On January 15, the United States Supreme Court (SCOTUS) held in
E.M.D. Sales, Inc., et al. v. Carrera that employers must prove that an employee is exempt from the minimum wage and overtime pay provisions of the Fair Labor Standard Act (FLSA) by only a preponderance of the evidence, and not by “clear and convincing” evidence.
The FLSA generally requires employers to pay a minimum wage and overtime compensation (at a rate equal to one-and-a-half times the regular rate of pay) to employees, but it also exempts many categories of employees from these requirements. These categories include employees who are paid on a salary basis that exceeds the FLSA’s minimum salary requirements and who perform executive, professional, administrative, outside sales, and certain computer-related duties. When an employee alleges that their employer failed to pay them minimum wage or failed to pay them overtime compensation for hours worked in excess of 40 hours in a workweek in violation of the FLSA, if the employer’s defense is that the employee was exempt from those provisions of the FLSA, the law places the burden on the employer to show that an exemption applies. Prior to the Court’s ruling, there was a conflict in the federal appellate courts as to what level of proof the employer had to show to prove the exemption: “preponderance of the evidence” – meaning more likely than not – or the more stringent “clear and convincing evidence” standard.
Bottom line, the Court’s decision does not change the applicable exemptions under the FLSA. Instead, it only clarifies the evidentiary burden imposed on an employer to prove an FLSA exemption applies. Employers who classify employees as FLSA-exempt should take appropriate steps to ensure they would be able to demonstrate – by a preponderance of evidence – that they properly classified each employee who is not paid minimum wage or overtime compensation by ensuring that they have appropriate and sufficient records of their payment on a salary basis and of the nature of the duties the employee performs.
If you have any questions or concerns, you may seek legal counsel to ensure your workforce is properly classified as exempt under the FLSA or to identify any areas of risk. You can read more on this SCOTUS determination in this
article overview from Squire Patton Boggs.