On October 15, 2026, the Dallas Court of Appeals issued a published opinion holding that when an action includes claims that are not subject to arbitration under the Federal Arbitration Act along with claims that are subject to arbitration, the entire dispute must remain in court.  In Whataburger Restaurants, LLC v. Garcia, the court held that the former employee properly invoked the federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA), rendering her pre-dispute arbitration agreement unenforceable as to her entire case, including claims that were not themselves sexual assault claims.

Background

In that case, Garcia, a former Whataburger franchise employee, signed an arbitration agreement requiring the mandatory arbitration of employment-related disputes, including claims of discrimination and sexual harassment. The agreement provided that the Federal Arbitration Act would govern.

Garcia later sued Whataburger alleging that the franchisee’s operating engaged in unwanted, non-consensual sexual contact with her at work and that, after she reported it to management, Whataburger took adverse actions that led to her termination. Garcia asserted claims for sexual assault, hostile work environment and retaliation under the Texas Labor Code, common law claims for assault and battery and intentional infliction of emotional distress against the individual operating partner and negligent hiring, retention, and supervision and gross negligence against Whataburger.

Whataburger and partner moved to compel arbitration. Garcia did not dispute that she signed the agreement but argued the EFAA exempted her case. In an amended response, she attached her sworn charge of discrimination filed with the Texas Workforce Commission Civil Rights Division, which alleged, among other things, that the partner touched her thigh and buttocks and made sexual comments. The trial court denied the motion in its entirety, and the defendants appealed.

The Court’s Analysis

The EFAA provides that, at the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute, a pre-dispute arbitration agreement is not valid or enforceable “with respect to a case” that relates to that dispute. A “sexual assault dispute” is defined as a dispute “involving a nonconsensual sexual act or sexual contact,” as those terms are defined in federal law. Whether the EFAA applies is a question for the court, not an arbitrator, according to the Dallas court.

The employer argued that Garcia had not pleaded facts showing that the partner and alleged harasser touched any body part listed in the federal definition of “sexual contact,” or that he acted with the required intent, and that her Chapter 21 claims did not mention sexual assault. Alternatively, the defendant also argued that even if the sexual assault and sexual harassment claims could not proceed in arbitration the remaining claims could be arbitrated.  The court rejected those arguments.

The court held that because the EFAA makes an arbitration agreement unenforceable “with respect to a case.” Thus, when one claim in a suit alleges a sexual assault or sexual harassment dispute, the agreement is unenforceable as to every claim in that case.

A copy of the Dallas Court of Appeals’ opinion in Whataburger Restaurants, LLC v. Garcia is available here.

On June 23, 2026, the Fifth Circuit issued its decision in Brenyah v. Columbia Hospital Corporation of Bay Area, affirming summary judgment for the employer on the plaintiff’s race and national origin discrimination, retaliation, ADA disability discrimination, ADA failure-to-accommodate, ADA interference, and Section 1981 -but reversing and remanding her Title VII and Section 1981 hostile work environment claims for further proceedings.

Background

Brenda Brenyah, a Black woman and naturalized U.S. citizen born in Ghana, began working as a registered nurse at Corpus Christi Medical Center’s (CCMC) Bay Area Hospital in March 2017. Shortly after starting, she alleged that Hispanic nurses in her unit frequently mocked her and a Black colleague’s African food and accents, made derogatory comments about Black employees, and expressed overt preferences for Filipino employees. Brenyah reported the behavior to multiple supervisors, who she contends conducted an inadequate investigation and allowed the conduct to continue. She also alleged that supervisors retaliated against her by issuing disciplinary coaching and extending her probation.

In August 2017, Brenyah was in a car accident, took medical leave, and was later diagnosed with a herniated disc and torn knee ligament. While on leave, she sought treatment at a different CCMC facility during Hurricane Harvey, leading to a contentious interaction with on-duty personnel and her eventual escort off the premises by police. She never returned to work, instead sending a letter in March 2018 advising CCMC of her forced resignation and citing discrimination and retaliation.

Brenyah filed two EEOC charges and sued CCMC in 2021 asserting Title VII and Section 1981 race and national origin claims, ADA disability discrimination and failure-to-accommodate claims, and ADA interference claims. The district court granted summary judgment for CCMC across the board. This appeal followed.

