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:
- 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.
- 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.