Employment / 1 min read
The U.S. Supreme Court has unanimously ruled that companies need only prove Fair Labor Standards Act (FLSA) exemptions by a "preponderance of the evidence" rather than the stricter "clear and convincing evidence" standard previously required in some jurisdictions. Preponderance of the evidence just means "more likely than not" or if you want to be quantitative – 51%.
The Court's January 15, 2025, decision in E.M.D. Sales, Inc. v. Carrera ends the Fourth Circuit's decades-long practice of imposing a higher burden of proof on employers in Maryland, North Carolina, South Carolina, Virginia, and West Virginia. This ruling brings these states in line with the majority approach used across the country.
Under the preponderance standard, employers must show it is more likely than not that an employee qualifies for an FLSA exemption - a significantly easier threshold to meet than proving it by clear and convincing evidence. However, businesses still bear the burden of properly classifying employees and maintaining compliance with wage and hour laws.
The FLSA requires employers to pay overtime to employees who work more than 40 hours in a week. However, certain categories of employees are "exempt" from overtime requirements - meaning employers don't have to pay them overtime. Common exemptions include executive, administrative, professional, and outside sales employees who meet specific salary and job duty requirements.
The stakes remain high. FLSA violations can result in two to three years of back pay, double damages, attorney's fees, and/or potential collective actions with multiple plaintiffs.
If your business operates outside Maryland, North Carolina, South Carolina, Virginia, and West Virginia, this ruling does not change your existing obligations - the preponderance standard was already the law in your jurisdiction.
For businesses in Fourth Circuit states, this brings your burden of proof in line with what the rest of the country has been following all along. Regardless of location, employers should pay careful attention to proper employee classification, as you still bear the burden of proving any claimed exemptions apply.