The Supreme Court Holds That Employers Need Not Prove Wage & Hour Exemptions Under a Heightened Standard of Proof

In E.M.D. Sales, Inc. v. Carrera, the Supreme Court decided the burden of proof an employer must meet to prove that an employee is exempt from the overtime and minimum wage requirements of the Fair Labor Standards Act. The Court held that the proper standard is the “preponderance of the evidence” standard, which requires only that the employer submit evidence which demonstrates that a fact or circumstances is more likely true than not true (one way to think of it is as anything greater than a fifty-fifty probability).

The Court overturned the Fourth Circuit Court of Appeal (which covers Virginia, North Carolina, South Carolina, West Virginia, and Maryland), which had required employers to prove an exemption using the more demanding “clear and convincing evidence” standard. This is a significantly higher burden that requires a litigant to prove that no serious doubt exists as to the fact or issue to prevail. 

In this case, a group of employees sued their employer alleging a failure to pay overtime. The employer argued that they were exempt from the FLSA’s overtime requirements as “outside salespeople.” The Maryland federal trial court (and Fourth Circuit Court of Appeals) ruled in favor of the employees finding that that the employer failed to prove that the employees met the requirements of this exemption by “clear and convincing evidence.” The Supreme Court reversed and returned the case to the Court of Appeals for further proceedings under a preponderance of the evidence standard. 

This decision will have practical benefit to employers defending their wage practices against claims of misclassification under the FLSA.  Whether an employee satisfies an FLSA exemption usually involves analyzing many facts. Often, certain facts will support an exemption while others will not (such as a manager who has supervisory responsibilities, but also occasionally performs non-exempt tasks such as cleaning or restocking shelves). A standard of proof that effectively requires the removal of any doubt is a high hurdle in such cases, one thankfully an employer need no longer satisfy.

While a good result, it is important for employers to remember that, even under a preponderance of the evidence standard, exemptions must be backed by facts and circumstances that support the specific requirements of the classification.

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The members of Sands Anderson’s Labor & Employment Team are available to assist employers with questions concerning misclassification and other wage & hour issues.