Exhaustion: The Second Charge Was Untimely

As a threshold matter, the court held that Brenyah’s second EEOC charge—filed in February 2019—was untimely. Because her alleged discriminatory conduct ended no later than her March 21, 2018 resignation, the 180-day filing deadline expired in September 2018. Brenyah argued that a federal government shutdown tolled the deadline, but the court rejected that argument, noting that the EEOC’s own guidance extended submission deadlines only for documents the agency had requested—not for new charges. As a result, the court considered only claims within the scope of Brenyah’s first, timely charge.

Discrimination Claims: Pretext Evidence Fell Short

The court found that CCMC’s extension of Brenyah’s probation qualified as an adverse employment action—probationary employees were subject to termination without cause and did not accrue seniority—satisfying Brenyah’s prima facie case under Muldrow v. City of St. Louis. However, her discrimination claims failed because she could not demonstrate that CCMC’s legitimate, nondiscriminatory reason for the extension—documented time-management and documentation deficiencies—was a pretext for discrimination.

The court noted that the record directly contradicted Brenyah’s claim that she never received a time-management plan or coaching, and that her proposed comparators—two Hispanic nurses who had extended their shifts—had done so far less frequently than she had. Without evidence that nurses outside her protected class were treated differently under nearly identical circumstances, her disparate treatment theory could not survive.

ADA Claims: No Causal Link; No Accommodation Request

The court affirmed summary judgment on both the ADA disability discrimination and failure-to-accommodate claims. The disability discrimination claim failed at the causation element: CCMC extended Brenyah’s probation before she developed her disability, severing any causal connection.

The failure-to-accommodate claim failed because Brenyah did not adequately put CCMC on notice that she needed accommodations when she sought to return to work. Her August 2017 communications referenced a doctor’s recommendation for light duty, but her subsequent communications through early 2018 focused on reorientation and training—not accommodations. Her own doctor’s records, which she transmitted to CCMC, showed that physical restrictions were only recommended through January 7, 2018, arguably signaling that no accommodation was needed by the time she sought to return.

Hostile Work Environment: Summary Judgment Reversed

The court reversed on Brenyah’s Title VII and Section 1981 hostile work environment claims, holding that she had raised genuine disputes of material fact on the two contested elements: severity/pervasiveness and the adequacy of CCMC’s remedial response.

On severity and pervasiveness, the court found that a reasonable jury could rule in Brenyah’s favor based on evidence that the harassing conduct—mocking of African food and accents, derogatory comments about Black employees, expressed racial preferences—occurred almost every shift and impaired her work performance. The court also considered second-hand harassment directed at Brenyah’s Black colleague, including a nurse telling him to stay twelve feet away due to his race, his being reassigned away from patients who did not want a Black nurse, and his being called racial slurs. Evidence from the Doctors Regional incident also counted, because CCMC employees’ conduct there led to disciplinary reports that had professional consequences for Brenyah at her place of employment.

On the employer’s response, the court found competing evidence sufficient to create a jury question. While CCMC investigated and offered Brenyah a transfer to a different unit, Brenyah produced evidence that the investigation was neither prompt, thorough, nor transparent. Among other things, a Black employee on the unit was not interviewed contrary to the supervisor’s assertion, no interview summaries were created despite standard practice, and Brenyah was told that “the cliques were not going anywhere”—suggesting the employer did not intend to end the conduct. The harassing behavior also continued after the investigation.

Practical Impact

For Texas employers, Brenyah reaffirms several core principles:

  • The EEOC charge filing deadline is strictly enforced, and a government shutdown does not toll the deadline for filing an initial charge.
  • Documented, contemporaneous performance issues remain a strong basis for legitimate, nondiscriminatory reasons for adverse employment actions.
  • An employee’s failure to affirmatively request accommodations when returning from medical leave may defeat a failure-to-accommodate claim, particularly where the employee’s medical documentation suggests restrictions have expired.
  • Hostile work environment claims that involve frequent, racially-charged conduct—especially where the employer’s investigation is demonstrably flawed—are difficult to resolve on summary judgment.

A copy of the court’s opinion in Brenyah v. Columbia Hospital Corporation of Bay Area is available here.

 

On May 28, 2026, the United States Supreme Court issued a unanimous decision in Flowers Foods, Inc. v. Brock, No. 24-935, holding that a local delivery driver who picks up and delivers goods entirely within one state can qualify for the Federal Arbitration Act’s transportation-worker exemption if his intrastate route forms part of a continuous interstate journey—even if he never crosses a state line or interacts with vehicles that do.

