Supreme Court Reinforces Basic Standard of Proof for FLSA Exemptions

The Fair Labor Standards Act of 1938 remains fertile ground for litigation. With recent focus on the salary test and the Department of Labor proposed changes in the salary thresholds, it is important to remember the basics of the Fair Labor Standards Act (FLSA). The FLSA contains a number of traps for the unwary. The Supreme Court’s recent decision in E.D.M. Sales, Inc. v. Carrera is a good reminder that “the basics” still matter.

On January 15, 2025, United States Supreme Court issued a unanimous decision addressing the applicable proof standard employers must meet in cases involving exemptions under the FLSA. The court held in E.D.M. Sales, Inc. v. Carrera, 144 S. Ct. 2720 (2024) that the appropriate standard of proof in an FLSA case is the “preponderance of the evidence” standard that is used in most civil litigation, and not  the more onerous “clear and convincing evidence” standard.

Human Resources professionals know that the FLSA requires employers to pay employees minimum wage and overtime wages in most circumstances. Employers are also familiar with the so called “white-collar” exemptions that allow them to avoid paying overtime if an employee is properly classified as exempt under one of the statutory exemptions. The employer bears the burden of proving that the employee meets any particular exemption.

E.D.M. Sales, Inc. v. Carrera involved the “outside sales” white-collar exemption. Plaintiffs were sales representatives who focused on monitoring inventory and taking orders at grocery stores for their food service employer. The employer classified these employees as exempt from overtime under the “outside sales person exemption.” This exemption covers employees if their primary duty is “making sales” and who spend their time on the road or “away from the employer’s place of business.” The plaintiffs sought overtime for hours they worked in excess of 40 per week and the United States District Court for the District of Maryland held that the employer failed to prove that the employees qualified as outside sale persons. In reaching this decision, the district court utilized a “clear and convincing evidence” standard, a legal standard that requires evidence to be so convincing that it's highly likely to be true. The employer argued that the proper standard was the less-demanding  “preponderance of evidence standard,” meaning that the party need only prove the party’s claim is more likely to be true than not, essentially requiring only a greater than 50% chance that the presented facts are accurate. The Fourth Circuit Court of Appeals affirmed the district court’s decision and the case made its way to the U.S. Supreme Court.

In a fairly succinct opinion, the Supreme Court stated that the “preponderance of evidence” standard was the common proof standard in civil litigation in 1938 when the law was passed. The court noted that a more onerous burden of proof would be used only in exceptional cases where a statute requires a higher standard, when the constitution requires a more onerous standard or in “uncommon” cases involving unusual circumstances. The court rejected the higher standard. The court noted that the FLSA does not contain a higher standard of proof, the constitution does not dictate a higher standard being used and there was no unusual governmental action involved in the typical FLSA exemption case.

The decision reminded the author of the case he tried (twice) and ultimately won. See Gross v. FBL Financial Services, Inc. 557 U.S. 167 (2009). In Gross, an age discrimination case, the Supreme Court focused on the appropriate legal standard of proof of causation to be used when instructing the jury, rather than the facts of the particular case . Similarly, in Carrera, , the Court focused on the language of the statute and rejected numerous policy arguments asserted by the employees, rather than the factual details of the duties of the jobs at issue.  Of note, the court also rejected the employees’ argument that a higher standard should be applied because employees cannot waive their rights to minimum wages and overtime under the FLSA.

While the E.D.M. Sales, Inc. v. Carrera case is fascinating for employment lawyers, it is also a good reminder that employers should focus on the basics when classifying employees as exempt or non-exempt under the FLSA. While the court did not focus on the details of the food sales jobs, employers hoping to take advantage of the outside sale exemption should do just that. There is a robust body of law analyzing whether employees classified as “outside sales” are truly making “sales” and whether they are doing so outside of the employer’s regular place of business. Employers should carefully analyze the actual job duties of any employee classified as exempt under the white-collar exemptions.

Nyemaster Goode’s Labor & Employment Law attorneys have extensive experience advising employers on compliance and litigating issues under the Fair Labor Standards Act and state wage/hour laws. Please feel free to contact any member of the team with questions.