SCOTUS Rules FLSA Classification Does Not Require Higher Evidence Standard

Key Takeaways:

• Fair Labor Standards Act (FLSA) exemptions do not call for a heightened standard of evidence.
• The ruling brings the evidence standard for evaluating exemptions under the FLSA in line with the evidence standard that applies to other statutes governing workplace protections, such as Title VII.
• The ruling may prove useful in defending against attempts to raise the evidentiary standard in instances where neither a statute nor the Constitution require it.

On Wednesday, January 15, 2025, in a unanimous opinion, the Supreme Court of the United States ruled that the preponderance of the evidence standard is the appropriate standard for courts to apply to overtime exemption classification disputes under the FLSA.

This issue worked its way up to the Supreme Court after the Fourth Circuit Court of Appeals held that food distributor EMD Sales Inc. (EMD) and its owner failed to prove by "clear and convincing evidence" that workers bringing claims under the FLSA qualified for the outside sales exemption. See Carrera v. E.M.D. Sales Inc., 75 F.4th 345 (4th Cir. 2023), cert. granted, 144 S. Ct. 2656, 219 L. Ed. 2nd 1283 (2024), and rev'd and remanded sub nom. E.M.D. Sales Inc.,v. Carrera, No. 23-217 (U.S. Jan. 15, 2025).

The three plaintiffs (employees of EMD) alleged they were not properly classified and were owed overtime. EMD argued that these employees met the requirements for the outside sales exemption under the FLSA. For this exemption to apply, an employee's primary duty must involve making sales or obtaining orders for services, and the employee must "customarily and regularly" work away from the employer's place of business in performing that primary duty. See 29 C.F.R. § 541.500(a).

EMD's position on appeal to the Supreme Court, that the default preponderance standard should apply to FLSA exemption determinations, was supported by the Department of Justice (DOJ) in amicus briefing. The DOJ noted in its brief that the Fourth Circuit's opinion was an outlier and that six other circuits have already adopted the preponderance standard for exemption determinations under the FLSA (with the Sixth, Seventh, and Tenth circuits explicitly rejecting the clear and convincing evidence standard). The DOJ also noted that, while the FLSA protects important workers' rights, its remedies are civil in nature and it does not put at stake the types of individual interests or rights that justify raising the evidentiary standard.

At oral arguments held before the Supreme Court, the justices sought from the plaintiffs an explanation of why a higher evidentiary standard should apply to FLSA exemption determinations as compared to other statutes governing employee protections, such as Title VII. Justice Brett Kavanaugh's opinion reinforced that the FLSA's evidentiary standard for exemption determinations should remain subject to the preponderance standard, the same as the "other workplace protections that vindicate important public interests [that] remain subject to the preponderance standard." Justice Kavanaugh further explained that deviation from the preponderance standard in civil litigation generally occurs only when a statute requires it, when the Constitution requires it, or in the rare instance involving a coercive governmental action, such as taking away a person's citizenship.

Often in FLSA actions, whether employees are properly classified as overtime exempt acts as a threshold issue. This clarification from the Supreme Court that such determinations will be subject to the default preponderance standard should be welcome news to employers and should provide clarity when they are facing contested exemption determinations in court. Moreover, the reasoning laid out in the opinion may be useful as a shield against attempts to raise the evidentiary burden in other types of employment litigation absent statutory or constitutional requirements.