Background

Flowers Foods, one of the Nation’s largest packaged baked goods producers, distributes its products through franchisee-distributors who purchase rights to serve specific territories. Angelo Brock is one such distributor serving Denver. He picks up Flowers products from a Colorado warehouse and delivers them to local retail stores without ever leaving the state.

In 2022, Brock sued Flowers alleging underpayment under federal and state wage laws. Flowers moved to compel arbitration under an arbitration clause in Brock’s distribution agreement. The district court denied the motion, and the Tenth Circuit affirmed, holding that Brock belonged to a class of workers “engaged in interstate commerce” under Section 1 of the FAA—and thus fell within the statute’s transportation-worker exemption—because his intrastate route was a constituent part of an interstate journey.

The Court’s Analysis

Section 1 of the FAA exempts from the Act’s arbitration-enforcement provisions the “contracts of employment . . . of any other class of workers engaged in foreign or interstate commerce.” 9 U.S.C. § 1. Flowers Foods is the fourth consecutive case in which the Supreme Court has rejected efforts to narrow that exemption. See New Prime Inc. v. Oliveira, 586 U.S. 105 (2019); Southwest Airlines Co. v. Saxon, 596 U.S. 450 (2022); Bissonnette v. LePage Bakeries Park St., LLC, 601 U.S. 246 (2024).

Justice Gorsuch, writing for a unanimous Court, rejected Flowers’s proposed bright-line rule that a worker must either cross state lines or interact with vehicles that do. The Court anchored its analysis in the text: when the FAA was enacted in 1925, “interstate commerce” encompassed the intrastate legs of a continuous interstate journey, and nothing in the word “engaged” required a worker to personally cross a state line. The Court drew support from The Daniel Ball, 10 Wall. 557 (1871), which held that a steamer operating entirely within Michigan was “engaged in commerce between the States” because it carried goods destined for or arriving from other states—establishing that using multiple independent carriers, some acting wholly within a single state, does not alter the interstate character of a continuous shipment.

The Court declined to address two alternative arguments Flowers raised but did not fully brief: whether the exemption applies when a worker contracts through an independently-operated business entity (a question on which circuits are split) and whether a distributor who purchases and takes title to goods before reselling them stands outside Section 1’s reach. Both issues remain open for future cases.

Practical Takeaways

  • Intrastate routes are not a safe harbor. Texas employers that use arbitration agreements with local delivery drivers or distributors cannot assume those agreements are enforceable under the FAA simply because the workers never leave the state. If the goods they deliver originated out of state as part of a continuous shipment, the Section 1 exemption may apply.
  • State arbitration law may offer an alternative path. Section 1 limits only the FAA. Texas’s General Arbitration Act does not contain an equivalent transportation-worker exemption, and arbitration agreements that expressly invoke state law arbitration provisions in the event a court determines the FAA does not apply may provide an avenue to enforce individual, non-class arbitration of disputes with transportation workers.

A copy of the Court’s opinion is here.

On June 12, 2026, the Fifth Circuit issued its decision in Guilbeau v. Schlumberger Technology Corporation, No. 25-50594, holding that a hybrid compensation scheme combining a fixed biweekly salary with variable day rates qualified as “salary basis” pay under the FLSA, exempting the named plaintiff from overtime as a highly compensated employee (HCE).

Background

Schlumberger paid its Directional Drillers and Measurements While Drilling employees under a hybrid system: a fixed biweekly salary that did not vary with hours or days worked, plus variable day-rate pay for each day worked on a rig. The variable component often comprised the majority of an employee’s total compensation. The plaintiffs brought a collective action seeking overtime pay, arguing the day-rate component of their pay disqualified them from salaried exempt status. The district court denied Schlumberger’s motion for summary judgment, and the Fifth Circuit accepted interlocutory appeal.

The Court’s Analysis

The FLSA’s overtime exemption for HCEs requires, among other things, that the employee be paid on a “salary basis.” Two regulatory pathways exist. Under 29 C.F.R. § 541.602(a), an employee is salaried if he receives a predetermined amount each pay period on a weekly or longer basis that does not vary with work quantity or quality — with additional variable compensation permitted on top. Under 29 C.F.R. § 541.604(b), employees paid on an hourly or daily basis can still qualify as salaried, but only if a “reasonable relationship” exists between guaranteed and actual pay — a standard the Fifth Circuit has interpreted to require that actual earnings not exceed 1.5 times the guaranteed amount.

