Supreme Court Clarifies Employer Burden Of Proof For Showing Exempt Status
Last week, the Supreme Court of the United States (SCOTUS) issued a unanimous 9-0 ruling in a case concerning the Fair Labor Standards Act (FSLA) and an employer’s responsibilities regarding federal minimum wage and overtime law. In EMD Sales, Inc. v. Carrera, the Supreme Court determined employers need only to meet a “preponderance of the evidence” standard when demonstrating an outside sales employee is exempt from federal minimum wage and overtime requirements.
In short, the ruling lowers the burden for employers to prove FSLA exemptions.
As legal experts at Squire Patton Boggs explained, the decision “does not change the applicable exemptions under the FLSA. Instead, it only clarifies the evidentiary burden imposed on an employer to prove a FLSA exemption applies.” The law firm advised that “employers who classify employees as FLSA-exempt should take appropriate steps to ensure they would be able to demonstrate — by a preponderance of evidence — that they properly classified each employee who is not paid minimum wage or overtime compensation by ensuring that they have appropriate and sufficient records of their payment on a salary basis and of the nature of the duties the employee performs.”
Heard by SCOTUS in November 2024, this case involved three salespeople for E.M.D. Sales, a food product distribution company, who sued the organization for failing to pay overtime. E.M.D. argued the employees qualified for the “outside salesman” FLSA exemption.
In an amicus brief submitted to SCOTUS, the National Association of Wholesaler-Distributors and the International Foodservice Distributors Association (IFDA) argued the preponderance of the evidence standard aligns with the operational realities of that industry while supporting fair labor practices. The brief provided significant background on who outside salespeople are, why they are important to businesses, and the difficulty of tracking their hours for overtime purposes.
Read the SCOTUS decision at this link.