What happened?

On January 15, 2025, the Supreme Court ruled unanimously that the standard of proof employers must meet to establish an employee’s exemption from overtime pay under the Fair Labor Standards Act (FLSA) is the “Preponderance of Evidence” and not the “Clear and Convincing Evidence” standard.

Overview:

The ruling holds that employers must prove an employee is exempt from the minimum wage and overtime pay provisions of the FLSA by a preponderance of the evidence, not by clear and convincing evidence.

• Preponderance of Evidence: To win a case, you just need to show that your side of the story is more likely true than not. Imagine a scale: if your evidence tips the scale even slightly in your favor, you win. It is like saying, “I’m pretty sure this is what happened,” rather than needing to be certain.

• Clear and Convincing Evidence: This standard means you need to show that your claim is highly likely to be true. It is like convincing a friend about something important with strong and persuasive evidence. It is like saying, “I’m almost certain this is what happened,” rather than being quite sure.

• While this decision simplifies the evidentiary standard in overtime exemption cases, employers must continue to properly classify their employees under the FLSA.
  • Misclassification risks significant liabilities: even under the preponderance standard, the burden of proof is still on employers to establish their employees properly qualify for an exemption from the FLSA’s minimum wage and overtime requirements.

Additional Details
This decision is seen as a win for employers, making it easier to defend against FLSA exemption suits. Employers now only need to prove that it is more likely than not that an employee qualifies for an exemption rather than meeting the higher threshold of proving it is highly probable.

• Evidentiary Standard: The preponderance of evidence standard applies, which is the default standard of proof in civil litigation.
  • This means employers need only show that their position is more likely than not correct, a lower threshold than the clear and convincing evidence standard.

• Impact on Employers: Employers who classify employees as FLSA-exempt should ensure they can demonstrate, by a preponderance of evidence, that they properly classified each employee.
  • This includes maintaining appropriate and sufficient records of their payment on a salary basis and the nature of the duties the employee performs.

• Legal Context: Before this ruling, there was a conflict in the federal appellate courts regarding the level of proof required to prove the exemption. The Court found that none of the bases for requiring a heightened standard of proof applied, and the preponderance of evidence standard also applies in Title VII employment discrimination cases.

Source References

• E.M.D. Sales, Inc., et al. v. Carrera 

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