The critical question was which pathway applied. If Section 604(b) governed, the plaintiffs would win — their ratio of actual to guaranteed pay far exceeded the 1.5-to-1 ceiling. The court held, however, that Section 602(a) controlled because the guaranteed salary was a predetermined sum calculated on a biweekly basis and not derived from hours or days worked. The variable day rates were simply permissible “additional compensation” that did not disturb the salary basis classification. The court reaffirmed its earlier holding in Venable v. Smith International, 117 F.4th 295 (5th Cir. 2024), that the nature of the guaranteed pay — not the variable component — determines which regulatory pathway governs.

The court reversed and ordered summary judgment for Schlumberger on the named plaintiff’s claims, but remanded for further proceedings on the remaining collective members, whose individual job duties, compensation levels, and salary thresholds had not been fully developed in the record.

Practical Takeaways

For employers using hybrid pay structures, Guilbeau reinforces several important points:

  • A fixed salary meeting the weekly minimum establishes salary basis under Section 602(a) even where variable pay comprises the majority of actual compensation — provided the salary is truly predetermined and not derived from hours or days worked.
  • The cautionary counterpoint remains that where a guaranteed minimum that was simply a function of an hourly rate times hours was treated as hourly pay — not a salary — and subjected to the more demanding Section 604(b) reasonable relationship test.
  • Collective actions involving hybrid pay carry individual-inquiry risks. Even where the named plaintiff is exempt, other collective members may present individualized questions about duties and compensation that require separate analysis.

A copy of the Fifth Circuit’s opinion is available here.

Since the COVID-19 pandemic and the necessity that many jobs be performed, at least temporarily, from home, employers and employees have litigated numerous disputes over when work-from-home eliminates an essential function of a position (i.e., onsite attendance) or is a reasonable accommodation. On May 8, 2026, the United States Court of Appeals for the Fifth Circuit issued a decision in Hayes v. GStek, Incorporated, No. 25-30392, affirming the dismissal of an employee’s Americans with Disabilities Act (ADA) claims where the employee’s requested accommodation — full-time telework — would have eliminated an essential function of his job. The decision provides useful guidance for employers navigating ADA accommodation requests in a post-pandemic workplace.

Background

Albert Hayes worked as a contract IT systems administrator at Fort Polk’s Army Network Enterprise Center through GStek, Inc., an Army contractor. During the COVID-19 pandemic, Hayes was permitted to telework on a temporary basis. When GStek and the Army transitioned employees back to in-person work in February 2022, Hayes was overstimulated by his return to the office and was subsequently diagnosed with Autism, Major Depressive Disorder, and Social Anxiety Disorder. In August 2022, Hayes was admitted to inpatient psychiatric care due to suicidal ideations.

In October 2022, Hayes submitted a physician’s note and formally requested full-time telework as a reasonable accommodation. While GStek’s project manager was initially receptive, the Army determined that allowing full-time telework for its contractors’ employees would not be in the best interest of the organization. Because Army officials retained express authority to control conditions of GStek employees’ work at the base — including telework eligibility — GStek could not unilaterally grant the request. As a partial accommodation, GStek permitted Hayes to work from home two to three days per week beginning in December 2022.

In January 2023, Hayes had a mental breakdown and thereafter communicated to GStek that he needed to work from home full-time. After GStek received no response to Hayes’s inquiry about whether he needed to report to work, GStek terminated his employment on January 25, 2023, citing absenteeism and other concerns. Hayes filed a charge of discrimination with the EEOC, received a right-to-sue notice, and brought suit against GStek asserting three ADA claims: failure to accommodate, disability discrimination, and retaliation. The district court granted GStek’s motion for judgment on the pleadings and dismissed all three claims with prejudice. Hayes timely appealed.

The Fifth Circuit’s Analysis

Failure to Accommodate

To prevail on a failure-to-accommodate claim under the ADA, a plaintiff must show: (1) he is a qualified individual with a disability; (2) the disability and its limitations were known to the employer; and (3) the employer failed to make reasonable accommodations for those known limitations. The threshold question in Hayes was whether Hayes qualified as a “qualified individual” — meaning he could perform the essential functions of his job with or without a reasonable accommodation.

