US Supreme Court Leans Toward Business in Overtime Dispute (1)

The US Supreme Court seemed likely to reject a heightened standard of proof for employers to show that workers are exempt from overtime rules.

All parties in the case argued Tuesday, which aims to resolve a lopsided circuit split, agree the Fair Labor Standards Act doesn’t specify the standard of proof that applies to such cases.

The typically “hot” bench had few questions for those supporting employers, who say that a higher standard would impose costs on business and ultimately lead to layoffs.

On the other side, employees argued that too low a standard would fail to adequately vindicate the goals of federal worker protections, including a fair workplace.

Lisa Blatt, the Williams & Connolly partner arguing for international food distributor E.M.D. Sales, said the “default rule” in civil cases is a preponderance-of-the-evidence standard. That would mean employers must show employees were more likely than not exempt from the FLSA’s overtime requirements.

“That default rule should resolve this case,” Blatt said.

But Lauren Bateman, the lawyer for watchdog Public Citizen representing employees, said the importance of the overtime rules requires a higher standard of proof to show they don’t apply.

Justice Ketanji Brown Jackson noted that the FLSA’s wage and hour rules aren’t just about money for employees. She said they’re also meant to protect the health and safety of workers, and expand employment generally.

The FLSA is “doing more significant work than just providing damages,” Jackson said.

Vindicating important interests requires a higher clear-and-convincing standard, Bateman argued. Under that standard, employers would have to prove it’s highly probable—not just more likely than not—that employees are exempt.

Justice Clarence Thomas noted many federal laws are intended to vindicate important rights, yet the court has said they’re still subject to the preponderance standard. He pointed to laws against racial and disability discrimination.

“Why should FLSA be treated more advantageously than the discrimination cases?” Thomas asked Bateman.

Additionally, several justices wondered how they would easure the relative importance of the rights at issue in various federal laws.

Justice Samuel Alito said the government provides lots of benefits that are critically important for some people. He wondered what the methodology would be for determining which rights are “particularly important.”

Public Interest

E.M.D. employees allege the company violated the FLSA when it failed to pay overtime.

The US Court of Appeals for the Fourth Circuit found E.M.D. failed to prove the employees were exempt from overtime pay. In doing so, the Fourth Circuit applied the higher clear-and-convincing standard, rather than the preponderance-of-the-evidence one used by all other circuits that have considered the question.

Bateman said a heightened standard makes sense because it’s not just employee rights at stake, but public ones, too.

The FLSA is “a statute that protects both the worker’s right to a fair day’s pay for a fair day’s work but also the public’s right to an economic system that doesn’t depend on and inexorably lead to the impoverishment and immiseration of the American worker,” Bateman said.

That public interest “calls for requiring the employer to prove an exemption clearly and convincingly,” she said.

Blatt said such a rule would force unjustified costs on employers. Paying overtime, even when the FLSA doesn’t call for it, would lead to employers, especially small businesses, to lay off workers, she said.

And Justice Department lawyer Aimee Brown, arguing for the US in support of E.M.D , noted there’s always a public interest when Congress enacts legislation.

And yet, there’s only been a “very narrow set of circumstances in which the court has suggested that it would be appropriate” to apply a heightened standard of review, Brown said.

The justices appeared convinced, as both Blatt and Brown faced few follow-up questions and each finished their arguments before their allotted times expired.

“Nobody?” Blatt asked when Roberts invited questions from his colleagues.

“I don’t think so. Anybody?” Roberts responded to laughter in the courtroom.

“Sorry,"Blatt said, as she left the lectern.

The case is E.M.D. Sales, Inc. v. Carrera, U.S., No. 23-217, argued 11/5/24.