The federal Fair Labor Standards Act provides important rights to employees nationwide. Its most notable provisions include rules for a minimum wage and overtime. However, the FLSA exempts certain types of employees from its protections. Employers often defend minimum wage and overtime claims under this law by arguing that the employees bringing the claims fit within an exemption.
The exemptions are intricate, and it’s often hard to tell whether they apply to a certain situation. The employee doesn’t need to show that an exemption doesn’t apply to them. Instead, the employer has the burden of proof to show that an exemption applies. But what standard do they need to meet? The U.S. Supreme Court answered this question last week.
In E.M.D. Sales, Inc. v. Carrera, employees of a grocery distribution company sought unpaid overtime pay under the FLSA. The employer argued that the employees fit within the outside sales exemption of the FLSA. The trial court rejected this argument, finding that the employer didn’t prove by “clear and convincing evidence” that the exemption applied. The U.S. Court of Appeals for the Fourth Circuit agreed, upholding the “clear and convincing evidence” standard. This diverged from other federal appellate courts, which have held that a “preponderance of the evidence” standard applies.
The preponderance standard is much less demanding. It just means that something is more likely than not. People often equate this standard to a 51 percent probability. On the other hand, clear and convincing evidence means that there’s a high likelihood that something is true. This doesn’t equate to a specific percentage, but it’s seen as significantly higher than the preponderance standard, while lower than the “beyond a reasonable doubt” standard in criminal cases.
A unanimous Supreme Court endorsed the preponderance standard used by most federal courts. Justice Brett Kavanaugh wrote that this is the default rule for civil lawsuits, and courts should use the clear and convincing standard only when an exception applies. Kavanaugh identified two main types of exceptions.
First, courts have applied the clear and convincing standard when required by the statute at issue or the Constitution. The FLSA doesn’t require a heightened standard for proving that an exemption applies, and constitutional rights aren’t at stake. The other limited exception to the preponderance standard applies when the government tries to take a highly coercive action against an individual. This clearly doesn’t describe wage disputes between businesses and employees. Since neither exception applied, the Court saw no need to deviate from the preponderance standard in evaluating a FLSA exemption argument.
It’s important to keep in mind that the Supreme Court’s decision isn’t limited to the outside sales exemption. To the contrary, it affects all the exemptions under the FLSA. This means that all employers facing FLSA claims of minimum wage violations or unpaid overtime pay will have an easier path to showing that an exemption applies.
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