Supreme Court Sets the Record Straight on Evidentiary Standard for Demonstrating an Exemption Under the Fair Labor Standards Act

January 29, 2025

In a recent decision, the United States Supreme Court answered an age-old question regarding the evidentiary standard required for an employer to carry its burden of proof in demonstrating that an employee meets an exemption to the Fair Labor Standards Act’s (“FLSA”) overtime requirements. It is well-settled that an employer claiming that a worker is exempt from the FLSA’s overtime requirement has the burden of proving that the employee meets an FLSA exemption. However, despite the FLSA’s nearly ninety-year tenure, it has been unclear what evidentiary standard of proof applies to the employer’s burden. In its January 15, 2025, decision in E.M.D Sales, Inc. v. Carrera, the Supreme Court of the United States held that an employer must prove only by a preponderance of the evidence that an employee meets an exemption from overtime requirements under the FLSA.

History of the FLSA

Congress enacted the FLSA in 1938, ushering in an era of guaranteed federal minimum wage for covered workers and required overtime pay. However, Congress also included numerous exemptions from the FLSA’s overtime requirements, including those employees working as outside salesman, seamen, switchboard operators, and much more. For many employers facing an FLSA lawsuit, a court-ruling that the employee seeking unpaid overtime compensation is exempt from the FLSA’s overtime requirements is crucial. A finding to the contrary can result in exposure to unpaid wages, liquidated damages and the employee’s reasonable attorney’s fees. It is well-settled that it is the employer’s duty to demonstrate that an employee meets an FLSA exemption. However, the FLSA is silent as to what burden of proof applies to this burden.

In lay terms, a burden of proof refers to what extent a party with a burden of proof in a lawsuit must prove its evidence to the court or jury. The strictest burden of proof is “beyond a reasonable doubt,” which is the prosecution’s burden of proof in criminal cases. On the low end of the spectrum is “some evidence.” As such, the burden of proof applicable to proving an FLSA exemption can have a critical impact on the employer’s ability to avoid costly unpaid overtime exposure. The more stringent the burden, the harder it is for an employer to demonstrate an exemption, and the more likely it is that the employer will face exposure.

Without guidance from Congress or the United States Supreme Court regarding the burden of proof that applies to an employer’s burden to demonstrate an FLSA exemption, the various federal courts have applied differing standards. For example, the Fourth Circuit Court of Appeals, which hears appeals from federal District Courts in West Virginia, Virginia, North Carolina, and South Carolina, has applied a clear and convincing evidence standard, which requires that the party with the burden of proof offer evidence that is highly and substantially more likely to be true than untrue. The remaining federal Circuit Courts of Appeals apply a preponderance of the evidence standard, which is less stringent than the clear and convincing evidence standard and requires only that the party with the burden of proof demonstrates evidence showing that the proffered evidence is more true than not true.

What Happened in This Case?

The United States Supreme Court answered the question regarding the requisite evidentiary standard for an employer to prove an FLSA exemption in its January 15, 2025, decision in E.M.D. Sales, Inc. v. Carrera. The plaintiffs filed a federal lawsuit against their employer, seeking unpaid overtime wages. The employer took the position that the employees were exempt from overtime requirements under the FLSA’s outside salesman exemption. The lower courts applied the clear and convincing standard to the employer’s burden in demonstrating that the employees met the outside salesman exemption, resulting in an order that the employer pay the employees overtime wages and liquidated damages.

The Supreme Court reversed and remanded, holding that the preponderance of the evidence standard is the correct standard to apply to the employer’s burden of proof in demonstrating an FLSA exemption. In sum, the court held that preponderance of the evidence is the default standard of proof in American civil litigation unless a statute, the Constitution of the United States, or precedence established by the courts establishes a higher burden of proof. The Supreme Court found that no such conditions existed in this case. Further, the Supreme Court was not persuaded by the employee’s policy-based arguments in favor of a more stringent standard. Critically for employers, the court highlighted that the FLSA’s public interests do “not fall entirely on the side of employees,” stating that: “Most legislation reflects a balance of competing interests. So, it is here.”  E.M.D. Sales, Inc., v. Carrera, No. 23–217 (January 15, 2025).

Bottom Line

The Supreme Court’s ruling in E.M.D. Sales, Inc. is favorable to employers facing FLSA lawsuits. However, the employer still carries the burden of proof and needs to be able to articulate to a court or jury why an employee meets one of the FLSA’s exemptions. If you are not sure why or how your exempt employee(s) qualify for an FLSA exemption, you should contact an employment attorney to conduct a review of your exempt employee’s duties and basis of pay.

This article, slightly modified to note recent updates, was featured online in the Wisconsin Employment Law Letter and published by BLR®—Business & Legal Resources. Reproduced here with the permission of BLR®—Business & Legal Resources.