On January 15, 2024, the United States Supreme Court issued a unanimous Judgment in E.M.D. Sales, Inc., v. Carrera[1] that employers only need to prove an exemption under the Fair Labor Standards Act (FLSA) by a preponderance of the evidence.
The FLSA creates several overtime exemption categories, such as, “learned professionals,” outside salespeople, and certain managerial employees. Employers do not have to pay overtime wages to employees who fall into one of these categories.
The Court’s holding in E.M.D. Sales creates uniformity in FLSA overtime matters. The Fourth Circuit Court of Appeals, which covers Maryland, North Carolina, South Carolina, Virginia, and West Virginia, had previously required employers to prove by “clear and convincing” evidence that an overtime exemption applied. All other Circuits already followed the lower, preponderance of the evidence standard. The Fourth Circuit’s standard generally led to the settlement of overtime collective actions, given the extreme difficulty for employers to prove these defenses in overtime litigation.
The Supreme Court rejected the Fourth Circuit’s clear and convincing evidence standard. The Court found that there are only three instances where a court can impose a clear and convincing evidentiary standard:
- a statute requires it,
- the Constitution requires it, or
- the government seeks to take “unusual coercive action” against an individual, e.g., stripping an individual of American citizenship.
The Court determined that none of these three instances applied to FLSA overtime exemptions.
Employers in the Fourth Circuit will now have a more even playing field in overtime litigation. Federal courts will now be able to hear defenses on their merits, rather than dismissing them nearly out of turn.
[1]604 U.S. ___ (2025) (Slip Op. at 1) (https://www.supremecourt.gov/opinions/24pdf/23-217_9o6b.pdf)
