216.696.8700

U.S. Supreme Court Clarifies Standard of Proof for FLSA Exemptions

January 31, 2025
NCAA

On January 15, 2025, the U.S. Supreme Court ruled that employers are not required to meet a heightened standard of proof to demonstrate that an employee is exempt from the minimum wage and overtime provisions of the Fair Labor Standards Act (FLSA). The Court’s decision reverses the Fourth Circuit’s ruling and establishes that the preponderance-of-the-evidence standard applies determinations as to whether an employee is appropriately classified for purposes of minimum wage and overtime exemptions.

Background

The Supreme Court, in E.M.D. Sales, Inc. v. Carrera, resolved a long-standing circuit split regarding the burden of proof employers must meet to establish exemptions under the FLSA. The FLSA mandates minimum wage and overtime pay but exempts certain employees, such as outside salesmen. Sales representatives at E.M.D. Sales, Inc., a food distribution company, sued for unpaid overtime. The company argued the employees were exempt, but the District Court ruled against E.M.D., holding that it failed to prove the exemption under a “clear and convincing evidence” standard. The Fourth Circuit upheld this ruling, diverging from other circuits that use the lower “preponderance of the evidence” standard. The Supreme Court granted certiorari to address this discrepancy.

Supreme Court’s Analysis

Justice Brett Kavanaugh delivered the opinion of the Court, which clarified that:

  • Default Standard in Civil Cases: The preponderance-of-the-evidence standard has historically been the norm in civil litigation, and exceptions apply only where explicitly required by statute, constitutional mandate, or in extraordinary circumstances involving government action against individuals.
  • FLSA’s Silence on Standards: The FLSA does not specify a heightened burden of proof for exemptions. In the absence of such guidance, courts should default to the preponderance standard.
  • Comparison with Other Statutes: Analogous employment statutes, such as Title VII, which serve important public policy objectives, do not impose a heightened evidentiary burden. Thus, applying a clear and convincing evidence standard to FLSA exemptions was unwarranted.
  • Rejection of Policy Arguments: The Court dismissed the employees’ contention that the public interest in a fair economy necessitated a higher burden, emphasizing that the FLSA seeks to balance competing interests. Additionally, the non-waivability of FLSA rights and employers’ control over evidence were deemed irrelevant to the evidentiary standard.

Decision and Implications

The Court unanimously held that the preponderance-of-the-evidence standard applies to employers’ affirmative defenses under the FLSA, reversing the Fourth Circuit’s decision. The case was remanded to determine whether the outside sales exemption applies under this standard. The ruling aligns the Fourth Circuit with other jurisdictions, offering clarity and consistency for employers nationwide.

Impact for Employers

The E.M.D. Sales decision clarifies that employers can establish the applicability of an FLSA exemption by a preponderance of the evidence, a standard the Court noted “allows both parties in the mine-run civil case to ‘share the risk of error in roughly equal fashion.’” In practice, employers must now demonstrate their classification of a challenged employee’s status under a FLSA exemption is more likely true than not true.

While employers still bear the burden of proving an FLSA exemption, the Supreme Court’s confirmation of the “preponderance of the evidence” standard in E.M.D. Sales, combined with the “fair reading” approach established in Encino Motorcars may create more favorable conditions for employers defending misclassification claims in court. In Encino Motorcars, the Supreme Court determined FLSA exemptions should not be construed narrowly, creating an argument for broader application of the exemptions. Nonetheless, employers should proactively audit exemptions and job descriptions to ensure compliance with the applicable exemption requirements and adjust as needed.

For additional information on the FLSA exemptions, or assistance in auditing your employee’s current exemption status, please contact our office at 216.696.8700 to speak with one of KJK’s Labor and Employment attorneys.