Supreme Court Reviewing Fair Labor Standards Act Exemption Standard

Law firm Jackson Lewis reports that on November 5, the Supreme Court heard oral arguments in E.M.D. Sales, Inc. v. Carrera, a case that will determine the standard of proof employers must meet to show an employee is exempt from the Fair Labor Standards Act (FLSA) minimum wage and overtime requirements. 

“There are two competing choices: preponderance of the evidence or ‘clear and convincing’ evidence,” explains attorney Jeffrey W. Brecher from the law firm Jackson Lewis.

Every circuit court that has addressed the issue, except the Fourth Circuit, has held that the preponderance of the evidence standard applies. “The Supreme Court appeared ready to agree and reverse the Fourth Circuit’s decision imposing a higher standard,” writes Brecher.

The case was filed by sales reps from distribution company E.M.D. Sales, Inc. is one of the mid-Atlantic international wine and food distributors. The FLSA exemption at issue is known as the “outside sales” exemption.

As explained in a fact sheet from the Department of Labor, for an employee to fall under that exemption (to be deemed not covered by minimum wage and overtime requirements), the employee’s primary duty must be making sales or garnering contracts. The employee must be “customarily and regularly engaged away from the employer’s place or places of business.”

The Supreme Court’s decision will have significant implications for employers. If the Court adopts the preponderance standard, it will resolve a circuit split and create consistency nationwide, reducing employers’ litigation risks in Fourth Circuit jurisdictions.

Law firms should advise clients regarding revisiting exemption classifications under the Fair Labor Standards Act and preparing for a clarified standardized legal landscape.