Upcoming Supreme Court Case to Settle FLSA Burden of Proof for Parties

Burdens of proof can be a mundane issue to discuss. Addressing the standard by which a fact finder decides a legal claim between opposing parties does not generate much enthusiasm with legal scholars. Nevertheless, the burden a party must carry in a legal proceeding can be so very important to the outcome. For anyone who has watched a controversial call on the field in an NFL football game the viewer knows the standard for overturning the call is often critical to whether that call is reversed. That standard in professional football is “clear and indisputable” evidence from the video replay. Deciding whether that standard has been met can make all the difference in the outcome of the play and the game.

So too, the burden of proof in a lawsuit can make or break the outcome. Scheduled for argument before the U.S. Supreme Court on November 5 is one such case (E.M.D. Sales, Inc. v Carrera) that will likely result in finally setting a uniform burden of proof that employers must satisfy to demonstrate whether a proffered FLSA exemption qualifies as a defense to a claim by employees that their employer has misclassified them as exempt and consequently avoided paying them overtime where applicable. 

What brings this case before the Court is the same set of circumstances that often causes the Supreme Court to accept an appeal- a split in what Circuit Courts of Appeals have decided on this critical issue. At least five Circuit Appeals Courts have previously determined that an employer need only prove by a “preponderance of the evidence” that the FLSA exemption the employer applied is applicable and thus alleviates the employer of the duty of paying overtime to such exempt employees. However, our own Fourth Circuit has previously concluded that a significantly higher standard of “clear and convincing evidence” must be established by the employer if the employer wishes to avoid liability for unpaid overtime.

What is intriguing about this case is that the employer in the trial court had asserted that three of its salespersons were not eligible for overtime because they qualified for the recognized “outside sales” exemption under the FLSA. Seeking to make their case easier to win, the employer argued that the “preponderance of the evidence” standard recognized by the other Circuits should apply. To support its argument, the employer noted that the Fourth Circuit itself had questioned whether the “clear and convincing” standard should continue to be applicable because of a recent 2018 Supreme Court case involving whether certain auto dealer employees qualified for an applicable statutory exemption. In that case the Supreme Court had commented that a narrow reading of FLSA exemptions would no longer be necessary. So, the employer in the pending case sought to get a burden of proof more favorable to employers despite prior precedent in the Fourth Circuit. But the Fourth Circuit rejected this attempt and held firm to its higher standard of the burden of proof of “clear and convincing” evidence.

Assuming things go as expected, the Supreme Court will now once and for all set a universal burden of proof that employers must meet when seeking to assert an exemption from overtime claims by employees. Despite the seeming mundane aspect of this debate, employers will need to take heed of the outcome as they move forward in determining whether certain employees are eligible for an FLSA exemption or should be treated as non-exempt. 

The Labor & Employment Team at Sands Anderson stands ready to assist clients with employment matters.

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