15 Jan Supreme Court Decides FLSA Exemption Burden of Proof Case
In a victory for local governments, the Supreme Court held that to prove that an exemption to the Fair Labor Standards Act’s (FLSA) minimum wage and overtime requirements apply, an employer need only do so by a preponderance of the evidence rather than a more demanding clear and convincing evidence standard.
Generally, the FLSA provides that employers must pay minimum wage and overtime pay at a rate of time and a half for work done above 40 hours per week. There are many exemptions to these requirements, including many that apply to local government employees. In this case, the employer, a grocery store distributor, claimed the employees – who worked outside the office servicing stores on their assigned routes – fell into the “outside sales” exemption, and so even though they regularly worked over 40 hours a week, the employer did not pay them overtime. The employees sued, claiming they did not meet the definition for the exemption and should have been paid overtime for all hours worked over 40 hours.
The district court concluded that the employer failed to prove by “clear and convincing evidence” that the exemption applied, and the Fourth Circuit affirmed. EMD Sales argued at the Supreme Court that the lower courts had applied too high of an evidentiary burden and that it should have only been required to prove the employees met the exemption by a preponderance of the evidence, which is a lower standard. The question of what burden of proof applies is applicable to all the FLSA exemptions and therefore of interest to local government employers.
In a unanimous opinion authored by Justice Kavanaugh, the Supreme Court reversed the lower court, concluding that employers need only prove an exemption applies by utilizing the preponderance of the evidence standard. The Court reasoned that at the time the FLSA was enacted, the default standard of proof in civil litigation was preponderance of the evidence. The Court noted that there are only three circumstances in which it has deviated from the default preponderance standard. First, when the statute dictates a higher standard of proof applies. Second, when the Constitution requires a heightened standard such as with involuntary civil commitment or termination of parental rights. And third, where the “government seeks to take unusual coercive action – action more dramatic than entering an award of money damages or other conventional relief – against an individual.” For example, the Court explained the third circumstance would apply in cases of revoking a person’s citizenship.
The Court explained it does not use a heightened burden of proof in other situations. Indeed, the Court noted that even in discrimination cases, the standard of proof is a preponderance of the evidence. Because the FLSA does not fit into any of the above circumstances which would call for a heightened burden of proof, the Court concluded that the proper standard is preponderance of the evidence.
The Local Government Legal Center (NACo, NLC, and IMLA) filed an amicus brief in this case, arguing that employers should only need to prove an exemption applies by the preponderance of the evidence. The potential financial consequences of a heightened burden of proof in FLSA cases would have been significant for local governments and their citizens. Had the Supreme Court adopted the employee’s rule in this case, it would have been extremely difficult to prove an exemption applies, exposing employers, including local governments, to significant financial penalties including double and treble damages. The Court’s decision is a great win for local governments as they protect the public fisc.
To read the Supreme Court’s decision, click here.
To read the LGLC amicus brief, click here.