In E.M.D. Sales, Inc. v. Carrera, the Supreme Court will grapple with the question of whether the standard of proof for Fair Labor Standards Act (FLSA) exemptions is a preponderance of the evidence or clear and convincing evidence. Under the FLSA, employers must pay employees time-and-a-half for work exceeding 40 hours a week unless an exemption applies.
Petitioner E.M.D. Sales, Inc. (EMD) is a Maryland-based company that distributes products to independent and chain stores across the Washington, D.C., metropolitan area. Respondents are three current and former EMD sales representatives who allege that they are owed overtime under the FLSA. EMD contends that the respondents are “outside salesm[e]n” exempt from the FLSA’s overtime requirements.
The district court found that respondents were not outside salesmen under the FLSA because EMD had failed to prove the applicability of the exemption by clear and convincing evidence. The Fourth Circuit affirmed.
Before the Supreme Court, EMD, joined by the U.S. Department of Justice, argues that the preponderance of the evidence standard is the default standard in civil cases and, therefore, applies to the FLSA exemptions. EMD argues that increasing the standard for proving exemptions to the FLSA will inflict unjustifiable costs on employers by requiring them to pay overtime in situations where it would otherwise not be called for, such as in the case of executives and professionals whose output is not clearly associated with hours of work per day. In response, the EMD sales representatives argue that the heightened standard of proof is appropriate because the cost of erroneously depriving a worker of FLSA protections (and thereby continuing unfair labor conditions that create widespread economic problems) exceeds that of erroneously requiring an employer to pay minimum wage and applicable overtime.
The Justices heard oral argument on November 5, 2024, mostly questioning the position that employers should be held to the higher clear-and-convincing-evidentiary standard. Justice Thomas, Chief Justice Roberts, and Justice Kavanaugh inquired why FLSA exemptions should be singled out to be held to a heightened standard, distinct from other types of federal actions and statutes. The Justices also questioned whether the evidentiary standard was a harmless error in this instance or if it really would change the outcome of the case. Justice Sotomayor questioned what outcome the standard of proof would have on the factual findings of the case. Similarly, Justice Jackson questioned how often the level of the standard of proof was dispositive in these types of cases. Chief Justice Roberts questioned what would happen to the case if it were remanded. The Justices also questioned whether the evidentiary standard was a matter of congressional intent or left for the judiciary to decide. Justice Jackson questioned the differences in methodology. Justice Alito provided a number of scenarios and questioned what type of methodology the judiciary could use to determine when a heightened standard was appropriate.
A decision is expected later in the term. Stay tuned for Dykema’s forthcoming post discussing the Court’s opinion.
For more information, please contact Chantel Febus, James Azadian, Mark Magyar, or Christopher Sakauye.