In the recently decided case of E.M.D. Sales, Inc. v. Carrera, three employees sued their employer claiming that they were improperly classified under the “outside sales exemption” of the Fair Labor Standards Act (FLSA) and were therefore improperly denied overtime wages. They claimed that their duties were simply that of taking routine orders and keeping track of inventories, and that they were not engaged in outside sales (an essential element of the exemption). The FLSA is a federal law which sets forth minimum wages, determines who is entitled to receive overtime pay, requires record keeping of wages paid to employees, and regulates child labor. The Act applies to employees in the private sector as well as those working in government jobs.
The question before the Court was one of a procedural nature: what is the standard of proof an employer is required to meet to successfully prove employees are exempt from overtime pay? The trial court held that the employer was required to show, by “clear and convincing evidence”, that the exemption applied. This decision was upheld by the appellate court. The employer then appealed the case to the U.S. Supreme Court continuing to allege that it was required only to prove the exemption by a preponderance of the evidence. The “clear and convincing” standard requires a high degree of factual evidence to support one’s position and is more stringent than the “preponderance of evidence” standard which means evidence that is more likely to be true than not.
On January 15, 2025, Justice Kavanaugh, speaking for a unanimous court, ruled in favor of the employer determining that the “preponderance of evidence” standard applies to decisions regarding the applicability of FLSA exemptions. The Court held that this standard is the default standard of proof in civil litigation in the United States. While the FLSA does not specify the standard to be utilized, Justice Kavanaugh stated that the heightened standard is to be utilized in only three situations: (1) when required by statue, (2) when mandated by the Constitution, or (3) when the matter involves a significant government action. Since no standard is specified in the FLSA, the “preponderance of evidence” applies by default.
Should you have any questions regarding overtime eligibility, or pay, please contact our firm.