The court held that in-person attendance was an essential function of Hayes’s position. Several factors supported this conclusion. The Army — which retained contractual authority over conditions of employment at Fort Polk — determined that full-time telework was not in the organization’s interest. Current incumbents performing similar contract services for the Army did not receive telework accommodations. Hayes’s supervisor further noted that granting full-time telework to Hayes could open the door to similar requests from other employees, potentially jeopardizing GStek’s contractual relationship with the Army.

The court also emphasized that an employer’s ability to supervise employees is a relevant factor in assessing whether a telework accommodation is reasonable, and that direct supervision is inherently more difficult when employees never report to the office. Hayes himself acknowledged multiple instances where he and his supervisor were unable to communicate effectively.

Critically, the court reaffirmed the established principle that temporary pandemic-era telework arrangements do not permanently alter the essential functions of a job. Citing its earlier decision in Ray v. Columbia Brazoria Indep. Sch. Dist. (5th Cir. Apr. 28, 2025), the court stated that an employer’s decision to permit telework during COVID-19 for health and safety reasons does not mean that telework becomes a feasible or required accommodation going forward.

Because full-time telework would have required eliminating an essential in-person function of Hayes’s job, the court found it was not a reasonable accommodation. The court further noted that GStek satisfied its statutory obligation by providing the partial accommodation of two to three days of remote work per week — and that the ADA does not require an employer to provide an employee’s preferred accommodation, only a reasonable one.

Disability Discrimination

Hayes’s disability discrimination claim fared no better. Analyzed under the familiar McDonnell Douglas burden-shifting framework, Hayes was required to establish, among other things, that he was a qualified individual for his position. Because the court had already determined that Hayes was not qualified — he could not perform the essential in-person functions of his job even with a reasonable accommodation — his discrimination claim failed at the prima facie stage.

Retaliation

The court also affirmed dismissal of Hayes’s retaliation claim. To establish a prima facie case of ADA retaliation, a plaintiff must show: (1) he engaged in ADA-protected activity; (2) he suffered an adverse employment action; and (3) a causal connection exists between the two. Hayes argued that the temporal proximity between his accommodation request and his termination established causation.

The court disagreed for two reasons. First, three months elapsed between Hayes’s initial accommodation request and his termination — a gap the court found insufficient to establish the “very close” temporal proximity required to support an inference of causation. Second, and more fundamentally, because Hayes was unable to perform the essential functions of his job, his accommodation request was unavailing as a matter of law, and a failed request for an accommodation cannot serve as the basis for a viable retaliation claim.

Practical Takeaways

Hayes v. GStek offers several practical reminders for employers:

  • Pandemic telework does not create a permanent accommodation baseline. Employers who permitted employees to work remotely during COVID-19 did not thereby transform telework into an essential job accommodation. The temporary nature of pandemic-era arrangements should be documented clearly.
  • In-person attendance remains an essential function of most jobs. Courts continue to recognize regular worksite attendance as an essential function, and full-time telework is rarely a reasonable accommodation, particularly where the employer’s operational needs or contractual obligations require in-person presence.
  • An employer satisfies the ADA by providing a reasonable accommodation, not the employee’s preferred one. Where an employer makes a good-faith effort to provide a partial accommodation that does not require eliminating essential job functions, it has likely met its statutory obligation.
  • Contractors operating under client-controlled work conditions should document those constraints. GStek’s contractual relationship with the Army — including the Army’s express authority to set telework policies for contract employees — was significant to the court’s analysis. Employers in similar third-party-controlled environments should ensure those constraints are clearly documented.

A copy of the opinion in Hayes v. GStek, Inc. is available here.

Earlier this year, the United States Court of Appeals for the Fifth Circuit issued a significant decision in Trinseo Europe GmbH v. Kellogg Brown & Root, L.L.C., No. 24-20460, providing important guidance on damages calculation in trade secret misappropriation cases. The case demonstrates the importance of apportioning damages among the various trade secrets that are misappropriate or risk a loss of the damages award if less than all of the information misappropriated qualifies as trade secrets.

Background

The dispute involved polycarbonate manufacturing technology developed by Dow Chemical and later acquired by Trinseo. Trinseo alleged that former Dow employees formed a consulting group and, along with Kellogg Brown & Root (KBR), misappropriated ten trade secrets in violation of the Defend Trade Secrets Act (DTSA). At trial, the jury found liability on four of the ten alleged trade secrets and awarded Trinseo over $75 million in damages.

