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Supreme Court to Review How Employers Can Establish Overtime Exemptions


On Monday, June 17, 2024, the Supreme Court agreed to review and establish the burden of proof that employers must satisfy to demonstrate the applicability of an overtime exemption under the Fair Labor Standards Act (FLSA).

The Supreme Court of the United States
The Supreme Court of the United States

Both the petitioning employer and the United States agree that employers must demonstrate that an FLSA exemption applies by the preponderance of the evidence, not with clear and convincing evidence.

Yes, you read that correctly: an employer and the United States agree on FLSA minutiae.

Proving that something is true by the preponderance of the evidence merely requires demonstrating that a proposition is more likely true than not true, which is the standard in most civil cases. For example, if an employee convinces a jury that it is more likely than not — slightly better odds than a coin toss — that an employer discriminated against them, they win.

At the other end of the spectrum is "beyond a reasonable doubt." That is the legal burden to convict a criminal. The prosecution must convince the jury that no other reasonable explanation can come from the evidence presented at trial. The jury need not be 100% certain that the defendant committed the crime, but pretty close.

Somewhere in between lies the clear-and-convincing-evidence standard, which requires the party with the burden of proof to establish that whatever facts they are trying to prove are "highly probable."

So far, seven Circuits have examined the evidentiary standard in overtime exemption cases. The Fifth, Sixth, Seventh, Ninth, Tenth, and Eleventh Circuits apply the preponderance-of-the-evidence standard. Most recently, the Fourth Circuit (Carrera v EDM Sales) applied the "clear and convincing evidence" standard, which the government characterized (pdf) as "unreasoned and inconsistent" with Supreme Court precedent of applying the preponderance of the evidence standard to "ordinary civil cases seeking monetary remedies."

Indeed, the Fourth Circuit's rationale for applying the clear-and-convincing-evidence standard is unclear. It identified a previous Fourth Circuit decision Shockley v. City of Newport News that utilized clear and convincing evidence to decide an FLSA exemption case but did not explain why, aside from citing an earlier Fourth Circuit case Clark v. JM Benson Co.. Clark clarified that the employer must establish that an FLSA exemption applies. The court then applied a clear and convincing standard but did not explain why.

Meanwhile, nothing in the FLSA's text addresses the relevant evidentiary standard, and the Supreme Court has recognized that the clear-and-convincing-evidence standard applies in cases involving more substantial losses than money.

Even the employee-respondent does not present much opposition other than arguing that the evidentiary standard is rarely dispositive and would not have affected the outcome in this case.

Posted In: Fair Labor Standards Act (FLSA); U.S. Supreme Court

Want to know more? Read the full article by at The Employer Handbook

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