Authored by Kara Goodwin
Employers seeking to prove that an employee claiming unpaid overtime is exempt under the FLSA often face two chilling phrases in the first paragraph of a court’s legal analysis. First, that exemptions are “narrowly construed” against employers and, second, that employers must prove that employees fit within those exemptions “plainly and unmistakably.” But two recent decisions show that those two phrases may not be so daunting anymore. Last month, in Christopher v. SmithKline Beecham Corp., the Supreme Court made clear that not all definitions of an exemption are to be narrowly construed against employers. And last week, the Tenth Circuit Court of Appeals reversed a jury verdict in favor of an employee challenging his exempt status because the trial court erroneously instructed the jury that an employer has to prove that an employee “plainly and unmistakably” fits within the terms of an exemption.
In Lederman v. Frontier Fire Protection, Inc., the plaintiff worked as a senior estimator for Frontier, a company in the business of selling and installing automatic fire sprinkler systems. Lederman’s responsibilities apparently included contacting customers and potential customers, inspecting customer buildings to evaluate the cost of sprinkler system installation, and preparing bids. The case went to trial on Frontier’s affirmative defense that Lederman qualified as an exempt outside salesperson, and therefore was not eligible for overtime pay.
At trial, the evidence was disputed on Lederman’s authority to finalize sales, the amount of time he spent away from Frontier’s place of business, and the importance of sales to his position. In its jury instructions on proof of an exemption, the district court told the jury that “an employer seeking an exemption from the overtime requirements of the FLSA bears the burden of proving that the particular employee fits plainly and unmistakably within the terms of the claimed exemption.”
The Tenth Circuit found the district court’s instruction to be a mistake, instead holding that the ordinary burden of proof – preponderance of the evidence – applies to employers seeking to prove an FLSA exemption. In doing so, the Tenth Circuit rejected the plaintiff’s argument that the heightened “plainly and unmistakably” burden of proof refers to the principle, articulated in many earlier cases, that exemptions from FLSA’s overtime provisions should be construed narrowly against the employer. The court found that cases using the phrase “plainly and unmistakably” did so in the context of statutory construction, not evidentiary burdens.
This decision is consistent with other courts that have confronted similar FLSA burden-of-proof issues and come to the conclusion that the proper standard is a preponderance of the evidence. For example, the Seventh Circuit, in Yi v. Sterling Collision Centers, Inc., rejected the contention that the employer was required to prove an FLSA exemption by “clear and affirmative evidence,” instead concluding that the appropriate burden of proof was a preponderance of the evidence. The preponderance standard, however, has not been universally accepted. For example, the Fourth Circuit, in Desmond v. PNGI Charles Town Gaming, LLC, maintained its position that the proper burden of proof for employers to show an employee falls within an exemption is “clear and convincing evidence.”
Lederman undoubtedly will prove to be a useful tool in what can often be an uphill, fact-intensive endeavor to prove an FLSA exemption. In addition, the Lederman decision further weakens the use of the “narrowly construed against the employer” concept in exemption cases. As readers of our blog will recall, this is consistent with the Supreme Court’s recent decision in Christopher v. SmithKline Beecham Corp., in which the Court ruled that an exemption should not be construed narrowly against the employer where the Court is interpreting a general definition that applies throughout the FLSA.