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April 7, 2025
Going forward, employers have a lower hurdle to defend against claims that employees were improperly classified as “exempt” under the Fair Labor Standards Act (FLSA), according to a 9-0 opinion delivered by Justice Brett Kavanaugh of the U.S. Supreme Court in E.M.D. Sales, Inc., et. al. v. Carrera, et. al., No. 23-217, decided January 15, 2025.
For those unfamiliar with the law, the FLSA (which has been in existence since 1938) generally requires employers to pay overtime to any employee working more than 40 hours per week, but exceptions exist in the statute. If an employee files suit against their employer alleging that the employer failed to pay overtime, the employer bears the burden of proving that one of these exceptions (known as an exemption) applies.
In E.M.D. Sales, a group of salespeople in the District of Columbia metropolitan area sued their employer, a food distributor. According to the Complaint filed in the federal district court in Maryland, E.M.D. Sales regularly assigned its salespeople to work more than 40 hours each week, managing inventory and taking orders at grocery stores, and never paid them overtime. E.M.D. Sales admitted as much, but asserted that it did not have to pay overtime, because this category of employee falls into the “outside-salesman exemption.” The district court disagreed, finding that E.M.D. Sales failed to provide clear and convincing evidence that the exemption applied because the complaining employees primarily effectuated sales made by other E.M.D. Sales employees and were not responsible for actually selling products to customers. Accordingly, the district court found E.M.D. Sales liable to pay overtime to the salespeople, plus liquidated damages for the FLSA violation.
E.M.D. Sales appealed to the U.S. Court of Appeals for the Fourth Circuit, arguing that the District Court held them to the wrong standard of proof, i.e., the clear and convincing standard (requires evidence to be highly probable or reasonably certain), rather than the (less burdensome) preponderance of the evidence standard (more likely than not) applied by courts in all of the other Federal Circuits who have considered the issue. However, the Fourth Circuit, applying its own precedent, affirmed the lower court’s ruling, and later denied a request for en banc review (review by all judges of the court).
The Supreme Court granted certiorari to resolve the split between the Fourth Circuit precedent and the precedent of the other Circuits and, upon review, determined that the Fourth Circuit got it wrong.
Noting that the preponderance of the evidence standard remains the “default standard” for civil ligation in the United States, Justice Kavanaugh wrote that three times exist when an alternate standard should be used: (1) when the statute requires a different standard; (2) when the U.S. Constitution requires a different standard; and 3) “uncommon circumstances,” such as “’when the government seeks to take unusual coercive action.’” Id. at 5, citing Price Waterhouse v. Hopkins, 490 U.S. 228, 252 (1989). Because none of those circumstances is implicated by a challenge under the FLSA, the default (preponderance of the evidence) standard is the correct standard to use in cases such as the one brought against E.M.D. Sales. Accordingly, the Supreme Court remanded the case back to the district court for consideration of the parties’ arguments under the correct standard. (The court declined to evaluate whether the judgment against E.M.D. Sales should be affirmed under the preponderance of the evidence standard.)
This article is designed to provide one perspective regarding recent legal developments, and is not intended to serve as legal advice. Always consult an attorney with specific legal issues.
