Great Lakes Wire

The U.S. Supreme Court has ruled unanimously that the evidentiary standard for proving exemptions under the Fair Labor Standards Act (FLSA) is a "preponderance of the evidence," rather than the more stringent "clear and convincing evidence." This decision arose from the case of E.M.D. Sales, Inc v. Carrera, et al., which questioned whether a sales position at E.M.D. Sales could be classified as exempt under the FLSA's Outside Sales exemption.

According to U.S. Department of Labor regulations, a job qualifies for this exemption if its primary duty involves making sales or obtaining contracts for services and if the worker is customarily engaged away from the employer's business premises.

E.M.D. Sales, a food distribution company, employed three sales representatives who were classified as exempt and not paid overtime despite working beyond 40 hours weekly. These employees claimed misclassification and sought overtime pay for excess hours worked.

Initially decided at a lower court level, the case used a higher evidentiary standard—clear and convincing evidence—to determine that E.M.D. Sales had not sufficiently proven the exemption status of its sales representatives. The employer appealed to the U.S. Court of Appeals for the 4th Circuit, which upheld this higher standard based on statutory interpretation precedent unique to that circuit.

The Supreme Court intervened, clarifying that since 1938, "the default standard of proof in American civil litigation has been 'preponderance of the evidence.'" The Court determined that FLSA cases should align with other workplace protection laws using this lower standard.

With this clarification on evidentiary standards established, further proceedings regarding whether these positions are indeed exempt will return to lower courts.

Employers are advised to review their FLSA classifications carefully due to potential compensatory damages related to misclassification claims extending up to three years prior to filing complaints.

Additionally, human resources professionals are encouraged to understand proper FLSA classification analysis requirements fully. For Executive, Administrative or Professional (EAP) exemptions, criteria include meeting salary basis tests ($684/week minimum), alongside specific job duties tests.

It is noted that last summer saw an unsuccessful attempt by a Texas court to adjust salary level exemptions under FLSA guidelines back down from $684 per week—a point not applicable when assessing Outside Sales roles due lack thereof salary basis requirement.