Supreme Court Lets Stand $0 Overtime Verdict for Misclassified Worker

On Oct. 13, the U.S. Supreme Court declined to review Merritt v. Texas Farm Bureau. The denial leaves in place a Fifth Circuit ruling that a company owed no overtime pay to a misclassified worker because it didn’t know he was working overtime.

Worker Alleged Misclassification, Sought OT

Jerry Merritt managed a team of insurance agents for Texas Farm Bureau. Like all agency managers at the company, he was classified as an independent contractor. He set his own schedule, wasn’t paid hourly and didn’t track or report his hours. From 2016 to 2018, his commissions ranged from $552,000 to $627,000 a year.

A district court ruled he should’ve been classified as an employee and was owed at least 816 hours of overtime. A jury then found the company didn’t know or have reason to know he worked those hours. The Fifth Circuit upheld the verdict, holding that failing to track hours doesn’t, by itself, show an employer knew about overtime.

What It Means for Overtime Pay Liability

The case shows that employer knowledge remains central to FLSA overtime liability, even when a worker is later found to have been misclassified. Within the Fifth Circuit, the lack of a timekeeping system alone won’t prove a company knew about overtime.

The Supreme Court’s denial of review sets no national rule, so tracking hours for nonexempt employees is still the safest practice everywhere.

More info: Misclassification Alone Doesn’t Create Overtime Liability, Court Says