The U.S. Supreme Court ruled Wednesday that the Fair Labor Standards Act’s (FLSA) exemptions do not call for heightened evidence standards. The appeal from a decision by the US. Court of Appeals for the Fourth Circuit, in which a three-member circuit panel held that employers must meet a “clear and convincing” standard to establish that an exemption applies for purposes of asserting an affirmative defense to an overtime claim. The Fourth Circuit’s ruling departed from the majority of circuits, which have held that the lower “preponderance of evidence” standard applies.
The lower court case was filed by sales reps for a food distribution company who claimed they were not paid for overtime hours worked. The employer argued that the employees were not entitled to overtime because the FLSA’s “outside sales” exemption applied. The trial court rejected this affirmative defense and found that the employer could not meet its burden to show that the exemption applied in that the employer had to prove the application of the exemption by “clear and convincing evidence”. The Court of Appeals affirmed the trial court’s decision.
The Supreme Court’s decision in this case will have important implications for employers. Had the Supreme Court affirmed the Fourth Circuit’s evidentiary standard, it would have been more likely that a trial court would conclude that an employee does not meet the asserted exemption, increasing the risk of liability under the FLSA. The Court’s decision will ensure that employers will face a uniform national standard and clarifies the proper evidentiary burden for showing that any of the FLSA’s exemptions apply.
If you have questions regarding this ruling, please contact Dani Smid or your BrownWinick attorney.
