U.S. Supreme Court to decide key exemption issue

On June 14, the U.S. Supreme Court agreed to decide an important Fair Labor Standards Act (FLSA) question—namely, whether an employer claiming an exemption from overtime needs to prove it by “clear and convincing” evidence (a very high standard) or by a preponderance of the evidence (a lower, easier standard to meet). The decision is important. If the standard is clear and convincing evidence, then employers will find it much more difficult to establish an exemption and will end up paying overtime to many more employees. Read on.

Numbers don’t lie

The FLSA covers most of the U.S. workforce—a massive reach of over 140 million workers. Unsurprisingly, FLSA cases account for a substantial amount of litigation.

In 2022, FLSA cases accounted for 45% of all new labor cases. The FLSA’s 34 exemptions from minimum wage and overtime requirements are the usual means by which employers defend these claims.

How did we get here?

Before 2023, six U.S. circuit courts of appeal—including our very own 5th Circuit—followed the “preponderance of the evidence” test. Then the 4th Circuit (which covers Maryland, North Carolina, South Carolina, Virginia, and West Virginia) decided to go rogue and went with the “clear and convincing” standard.