On January 15, 2025, the U.S. Supreme Court issued a rare unanimous decision in EMD Sales Inc. v. Carrera, addressing the standard of proof employers must meet to establish that an employee is exempt from the minimum wage and overtime requirements under the Fair Labor Standards Act (FLSA). The Court held employers need only prove employees meet an FLSA exemption by a preponderance of the evidence (more likely true than not), rejecting the Fourth Circuit’s use of the higher “clear-and-convincing-evidence” standard. This ruling carries significant implications for employers in the context of employee classification and defending against unpaid overtime claims.
FLSA: No Special Treatment Granted
Generally, the FLSA requires employers to pay their employees a minimum wage and overtime compensation unless an employee meets the requirements of a statutory exemption. In clarifying that the appropriate standard of proof in FLSA exemption cases is the preponderance-of-the-evidence standard rather than the Fourth Circuit’s clear-and-convincing-evidence standard, the Supreme Court emphasized that the former is consistent with the default standard used in American civil litigation. In civil litigation, the Court only deviates from the preponderance-of-the-evidence standard in three main circumstances, none of which apply to FLSA exemption cases:
- If a statute establishes a heightened standard of proof;
- When the Constitution requires a heightened standard of proof; and
- In certain “uncommon” civil matters where a heightened standard of proof is required, for example, when the government seeks to take an unusual coercive action against an individual, i.e. taking away a person’s citizenship.
In making its determination, the Supreme Court rejected policy arguments suggesting that the FLSA’s focus on public interest warranted a higher standard of proof. The Court noted that other significant workplace protections, such as those under Title VII of the Civil Rights Act (federal anti-discrimination law), similarly use the preponderance-of-the-evidence standard, further reinforcing the Court’s stance that the burden of proof in FLSA cases should not exceed this threshold.
Through its ruling in EMD Sales Inc. v. Carrera, the Supreme Court aligned the Fourth Circuit with other appellate courts that have consistently applied the preponderance-of-the-evidence standard, ensuring uniformity across jurisdictions and simplifying the legal landscape for employers.
Implications for Employers
The Court’s ruling clarifies that the burden of proof for FLSA exemptions will now be uniformly based on the preponderance-of-the-evidence standard across all jurisdictions. This development simplifies the legal process for employers, who no longer need to contend with varying standards of proof depending on the jurisdiction in which a case is heard. It also reduces the administrative burden on employers by removing some uncertainty surrounding the FLSA. As the U.S. Chamber of Commerce has noted, uncertainty over FLSA coverage can disrupt business expectations, reduce workforce investment, and deter commercial development due to the threat of costly litigation. The Court’s establishment of a uniform standard should assist in stabilizing business expectations moving forward.
To effectively defend against unpaid overtime claims, employers must ensure that their employee classifications—whether exempt or non-exempt—are well-documented and can be substantiated by a preponderance of the evidence. Proper documentation and clear records remain critical for defending exemption status under this standard of proof.
[View source.]
