In a decision released earlier today, the U.S. Supreme Court ruled in E.M.D. Sales Inc. v. Carrera that the Fair Labor Standards Act (FLSA) exemptions do not require heightened evidence standards when the case is heard by a judge or jury.
This decision came from a case involving E.M.D. Sales Inc. and its owner, Elda Devarie, who were disputing the classification of three workers under the FLSA’s outside sales exemption. The core issue was whether the clear and convincing evidence standard should apply to these classification disputes instead of the default preponderance of evidence standard.
This has important implications because the preponderance of the evidence standard (think 50.1% when weighing all the evidence for and against) is a much easier standard to establish — making it easier for employers to claim the exemption.
In July 2023, the Fourth Circuit had ruled against E.M.D. Sales, stating that they failed to prove by clear and convincing evidence that the workers were exempt from overtime. The Supreme Court’s decision overturned this, affirming that the preponderance of evidence standard, which is typical in civil trials, should be used. Ultimately, this means that the employer only needs to show that it is more likely than not that the workers fall under the exemption.
The outside sales exemption under the FLSA applies to employees whose primary duty is making sales or obtaining orders and who are regularly engaged away from the employer’s place of business. Unlike other white-collar exemptions, the salary basis requirement does not apply here. The workers in this case argued that they were not properly classified and were owed overtime wages.
The court also addressed the employees’ policy-laden arguments for a heightened standard and found them unconvincing. Their argument that the FLSA protects the public interest in a fair economy does not necessitate a heightened standard according to the court. As the court noted, other workplace protections, like those under Title VII, also serve important public interests but are subject to the preponderance standard. The employees argued that rights under the FLSA are nonwaivable and therefore different from other rights subject to the preponderance standard. But the court concluded that waivability of a right does not determine the standard of proof
This ruling is significant as it clarifies the burden of proof required for employers to classify workers as exempt from overtime under the FLSA. It ensures that the standard remains consistent with other civil cases, making it somewhat easier for employers to defend their classification decisions.