The Fatal Flaw: Failure to Apportion

Despite the jury’s favorable findings, Trinseo’s damages award was vacated because the damages expert failed to apportion damages between the ten “trade secrets” that were misappropriated.  Trinseo’s damages expert provided estimates that assumed misappropriation of all ten alleged trade secrets. The expert failed to individually value each trade secret or offer any methodology for the jury to calculate damages based on fewer than ten secrets.

The Fifth Circuit’s Analysis

The Fifth Circuit affirmed the district court’s decision, holding that trade secret damages must be apportioned when the plaintiff alleges multiple trade secrets but only proves misappropriation of some of them. The court applied the reasoning from patent infringement cases to conclude that when the accused technology does not comprise the entire accused product, damages must be apportioned between patented and unpatented features. The Fifth Circuit held that the same principle applies in trade secret cases. Because Trinseo presented damage estimates premised on all ten trade secrets, but the jury found only four were misappropriated, there was no reasonable basis for the jury to calculate damages.  Thus, the damage award was vacated because the plaintiffs bundled the trade secrets together without providing per-secret valuations.

TUTSA Preemption: No End-Run Around Trade Secret Standards

Also notable was the holding that the Plaintiff’s alternative common-law claims for “misappropriation of confidential information” were preempted by the Texas Uniform Trade Secrets Act (TUTSA).  Trinseo had asserted these claims in the alternative, hoping that if certain information failed to qualify as a trade secret, it might still recover under a common law claim of confidential information misappropriation.

The court held that the Texas Uniform Trade Secrets Act (TUTSA) preempts such claims when they are premised on the same information and facts as the trade secret claims. Looking to the substance of Trinseo’s pleadings—which alleged the confidential information was used in business, provided competitive advantage, and was kept substantially secret—the court concluded that the information fell within TUTSA’s definition of a trade secret and was therefore preempted by TUTSA and the district court’s dismissal of the common law claim on summary judgment was proper.

You can download the entire opinion in Trinseo Europe GmbH v. Kellogg Brown & Root, L.L.C. here.

Beginning September 1, 2025, noncompetition agreements with dentists, professional and vocational licensed nurses, and licensed physician assistant (collectively “health care practitioners”) must include:

  • An option to buy-out of the noncompete in an amount not greater than the practitioner’s total annual salary and wages at the time of termination;
  • Temporal limitations not greater than one-year following the termination of employment;
  • Geographic limitations not greater than a five-mile radius from the primary practice locations of the health care practitioner;
  • Be clearly and conspicuously stated in writing.

Agreements that do not include these provisions are likely to be held unenforceable.

Doctor with a stethoscope
Online Marketing, Unsplash

Effective September 1, 2025, the Texas Legislature imposed additional restrictions for enforceable noncompetition agreements with physicians entered on or after that date.  For agreements entered after September 1, 2025, in addition to the other longstanding restrictions, the agreements must not:

  • Include a buy-out that is greater than the total annual salary and wages of the physician at the time of termination.
  • Last longer than the one-year anniversary of the date the contract or employment is terminated.
  • Be greater geographically than a five-mile radius from the location at which the physician primarily practiced before termination.
  • Be clearly and conspicuously stated in writing.

Importantly, the new law also provides that a noncompete relating to the practice of law with a physician licensed by the Texas Medical Board is void and unenforceable against a physician who is involuntarily terminated without “good cause”.  “Good cause” means a reasonable basis for discharge that is directly related to the physician’s conduct on the job or otherwise, job performance, and contract or employment record.

On July 14, 2025, the U.S. Court of Appeals for the Fifth Circuit issued a significant decision addressing the application of the Fair Labor Standards Act (FLSA) overtime exemption for highly compensated employees (HCEs) in the oilfield services sector. In Gilchrist v. Schlumberger Technology Company, the court reversed a district court ruling and held that two former employees of an oilfield services company, who worked as Measurements While Drilling Field Specialists (MWDs), were exempt from FLSA overtime requirements due to their level of compensation and their administrative and advisory duties.

Background

The plaintiffs, who served as MWDs, were responsible for providing real-time downhole data—such as drilling trajectory, pressure, and temperature—to clients engaged in oil and gas exploration. Their work was critical to ensuring safe and efficient drilling operations, as errors could result in significant operational and safety risks. The MWDs’ primary responsibilities included rigging up equipment, monitoring and quality checking drilling data, and communicating findings to the directional driller and, ultimately, the client.

