FLSA Does Not Require Higher Standard of Proof for Employers to Demonstrate Employee Exempt Status Under the FLSA

Legal Alert

January 17, 2025

On January 15, 2025, the U.S. Supreme Court unanimously resolved a split among federal Circuit Courts and found employers need only demonstrate by a “preponderance of the evidence” standard that an employee is exempt from the minimum wage and overtime compensation requirements of the Fair Labor Standards Act (FLSA). The Supreme Court rejected a more onerous “clear and convincing evidence” standard, finding there exists no statutory or policy requirement for the FLSA to require such a higher standard of proof and concluding “the preponderance-of-the-evidence standard applies when an employer seeks to show that an employee is exempt from the minimum-wage and overtime pay provisions of the Fair Labor Standards Act.”

Background

The FLSA guarantees a federal minimum wage for covered workers and requires overtime compensation for such employees working over 40 hours per week. However, certain categories of employees are exempt from one or both of these requirements, provided that an employer bears the burden of proof to demonstrate that an employee fits within an applicable exemption.

In E.M.D. Sales Inc. v. Carrera, No. 23-217, sales representatives sued E.M.D. alleging that the company violated the FLSA by failing to pay them overtime. E.M.D. argued that the sales representatives were outside salesmen and therefore exempt from the FLSA’s overtime-pay requirement. The U.S. District Court for the District of Maryland found the employees were entitled to overtime compensation because E.M.D. did not prove that its sales representatives were exempt by “clear and convincing evidence” -- rather than the “preponderance of the evidence” standard favored by other federal courts on this issue. E.M.D. appealed to the U.S. Court of Appeals for the Fourth Circuit, arguing that the District Court mistakenly applied the higher standard of proof. The Fourth Circuit disagreed and thereby caused a split with the Fifth, Sixth, Seventh, Ninth, Tenth and Eleventh Circuits. The Supreme Court granted certiorari to resolve the conflict.

Decision

The default standard of proof in civil litigation is the “preponderance of the evidence.” Courts depart from this standard in three circumstances: (1) if a statute applicable to a claim requires a heightened standard of proof, (2) if the U.S. Constitution requires a heightened standard of proof, or (3) in “uncommon cases” involving coercive government action.

The Supreme Court determined that demonstrating the applicability of FLSA exemptions involve none of these circumstances. First, the FLSA itself does not specify any particular standard of proof for purposes of establishing an exemption applies (thereby justifying the default “preponderance of the evidence” standard); Second, the FLSA exemption issue does not affect constitutional rights to justify placing a heightened standard on employers; Third, the case does not involve the government taking “unusual” coercive action against an individual.

Conclusion

The E.M.D. decision provides clarity going forward that employers are not subject to a higher burden of proof in federal wage claims involving the applicability of the various exemptions from the FLSA’s minimum wage and/or overtime requirements.

If you have any questions regarding the issues raised in this client alert, please contact your Labor and Employment counsel at Smith, Gambrell & Russell, LLP.

This article was also authored by Isabella Loarte-Ciudad.