Supreme Court to Consider Standard for Proving Fair Labor Standards Act Exemptions

The Supreme Court (the Court) recently announced that it will address possible changes to the Fair Labor Standards Act (FLSA). Specifically, next term, the Court will address the standard employers must meet to show minimum wage and overtime exemptions. Markedly, the FLSA provides for several federal wage and hour standards. It is also one of five commonly cited employment laws that all employers should familiarize themselves with. Violations can result in settlements anywhere from hundreds of thousands to millions of dollars. Earlier, in April 2024, the Court issued a ruling involving employees and the concept of “significant harm.” Chiefly, under Title VII of the Civil Rights Act (Title VII), employees do not need to suffer significant harm to claim discrimination.

Overview of the Fair Labor Standards Act

As shown above, the Fair Labor Standards Act (FLSA) provides for several federal wage and hour standards, including overtime rules and a federal minimum wage. The FLSA covers full-time and part-time workers in the private sector and federal, state, and local governments. Specifically, the FLSA states that if employers offer bona fide meal breaks (typically lasting at least 30 minutes), these breaks are:

• not to be considered work time; and
• are not compensable.

Additionally, every covered employer must keep certain records for each covered employee. Records do not have to be in a particular form. However, they must include specific identifying information about the employee, data on hours worked, pay rate, and wages earned.

Background of the Case

In general, according to Jackson Lewis, three sales representatives for a food distribution company filed suit in a Maryland federal court. Specifically, the employees claimed the company failed to pay them overtime as required under the Fair Labor Standards Act (FLSA). The employer argued that the plaintiffs were not entitled to overtime because the FLSA’s “outside sales” exemption applied. As a result, the U.S. Court of Appeals for the Fourth Circuit held that employers must meet a “clear and convincing” standard to establish that an exemption applies. According to the Fourth Circuit, the employer did not meet that standard. Consequently, the Fourth Circuit found the case in the employees’ favor.

The Supreme Court Case

Basically, now that the Supreme Court (the Court) has agreed to hear the case, there is only one question that it needs to decide. That question centers upon whether or not the standard of proof that employers must satisfy to demonstrate a Fair Labor Standards Act exemption requires a “preponderance” of the evidence or “clear and convincing” evidence. Specifically, the Court will answer this question during the next scheduled term in 2025.

Employer Takeaways

In conclusion, the Supreme Court’s (the Court’s) upcoming decision in this case could create implications for employers. Depending on what the Court determines the exemption standard to be, all businesses, especially those with outside sales representatives, may need to reexamine their minimum wage and overtime exemption policies. To help business owners and their managers comply with overtime exemption laws, WorkWise Compliance (formerly Personnel Concepts) created the Overtime Exemptions Compliance Program eLearning Module. This digital solution helps employers, managers, and human resources representatives understand the requirements of the Department of Labor’s (DOL’s) overtime rule and determine if employees need to be re-classified.