Fair Labor Standards Act – The Supreme Court Weighs In
On January 15, 2025, the Supreme Court delivered a unanimous (can you believe it?) decision restoring the burden of proof employers should use in to establish an exemption under the Fair Labor Standards Act (FLSA). Click here to read the case and the opinion delivered by Justice Kavanaugh.
What has been reinforced in this most recent case was the standard an employer should be held to in order to claim that a job should be exempted from coverage under the duties basis test. The Supreme Court held that in order to justify an exemption under the FLSA, the applicable standard an employer should continue to use is “preponderance of the evidence” rather than “clear and convincing” evidence, as suggested by a lower court.
As a refresher, the FLSA requires that employees are paid at least the federal minimum wage and 1.5 times their regular hourly rate in overtime for any hours physically worked over 40 in a work week. The FLSA also provides for both standard and less than standard exemptions via two tests – salary basis and duties. If you need a refresher on the FLSA’s provisions, click here.
If I am looking at this decision through the lens of an HR practitioner (40+ years and counting!), I am thinking it’s a good time to recommend that my clients revisit the exempt/non-exempt status of each unique job within their companies. As position requirements change and new positions are created, an internal audit of FLSA classifications is important to ensure that classifications meet both the salary basis and duties basis tests, the latter being supported by a “preponderance of evidence” standard.
Misclassifications under the FLSA can result in both unwelcome financial consequences and challenging employee relations issues. As I have learned over the years, it is frequently a better business decision to prevent HR problems from occurring than to try and fix them after the fact.
The opinions expressed in this blog are those of Zieleniec HR Solutions, LLC. We are not attorneys, and nothing expressed herein should be construed as legal, tax or accounting advice. We encourage our clients to consult with business attorneys, tax advisors and/or accountants for advice as appropriate.