I am fascinated by the case that the Supreme Court has announced it will take on.  The Court will decide the proper evidentiary standard that an employer must meet in order to establish that employees are exempt under Part 541 of the FLSA regulations.  What the Court decides will send shock waves throughout the employer community, either way it goes.  The case is entitled E.M.D. Sales Inc. et al. v. Carrera et al and will be heard by the Supreme Court of the United States.

The employer has petitioned from a Fourth Circuit decision where the appellate court ruled that the “clear and convincing” standard is the appropriate one.  That standard is more stringent than the evidentiary standard for a civil trial, which is a “preponderance of the evidence” test.  It is less than the criminal trial standard, i.e., “guilt beyond reasonable doubt.”  The petitioner asserts that the Fourth Circuit decision is in conflict with the holdings of six other federal appellate courts.  The employer states that “the burden of proof obviously matters.  In the Fourth Circuit alone, the “clear and convincing standard” makes it extraordinarily difficult for the employers to prevail.”

Both the Department of Justice and Labor have filed briefs in opposition to the Fourth Circuit opinion.  They assert that “the court can and should briefly dispose of this case by simply reiterating the presumption that the preponderance-of-the-evidence standard applies to civil cases involving a dispute over monetary issues and explaining that there is no basis for departing from that standard in the context of FLSA exemptions.”

The case involves three sales representatives who claim they were not “outside” salespeople which, under the FLSA, would make them exempt.  They contend that even under the less rigorous “preponderance” standard they were misclassified.  They note that the trial court “found that EMD lacked ‘objectively reasonable grounds for believing’ that respondents fell within the FLSA’s outside sales exemption.”  They contend that “in short, the answer to the question presented in the petition will not affect the outcome of this case — and if history is any guide, many, if any, future cases.”

The Takeaway

I hope this comes out right. I really do. Adopting a “clear and convincing” standard will make it, in my view, virtually impossible for employers to classify any employee, except for high level executives or other clearly exempt people (e.g. HR Director) as exempt. That cannot be the result envisioned by the FLSA and is not the test in several other federal appellate courts.

Supreme Court–please get this right…

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