On November 5, the United States Supreme Court heard oral arguments in E.M.D. Sales, Inc. v. Carrera, a case addressing the evidentiary standard an employer must meet to establish whether an exemption under the Fair Labor Standards Act (FLSA) applies.
The FLSA governs minimum wage and overtime requirements. Employees eligible for overtime must receive it at the correct rate unless one of the 34 statutory exemptions applies. If an exemption applies, the employer is not required to pay the employee overtime.
When sued for allegedly failing to pay overtime, employers often defend themselves by asserting that the employee is exempt. Determining whether an employee qualifies for an exemption is complex, involving an analysis of the employee’s duties, authority, method of payment (hourly or salary), and earnings. The FLSA exemptions cover various roles and circumstances.
If an employer claims an employee is exempt, the employer bears the burden of proving the exemption applies. In other words, the employer must establish that the employee’s role meets the criteria for the claimed exemption.
This is where Carrera comes into play.
The Supreme Court will decide what standard of proof employers must meet to establish the applicability of a statutory exemption.
Six federal appellate courts currently apply the “preponderance of the evidence” standard, the typical standard in most civil cases. Preponderance of the evidence means the party with the burden must show it is more likely than not—at least 50.1%—that their claim is true based on the evidence.
In Carrera, however, the Fourth Circuit Court of Appeals held that employers must prove an exemption applies by “clear and convincing evidence,” a significantly higher standard. This stricter standard requires the employer to show that the evidence is highly and substantially more likely to be true.
If the Supreme Court adopts the clear and convincing standard, it will significantly impact FLSA litigation. Raising the burden of proof for exemptions would make it harder for employers to defend against FLSA claims.
Stay tuned for the Supreme Court’s decision—it could reshape the landscape of wage and hour law.