Litigation and Defense Strategy – Coordination with Outside Counsel Make sure your outside counsel are aware of the E.M.D. Sales decision and its implications.
Guidance for Your Internal Operations Inside counsel should lead three internal initiatives to shore up your defenses:
Reassess Exemption Classifications
Strengthen Wage and Hour Compliance Programs
• Conduct a classification audit: The Supreme Court’s ruling will impact all 34 of the FLSA’s exemptions. With a lower evidentiary burden, you are in a stronger position to defend exempt classifications. However, proactive compliance remains critical to avoid litigation. • Focus on ‘gray area’ positions: You should re-evaluate positions on the borderline of exempt and non- exempt status. Consider potential risk exposure if an employee’s duties don’t align with the FLSA’s exemption criteria. • Engage HR and Compensation Teams: Ensure job descriptions accurately reflect duties, particularly for outside sales employees and white-collar exemptions.
Immediate Changes to Litigation Strategy
• Regular training for managers and HR: Ensure that your supervisors are trained on proper classification criteria, timekeeping requirements, and overtime rules to prevent misclassification claims. • Enhance documentation protocols: Employers still bear the burden of proof in misclassification disputes. You should reinforce best practices for maintaining records that demonstrate compliance. • Monitor state/local law variations: Some states impose stricter exemption standards — ensure state law compliance isn’t overlooked.
• Lower burden means stronger defenses: Employers no longer need to meet the higher “clear and convincing” standard, reducing the risk of adverse rulings. Inside counsel should ensure outside counsel is leveraging this ruling in pending and future misclassification cases – especially in Maryland, North Carolina, South Carolina, Virginia, and West Virginia, which are part of the 4th Circuit. • Motion practice opportunities: In active cases, consider motions for reconsideration or summary judgment where prior adverse rulings hinged on the higher burden of proof.
Refining Litigation Tactics in Wage and Hour Cases
• Reassess settlement thresholds: With a lower burden of proof, you may have stronger leverage in settlement negotiations. Reevaluate your litigation risk assessments and case valuation summaries with your outside counsel. • Develop trial strategies emphasizing the new standard: Trial teams should be prepared to educate judges and juries on the preponderance standard to reinforce employer-favorable arguments.
Engage in Proactive Risk Management
Consider Broader Wage and Hour Litigation Trends
• Risk modeling for potential claims: Analyze historical misclassification claims and assess areas where reclassification may be prudent. • Internal hotline for classification concerns: Establish or reinforce a process for employees to raise concerns before they escalate into litigation. • Evaluate arbitration agreements: If feasible, consider whether arbitration agreements could help manage potential wage and hour disputes more efficiently.
• Watch for DOL enforcement shifts: While SCOTUS has ruled on the standard of proof, states may seek to tighten exemption rules through guidance or rulemaking. Stay ahead of any local shifts. • Monitor collective action strategies: Plaintiffs’ firms may adjust tactics in response to this ruling, possibly shifting focus to alternative legal arguments or pursuing state law claims. Maintain active oversight of these case trends.
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