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In denying an en banc rehearing of Adams v. All Coast, LLC, the Fifth Circuit held that not all Jones Act Seamen are FLSA Seamen. In Adams, as we detailed in February, the Court had reversed a district court ruling finding that crane operators and cooks on a liftboat were “seamen” within the meaning of the FLSA, and were therefore not entitled to overtime.

Employers of seamen should take note of this ruling and its narrow definition of “seaman” under the FLSA. The Court held that vessel workers whose functions do not aid in the “operation as a means of transportation” are not “seamen” for the purposes of the FLSA, even though they would be “seamen” under the Jones Act. Therefore, these non-seamen workers are entitled to overtime pay.

As was noted by the dissenting judges, this ruling raises very real concerns for maritime employers and the maritime industry as a whole about to how to ensure offshore employees are paid properly. This decision allows maritime workers to walk in and out of FLSA exempt status and requires detailed and potentially confusing or contradictory timekeeping be done aboard the ship.

Who’s a Seaman Under the FLSA?

In Adams, a crane operator on a liftboat sought overtime pay in accordance with the FLSA, claiming he was not exempt from overtime because he was not a “seaman.”

The crane operator performed two distinct jobs: traditional maritime and nautical duties as well as crane operation to move personnel and equipment between the liftboat and the dock, offshore worksite platforms, and other vessels.

The plaintiff argued that his main job was crane operation, which had nothing to do with the “operation of the vessel as a means of transportation” and did not contribute to the safe navigation of the ship. The Fifth Circuit agreed.

The ruling reinforces the already narrow definition of “seaman” for the purposes of the FLSA. An employee is a “seaman” if the employee’s service is primarily offered to aid the vessel as a means of transportation, provided that the employee does not perform a substantial amount of other work.

Notably, the Fifth Circuit held that assisting with loading and unloading at the beginning or end of a voyage are not connected with the operation of the vessel as a means of transportation. Further, other tasks, such as construction, dredging, digging, or other “essentially industrial” or excavation work are not connected with the operation as a means of transportation. The key inquiry is the characteristic of the work performed. The Court found that the plaintiffs’ crane operation was not seaman work for purposes of the FLSA exemption but remanded to the district court to determine if they might qualify for the exemption otherwise.

Likewise, the Court concluded that the cooks working onboard were not entitled to claim the FLSA seaman exemption either. The matter was remanded for the district court to decide (i) how much time the cooks spent preparing food for the crew when they were not performing seaman’s work, and (ii) how much time they spent preparing food for non-crew members. If that amounts to a “substantial” amount (considered to be more than 20 percent of the time worked during the workweek), then the cooks were not doing seaman’s work.

How Do Employers Pay Jones Act Seamen who may not be FLSA Seamen?

This Fifth Circuit ruling leaves many challenging issues and large gray areas for employers of Jones Act seamen.

The most pressing issue is the intersection of the Jones Act seamen and the FLSA non-seamen. These disparate definitions mean a worker can be a seaman for the purposes of the Jones Act but a non-seaman for the purposes of the FLSA at the same time. This is problematic for employers attempting to classify its employees.

In particular, there are numerous jobs on a vessel that do not directly aid in the “operation as a means of transportation” but are still classified as seamen under the Jones Act. How will these employees and their duties be classified under the FLSA?

Another major challenge is classifying a Jones Act seaman who performs multiple jobs. The Fifth Circuit in Adams indicated that the workers performed two distinct jobs and analyzed each job under “safe navigation of the ship” standard. Moving forward, how will courts separate job duties for the purposes of the Jones Act and the FLSA? How will employers determine if a worker is performing two distinct jobs or one integrated job with various duties? Because this inquiry is fact intensive, an employer may have difficulty knowing with any degree of certainty how to classify its employees. Moreover, insurers providing Employer’s Practices Liability insurance could have exposure for the costs of defending suits where it is alleged that offshore workers were improperly paid.

Given this decision, carefully drafting employment contracts and job descriptions – as well as keeping a watchful eye on actual duties performed by employees – will be essential for Jones Act seamen employers to avoid FLSA litigation. It may be that employers have to switch from paying employees a day rate to paying an hourly rate that includes overtime for time worked over the standard eight-hour day. This will create a massive administrative burden on employers and, ironically, might mean that such employees actually earn less since the day rate previously paid was reflective of overtime even though not specifically calculated. What works best for employers will require a careful review and possible revision of existing ways that employees’ working time is recorded and how they are paid.

As with Hewitt v Helix, in which the Fifth Circuit held that even a highly compensated offshore employee traditionally exempt from FLSA may be entitled to overtime, maybe Adams v. All Coast will attract the attention of review by the US Supreme Court.