On January 15, 2025, the U.S. Supreme Court delivered a unanimous decision in E.M.D. Sales, Inc. v. Carrera, clarifying the burden of proof employers must meet to classify workers as exempt under the Fair Labor Standards Act (FLSA).
The FLSA mandates minimum wage and overtime pay for covered employees but exempts certain categories, such as outside salespeople. In this case, sales representatives of E.M.D. Sales, Inc. claimed they were misclassified as exempt and denied overtime compensation. The District Court required the employer to prove the exemption by "clear and convincing evidence," which requires the evidence to be highly probable and leave a firm belief in its truth, which is a higher standard than the typical "preponderance of the evidence" used in civil cases, which only requires proving that a claim is more likely true than not—just tipping the scale over 50%. The Fourth Circuit upheld this stringent requirement, diverging from other appellate courts.
Justice Brett Kavanaugh, writing for the Court, stated that the standard burden of proof in civil litigation is a preponderance of the evidence, unless a statute or constitutional provision specifies otherwise. The Court found no justification for a heightened standard in FLSA exemption cases, aligning with the majority of appellate courts. Consequently, the Court reversed the Fourth Circuit's decision and remanded the case for further proceedings under the correct standard.
This ruling standardizes the burden of proof across jurisdictions, simplifying the process for employers to demonstrate that an employee qualifies for an FLSA exemption. Employers must still carefully assess and document employee roles to ensure proper classification but can now do so under the more attainable preponderance of the evidence standard.
Employers should regularly review all employee classified as exempt to confirm the designations aligns with FLSA criteria, supported by clear and thorough documentation. As necessary, workplace policies should be updated and targeted training should be provided for HR personnel and management in order to ensure they understand the implications of this decision and can apply the correct standards consistently. Additionally, employers are encouraged to consult legal counsel when complex classification issues arise to minimize the risk of costly legal disputes.
If you have any questions about the exempt status under the FLSA, the preponderance of evidence standard, or any other employment law matter, please contact Michael A. Airdo at mairdo@airdowerwas.com or James C. Jansen at jjansen@airdowerwas.com.