Employers are breathing a sigh of relief after the U.S. Supreme Court last week unanimously confirmed the application of a “preponderance of the evidence” standard to an employer’s burden of proof when it seeks to establish that an employee is exempt from the minimum wage and overtime pay provisions of the Fair Labor Standards Act (FLSA).
How did we get here?
The Supreme Court sought to resolve a split among federal circuit courts to determine whether employers need only demonstrate by “a preponderance of the evidence” standard that an employee is exempt from the minimum wage and overtime compensation requirements of the FLSA or the more onerous “clear and convincing" evidence standard.
The FLSA requires employees be paid the federal minimum wage and overtime when they work more than 40 per work week. However, certain employees are exempted from one or both of these requirements if the employer can demonstrate that an employee fits within an applicable exemption. The burden of proof is on the employer to demonstrate the exemption is met, and different courts had applied different standards for this burden. While most circuit courts used the “preponderance of the evidence” standard, the 4th U.S. Circuit Court of Appeals (which governs Maryland, North Carolina, South Carolina, Virginia and West Virginia) had applied the more stringent “clear and convincing evidence” standard.
The Supreme Court concluded that, when an employer seeks to prove an employee is exempt from minimum-wage or overtime pay provisions of the FLSA, the employer must demonstrate the exemption by a preponderance of the evidence, the default standard applicable to most claims. In its decision, the Supreme Court compared the standard necessary to prove other workplace causes of action, such as Title VII, which only requires the preponderance standard.
Takeaways for Employers
The Supreme Court’s decision is a win for employers because it sets a consistent standard for FLSA exemption cases and relieves employers of the risk of a more difficult burden of proof. Nonetheless, even with a lower standard, employers still bear the burden of proof when seeking to exempt an employee from minimum wage and overtime protections and must show it is more likely than not that the employee meets the tests for the exemptions. Employers should also be aware that state laws may impose different requirements for employees to qualify as exempt from state minimum wage and overtime laws.
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