Mark Fahleson, Tara Paulson, Julie Schumacher
On January 15, 2025, the United States Supreme Court ruled unanimously that employers need only show that an employee is exempt from the Fair Labor Standards Act's (FLSA) overtime and minimum wage requirements by a “preponderance of the evidence.”
In E.M.D. Sales, Inc. v. Carrera the employer employed sales representatives who managed inventory and took orders at grocery stores that stocked E.M.D. products. The employer categorized the employees as being “exempt” from the FLSA’s overtime requirements under the outside sales exemption. Several of the sales employees argued they spent the bulk of their time on tasks other than sales and sued, alleging they were non-exempt employees entitled to overtime under the FLSA.
The trial court concluded that E.M.D. failed to prove by “clear and convincing evidence” that the FLSA’s outside sales exemption applied to the employees. On appeal, the U.S. Court of Appeals for the Fourth Circuit upheld the heightened “clear and convincing evidence” standard for employers to prove exemptions under the FLSA, which led E.M.D. to appeal to the Supreme Court.
The Supreme Court overturned the lower court decisions because, among other reasons, the FLSA is silent on the evidentiary standard. The Supreme Court concluded the burden on employers to establish an exemption applies is the less-stringent "preponderance” standard.
“Preponderance of the evidence” generally means more likely than not and, and is a lower threshold than the “clear and convincing evidence” standard jettisoned in Carrera.
Takeaways:
Employers have always had the burden of proving that an employee is exempt from the FLSA’s overtime and minimum wage requirements, but Carrera makes it clear that employers need only show that it is “more likely than not” that an employee qualifies for a specific exemption.
A recommended “best practice” for employers is to periodically review and update job descriptions through the lens of the FLSA. Employers should identify the specific exemption the employer believes the position qualifies for and analyze the actual duties performed by such employees against the regulatory requirements of the specific exemption. Employers should ask themselves, “if we are forced to prove this exemption applies, what evidence do we have to support our position?” To the extent actual duties performed by the position do not mirror those found in the written job description, consideration should be given to revising the written job description as well as to altering the requirements of the job with an eye towards compliance.
Employers are encouraged to consult with their employment and labor law counsel to review their policies, practices and job descriptions to ensure compliance with applicable law.
This article is provided for general information purposes only and should not be construed as legal advice. Those requiring legal advice are encouraged to consult with their attorney.
