Supreme Court Clarifies Evidence Standard for FLSA Exemptions

On January 15, 2025, the U.S. Supreme Court unanimously ruled that employers must demonstrate an employee’s exemption from the Fair Labor Standards Act (FLSA) using the preponderance of the evidence standard, aligning with the approach of six other circuit courts.

Key Points:

• Preponderance of the Evidence Standard: This standard requires employers to show that it is more likely than not that an employee qualifies for an exemption under the FLSA. This is a lower burden of proof compared to the “clear and convincing evidence” standard previously applied by the Fourth Circuit.
• Resolution of Circuit Split: Prior to this decision, six circuit courts—the Fifth, Sixth, Seventh, Ninth, Tenth, and Eleventh—applied the preponderance of the evidence standard. The Fourth Circuit had applied the higher “clear and convincing evidence” standard, leading to inconsistencies in how FLSA exemptions were determined across different jurisdictions.

Case Background:

The case involved E.M.D. Sales, Inc., a grocery distributor, which classified certain sales employees as exempt from overtime pay under the FLSA’s outside sales exemption. Employees challenged this classification, leading to legal proceedings. The Fourth Circuit ruled that the employer needed to prove the exemption by clear and convincing evidence. The Supreme Court’s decision overturns this ruling, aligning the Fourth Circuit with other circuits in applying the preponderance of the evidence standard.

Implications for Employers:

While this ruling will not change the standard already followed in the Ninth Circuit (which includes Idaho), it verifies the process for employers to establish FLSA exemptions, only requiring them to meet the standard burden of proof used in most civil cases. Employers should continue to ensure that employee classifications meet the criteria for exemptions under the FLSA, as misclassification can lead to legal challenges and potential liabilities.

The case has been remanded to the Fourth Circuit for further proceedings consistent with the Supreme Court’s opinion.