U.S. Supreme Court resolves circuit split on burden of proof dispute for FLSA exemptions

On January 15, 2025, the U.S. Supreme Court overturned the Fourth Circuit’s decision in E.M.D. Sale, Inc. v. Carrera, and ruled that the “preponderance of evidence” standard, and not the higher “clear and convincing evidence” standard favored by the Fourth Circuit, is the correct burden of proof in cases involving whether an employee is exempt from the minimum wage and overtime requirements of the Fair Labor Standards Act (FLSA). This decision has a notable impact for employers defending misclassification claims brought under the FLSA and resolves a split in the circuits on this issue.

When an employee challenges their classification as exempt from the FLSA overtime and minimum wage requirements, the burden of proof is on the employer to establish that one of the exemptions applies. Before the Carrera ruling, the Fifth, Sixth, Seventh, Ninth, Tenth, and Eleventh Circuits required that the employer prove that the exemption applied using the “preponderance of the evidence” standard. The Fourth Circuit, however, applied the higher “clear and convincing” standard, making it more difficult for employers to meet their burden. See Carrera v. E.M.D Sales, 75 F.4th 345 (4th Cir. Jul. 27, 2023). In E.M.D, a sales representative claimed he was improperly classified as exempt under the outside sales exemption. The trial court held that the employer failed to prove that the exemption applied by clear and convincing evidence. The employer appealed, and the Fourth Circuit affirmed, holding that the “clear and convincing” evidence standard was correct, thereby creating a circuit split. In deciding the split, the Supreme Court held that where a statute is silent on the burden of proof, the common “preponderance of the evidence” standard applies.

The Court explained that when Congress enacted the FLSA, “the established default standard of proof in American civil litigation was the preponderance-of-the-evidence standard.” The Court found that the burden of proof may only deviate from the preponderance standard in civil litigation in three instances: (1) when a higher standard is required by statute; (2) when a higher standard is required by the constitution, like in certain First Amendment or due process cases; and (3) in circumstances where the government seeks to take “unusual coercive action,” like taking away a person’s citizenship.

Applying these three exceptions to the FLSA, the Court noted that neither the statute nor the Constitution required a higher standard of proof. Moreover, FLSA disputes do not involve “unusual coercive action” by the government against an individual, but are more like Title VII claims, which use the preponderance standard: “If clear and convincing evidence is not required in Title VII cases, it is hard to see why it would be required in Fair Labor Standards Act cases.”

This decision eases the burden on an employer’s ability to defend FLSA exemption claims, regardless of the circuit. Employers should, however, continue to monitor federal, state, and local legal developments to ensure that their practice are compliant.

If you have any questions on these developments, need assistance evaluating employee classifications, or have other questions related to wage and hour compliance, please contact Betty S. W. Graumlich at bgraumlich@reedsmith.com, John McDonald at jmcdonald@reedsmith.com or the Reed Smith lawyer with whom you normally work.