U.S. Supreme Court Clarifies Employer’s Burden for Proving that Employee is Exempt From Overtime

In lawsuits where employees claim their employer wrongfully withheld overtime or minimum wage, if the employer claims that the employees were “exempt” it bears the burden of proving that they actually met the requirements of the exemption under the Federal Fair Labor Standards Act.  There was a split among the Federal Circuit Courts of Appeals regarding what that burden of proof was.  The United States Supreme Court has now resolved that conflict in the case of E.M.D. Sales Inc. v. Carrera.

 

Wage and Hour Protections for New Jersey Employees

New Jersey employment law provides that employers must pay minimum wage and overtime to most employees unless they are exempt.  The Federal Fair Labor Standards Act provides similar protections.  The main exemptions under both Federal and New Jersey employment law are similar.  Administrative, executive, professional and “outside sales” employees are exempt from minimum wage and overtime provided they make a minimum salary.

 

Burdens of Proof Under the Fair Labor Standards Act

Under the Fair Labor Standards Act, in wage and hour claims employers bear the burden of proving that their employees are meet the requirements of the particular exemption claimed if they utilize one of the exemptions to not pay them minimum wage or overtime.  However, the Act was silent on what that burden was.  The Federal courts of appeals had been split on what burden of proof the employer must meet.  Most circuits, including the Third Circuit Court of Appeals which hears appeals from federal court cases in New Jersey, applied the standard civil case burden of proof in which the party bearing the burden must prove their case by a “preponderance of the evidence” meaning that their claims are ”more likely than not” true. However, the Fourth Circuit, which hears appeals from Federal cases in Maryland, Virginia, West Virginia, North Carolina and South Carolina, applied the more stringent “clear and convincing evidence” standard.

 

The E.M.D. Sales Case

Several employees of E.M.D. Sales, Inc., sued their employer in the United States District Court for the District of Maryland, for allegedly wrongfully refusing to pay them overtime even though they worked more than 40 hours in a week.  The employer argued that the employees were exempt from overtime under the Fair Labor Standards Act because they were “outside salesmen.”  The district judge held a trial and ruled against the company.  It applied the case law from the Fourth Circuit, which was governed the District of Maryland, and found that E.M.D. had not proved by clear and convincing evidence that the employees were exempt.  The judge therefore ordered E.M.D. to pay the employees their unpaid overtime wages plus liquidated damages.

E.M.D. appealed to the Fourth Circuit Court of Appeals, which affirmed the district court’s decision, based on the Circuit’s prior decisions finding that the higher “clear and convincing” burden of proof applied when employers sought to claim their employees were exempt under the Fair Labor Standards Act.

E.M.D. appealed to the United States Supreme Court.

 

The Supreme Court’s Decision

The U.S. Supreme Court reversed the Fourth Circuit’s decision, finding that the appropriate burden of proof is the “preponderance of the evidence” standard commonly applied in civil lawsuits.  The Supreme Court explained in its opinion that there were only three situations where that standard would not be used: Where the statute in question specified a different burden of proof; where the Constitution required it; or where an “uncommon case” required it.  The Supreme Court found that none of those applied.  The Fair Labor Standards Act is silent on the burden of proof to be applied; constitutional rights are not implicated; and wage and hour claims are not unusual cases.  Therefore the standard burden of proof should have been applied.

The Supreme Court therefore remanded the case to the District Court for a new determination under the “preponderance of the evidence” standard.

 

New Jersey Employment Law Impact

Under the New Jersey Wage and Hour Law and Wage Payment Law, the employer also bears the burden of proving that an employee falls within one of the exemptions, which align with those of the Fair Labor Standards Act.  Moreover, many government employees are not covered by the New Jersey Wage and Hour Law and Wage Payment Law and must therefore utilize the Federal Fair Labor Standards Act to seek relief from wage and hour violations.

 

Contact Us

Our New Jersey employment attorneys represent employees and employers in all aspect of New Jersey employment law, including wage and hour litigation and compliance under the Fair Labor Standards Act, New Jersey Wage and Hour Law and New Jersey Wage Payment Law.  Call us at (973) 890-0004 or fill out the contact form on this page to schedule a consultation with one of our New Jersey employment lawyers.  We can help.