The U.S. Supreme Court’s recent decision in E.M.D. Sales, Inc. v. Carrera settles a conflict among the courts and clarifies that the standard of proof that an employer must satisfy to show that an employee is exempt is by a preponderance-of-the-evidence, not the heightened standard of clear and convincing evidence. This decision sets a clear national standard under the Fair Labor Standards Act (FLSA) and, when challenged, makes it easier for employers to prove their employees are properly classified.  

Background 

E.M.D. Sales, Inc. (E.M.D.) was sued by its sales representatives for allegedly not paying overtime. E.M.D defended the action claiming the plaintiffs were outside salesmen exempt from FLSA overtime requirements. In the lower court and on appeal, E.M.D. was found liable for overtime because it had not proven, by a clear and convincing standard, that its sales representatives were outside salesmen. The question on appeal was which standard applies to show an employee is exempt under the FLSA: clear and convincing evidence or a preponderance-of-the-evidence.  

The Supreme Court ruled that the preponderance-of-the-evidence standard, not the clear-and-convincing-evidence standard, applies when an employer seeks to prove an employee is exempt from FLSA provisions. The Court noted that its decision aligns with the default standard in American civil litigation unless a statute or the Constitution specifies otherwise. 

What Does it Mean 

The Court’s ruling provides a consistent nationwide standard for all FLSA exemption cases. The lower threshold ‘preponderance’ standard will also ease the burden on businesses defending misclassification claims under the FLSA.   

To avoid misclassification claims under both state and federal laws, consider the following best practices: 

• Be mindful of differing wage and hour requirements. State and local municipalities can enact higher, more stringent, or differing wage and hour requirements. These requirements should be reviewed annually to ensure continued compliance.  

• Regularly review job descriptions. Schedule regular annual audits to confirm that all duties and responsibilities listed in the job description are accurate and remain aligned with classification mandates.