Alaska Supreme Court Lowers Employers' Burden of Proof for Exemptions Under Alaska Wage and Hour Act

The Alaska Supreme Court has reversed its long-standing precedent relating to exemptions under the Alaska Wage and Hour Act by lowering the burden of proof employers must meet to establish the exemption. In Buntin v. Schlumberger Technology Corporation, the Court held that employers must prove the employee fits within an exemption under the Alaska Wage and Hour act by a preponderance of the evidence, rather than the far higher threshold it had long applied. Additionally, Alaska Wage and Hour Act exemptions that are identical to the federal Fair Labor Standards Act (FLSA) will be more broadly interpreted by Alaska courts, potentially leading to increased application of those exemptions.

Under both the FLSA and the Alaska Wage and Hour Act, employers bear the burden of proving that employees meet one of the statutory exemptions under the respective Act because it is considered an affirmative defense. If an employer in Alaska fails to prove that the employee meets one of these exemptions, then—under the Alaska Wage and Hour Act—the employee is owed overtime compensation for work performed in excess of eight hours per day or 40 hours per week.

The federal standard of proof—and the standard in virtually every other jurisdiction—is a preponderance of the evidence, or put another way, there is a greater than 50 percent chance that the employee meets one of these exemptions. Prior to Schlumberger, Alaska alone required an employer to establish a wage and hour exemption beyond a reasonable doubt—the highest standard of proof and one almost exclusively applied in a criminal context.

This change standardizes the burdens of proof by which an employer must prove an exemption under the FLSA and the Alaska Wage and Hour Act. Thus, an Alaska judge or jury now needs to analyze the facts based upon a single standard, not two, which should help eliminate confusion at trial and lead to more consistent decisions between Alaska and federal law. This should significantly benefit any Alaska employer defending against an Alaska Wage and Hour Act claim by arguing the employee meets one of the statutory exemptions.

Statutory Construction of the Alaska Wage and Hour Act's Exemptions and Scope of Interpretation

In 2018, the U.S. Supreme Court departed from the rule that courts were to interpret exemptions under the FLSA narrowly. Since Encino, many federal courts (as noted by the Alaska Supreme Court) have concluded that they are to fairly interpret FLSA exemptions, meaning an expanded application of these exemptions.

Against this backdrop, the Alaska Supreme Court recently analyzed whether the exemptions set forth in the Alaska Wage and Hour Act should be interpreted in a manner consistent with the federal exemptions. The Court agreed that they should—to a point. The Court noted that the Alaska Legislature amended the Wage and Hour Act in 2005 to ensure the "white collar" exemptions in Alaska's Wage and Hour Act were defined and interpreted in the same manner as the FLSA.

The Court reasoned that these exemptions must therefore be interpreted fairly, not narrowly. However, the Alaska Wage and Hour Act contains exemptions not expressly linked to the FLSA, and the Court ruled these exemptions shall be treated differently and will continue to be interpreted narrowly.

Takeaways

Alaska employers no longer must prove an Alaska Wage and Hour Act exemption beyond a reasonable doubt. This lower burden of proof should benefit Alaskan employers defending against Alaska Wage and Hour Act claims. Further, the alignment between the federal and Alaskan standards for overtime exemptions should result in more consistent decisions between Alaska and federal law, as well as reduce unnecessary confusion at trial.

Additionally, those exemptions in the Alaska Wage and Hour Act expressly linked to the FLSA will be interpreted fairly, leading to potentially broader application by employers. However, those exemptions not expressly linked to the FLSA will continue to be interpreted narrowly.

As with all new legal changes, Alaska businesses should inquire with their legal counsel to determine how this decision will impact any potential overtime claims brought under the Alaska Wage and Hour Act.