Determining whether an employee is exempt under the Fair Labor Standards Act (FLSA) has rarely been simple. A new decision from the U.S. Supreme Court provides much-needed clarity for employers. In a unanimous decision issued on January 15, the court in E.M.D. Sales Inc. v. Carrera clarified the standard of proof required for employers seeking to prove that employees are exempt from the FLSA overtime and minimum wage provisions.
The court held that the preponderance-of-the-evidence standard applies when an employer seeks to prove that an employee qualifies for one of the FLSA’s exemptions. This standard, which is less stringent than the clear-and-convincing evidence requirement previously used by the Fourth Circuit Court of Appeals (which includes North Carolina, South Carolina, and Virginia), means that employers must now only demonstrate it is more likely than not that an employee meets the criteria for an exemption under the FLSA.
This decision overturns the Fourth Circuit’s previous approach and now creates a uniform standard that reduces an employer’s burden of proof in FLSA exemption issues. Employers in the Fourth Circuit and across the country can now benefit from a relaxed evidentiary burden when defending exemption classifications, reducing litigation risks and promoting predictability in litigation outcomes.
This Supreme Court decision highlights the importance of accurately ensuring that exemption classifications are based on specific job duties, salary levels, and the criteria outlined in FLSA regulations. To mitigate risks, employers should maintain thorough documentation of employees’ responsibilities (including updated job descriptions) and compensation structures.
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