advice. Talk with employment counsel before changing a pay plan.