When you are over worked or in deep trouble. It is a variation of "knee deep in shit" but adds the assumption that it takes longer to "get" knee deep is pelican piss then it takes to with shit, thus you have been over worked or in deep trouble for a longer period of time.
to be in knee deep means to be in a situation to a great extent, generally "knee deep in trouble". It can also be literally knee deep, for instance "knee deep in he dead" from DooM.