Despite earning annual compensation well above the regulatory threshold for HCEs (over $200,000), the plaintiffs were not paid overtime. They brought suit, alleging they were not exempt from FLSA overtime provisions. The district court found in their favor, concluding that their duties did not qualify as exempt administrative or executive work.

Fifth Circuit’s Analysis

On appeal, the Fifth Circuit focused on whether the plaintiffs met the requirements for the HCE exemption under 29 U.S.C. § 213(a)(1) and 29 C.F.R. § 541.601(a). The parties agreed that the compensation and non-manual work requirements were satisfied; the dispute centered on whether the plaintiffs “customarily and regularly performed” at least one exempt administrative or executive duty.

The court held that the MWDs performed two qualifying administrative duties:

  1. Quality Control: The court found that the MWDs’ role in quality checking drilling data before it was provided to clients constituted administrative quality control work, as contemplated by the regulations. The MWDs were responsible for ensuring the accuracy and completeness of data logs, removing erroneous data, and preparing final reports for client review. This work was performed “customarily and regularly,” meeting the regulatory standard for frequency.
  2. Advisory and Consulting Functions: The court also determined that the MWDs acted as advisers to the company’s clients by providing essential real-time information and guidance during drilling operations. Drawing on recent Fifth Circuit precedent, the court concluded that such advisory work directly related to the management or general business operations of the employer’s customers, satisfying the administrative exemption criteria.

The Fifth Circuit rejected the district court’s reliance on prior, more restrictive interpretations of the administrative exemption and clarified that, under the HCE exemption, a “fair reading” of the regulations is required. The court also noted that the HCE exemption imposes a more flexible duties standard than the standalone administrative exemption, requiring only that the employee customarily and regularly perform one qualifying duty.

Because the plaintiffs’ administrative duties were sufficient to satisfy the HCE exemption, the court did not address arguments regarding executive duties or the exercise of discretion and independent judgment.

Practical Impact

This decision reinforces the applicability of the HCE exemption to oilfield service employees whose primary responsibilities include quality control and advisory functions, even where their direct client interaction may be limited. The ruling clarifies that high compensation, coupled with regular performance of qualifying administrative duties, is sufficient to exempt employees from FLSA overtime requirements under the HCE standard.

A copy of the Fifth Circuit’s opinion is available here.

On June 5, 2025, the U.S. Supreme Court issued a unanimous decision clarifying the evidentiary standard for Title VII disparate treatment claims.  The Court held that plaintiffs who are members of a majority group—such as heterosexuals, men, or whites—are not required to meet a heightened evidentiary burden to establish a prima facie case of discrimination.  This decision resolves a circuit split, reinforcing that Title VII’s protections apply equally to all individuals, regardless of group membership.

In that case, Marlean Ames, who identifies as a heterosexual woman, had been employed by the Ohio Department of Youth Services since 2004, holding various positions over the years. In 2019, she applied for a newly established management role within the agency’s Office of Quality and Improvement. Although she was interviewed for this position, the agency ultimately selected another candidate, a lesbian woman, for the job.  Shortly after her interview, Ames was removed from her position as program administrator by her supervisors. She accepted a demotion, returning to her previous secretarial role, which came with a significant reduction in pay. The agency subsequently filled the now-vacant program administrator position with a gay man.

Ames believed that her sexual orientation was the reason she was denied the promotion and later demoted. As a result, she filed a lawsuit against the Ohio Department of Youth Services, alleging that these employment decisions constituted discrimination under Title VII. The lower courts initially ruled against her, applying a heightened evidentiary standard because she was a member of a majority group.  Under that heightened evidentiary standard, the court required a member of a majority group to show “background circumstances to support the suspicion that the defendant is the unusual employer who discriminates against the majority.”

In an interesting concurring opinion, Justice Thomas signaled that, in an appropriate case, he would be willing to reconsider whether the long-standing McDonnell Douglas burden-shifting test remains a workable and useful evidentiary tool for trial courts evaluating disparate treatment employment discrimination claims.

This decision should have little impact on Texas employers because the Fifth Circuit Court of Appeals was not one of the circuits requiring members of a majority group to make a heightened showing that the defendant is the unusual employer who discriminates against the majority.

A copy of Ames v. Ohio Depart. of Youth Services is available here.