Supreme Court Clarifies Burden of Proof for FLSA Exemptions

Morgan Lewis reports that the US Supreme Court issued a unanimous decision in EMD Sales Inc. v. Carrera on January 15, 2025, addressing a Fair Labor Standards Act (FLSA) dispute over the evidentiary standard employers must meet to classify employees under FLSA exemptions.

The Court rejected the Fourth Circuit’s heightened “clear and convincing evidence” standard, holding that the standard of proof is the less stringent “preponderance of the evidence.” The ruling provides clarity and uniformity across all federal circuits regarding the burden of proof in an FLSA exemptions case.

The case arose when three EMD Sales employees claimed they were misclassified as exempt under the FLSA and denied overtime pay. EMD argued that the employees qualified as outside salespersons, exempt under the FLSA.

The district court ruled against EMD, applying the Fourth Circuit’s requirement for “clear and convincing evidence.” On appeal, EMD contended that the lower court should have applied the “preponderance of the evidence” standard, consistent with five other federal circuits.

The Fourth Circuit upheld its precedent, prompting EMD to petition the Supreme Court, which granted review. Justice Kavanaugh’s opinion overturning the Fourth Circuit affirmed that the default “preponderance” standard applies to FLSA exemption claims.

The ruling explained that civil cases default to the preponderance standard absent a statutory or constitutional mandate or exceptional circumstances. Rejecting arguments for a stricter rule, the Court noted that similar workplace protections, such as those under Title VII, also use this standard.

The ruling is a significant victory for employers. This means they face a uniform and less onerous standard of proof when classifying employees as exempt under the FLSA. They must still be cautious to meet both federal and state exemption requirements, which may impose additional criteria such as stricter duties tests or higher salary thresholds.