The United States Supreme Court just issued a unanimous decision settling a dispute in the lower courts about what standard of proof applies in cases where an employee’s exemption from the FLSA’s minimum wage and overtime rules is at issue.

The FLSA generally requires that employers pay all employees a minimum wage, and that they pay employees overtime for any hours over forty worked in a week.  The law provides for several exemptions based upon employees’ job duties and how they are paid.  Employees fitting into one of these exemptions are referred to as “exempt,” and employers need not pay them overtime.  When a dispute arises about whether an employee qualifies as exempt under the FLSA, the employer bears the burden of proving that the exemption applies.  If the employer fails to meet that burden, the employer could be liable for back pay and other consequences. 

In this case, E.M.D. Sales v. Carrera, the Supreme Court considered what standard of proof employers are required to meet in FLSA exemption cases.  Thanks to television legal dramas, most people are familiar with the “beyond a reasonable doubt” standard of proof that applies in criminal cases.  However, in most civil litigation, the applicable standard of proof is “preponderance of the evidence,” meaning that the party bearing the burden of proof must present evidence showing that it is more probable than not that their version of the facts is true.  In some civil cases a somewhat higher standard of proof—“clear and convincing evidence”—applies because it is specifically required by statute or the Constitution, or because there are compelling public policy reasons for a court to require a higher showing of proof.  Clear and convincing evidence is a harder evidentiary standard to meet, and it requires the fact finder to be persuaded that the party’s contention is highly probable based on the evidence.

The plaintiffs in this case, who were classified as exempt by their employer under the FLSA’s “outside sales” exemption, claimed that they should have been classified as nonexempt and paid overtime.  The trial court ruled in favor of the employees because it found that the employer had not shown by clear and convincing evidence that the employees met the requirements of the exemption.  On appeal, the Fourth Circuit Court of Appeals agreed.  However, a number of other Circuit Courts of Appeals that have considered the issue have held in other cases that the lower preponderance of the evidence standard applies, and not the higher clear and convincing evidence standard.  When different Courts of Appeals issue decisions with opposing answers on the same legal question, the Supreme Court sometimes steps in to resolve the “Circuit split,” and that is what it did in this instance.

The Court’s decision in E.M.D Sales settles the question of which standard of proof is required in FLSA exemption cases.  In reversing the lower court decision, the Supreme Court found that employers may support a FLSA exemption by the lower preponderance of the evidence standard of proof.  And while the case makes clear that employers will not be held to the heightened clear and convincing evidence standard, the case is a good reminder that, when an employee’s exempt status is questioned, the burden will be on the employer to defend their decision to classify the employee as exempt.  It is always a good practice for employers to regularly review their employee classifications to ensure that they comply with applicable wage and hour laws regarding minimum wages and overtime.