Labor & Employment Law Daily Wrap Up, WAGE-HOUR—EXEMPTIONS—U.S.: Preponderance standard applies when employer seeks to demonstrate exemption from FLSA, (Jan 15, 2025)

By Jason Albright, J.D.

“Exempt employees can range from baseball players to seamen to maple-syrup processors to software engineers to firefighters, and so on.”

The default preponderance standard governs when an employer seeks to prove that an employee is exempt under the FLSA, the U.S. Supreme Court has affirmed in a unanimous opinion. Writing for the Court in a case involving application of the statute’s outside sales exemption to sales representatives for a food products distributor, Justice Kavanaugh observed that the FLSA does not specify a standard of proof for its exemptions, the case does not implicate any constitutional rights that might require a heightened standard, and it is not a case in which the government otherwise seeks to take “unusual coercive action” against an individual. Instead, cases under the FLSA “are more akin to the Title VII cases where the Court has held that a preponderance standard applies” (E.M.D. Sales, Inc. v. Carrera, No. 23–217 (U.S. Jan. 15, 2025)).

Food products distributor. The employer in the case, according to the High Court, distributes international food products in the Washington, D.C., metropolitan area. It employs sales representatives who manage inventory and take orders at grocery stores that stock its products.

Sales representatives’ suit. Several E.M.D. Sales representatives sued the company in federal district court in Maryland, alleging that E.M.D. violated the FLSA by failing to pay them overtime. E.M.D. did not deny that the employees worked more than 40 hours per week without receiving overtime pay. Instead, it argued that the employees fell within the Act’s outside-sales exemption.

District court’s decision. Following a bench trial, the district court concluded that the employer failed to prove “by clear and convincing evidence” that the employees qualified as outside sales employees. The court found that the employees primarily executed the terms of sales already made rather than making new sales themselves. The court thus ordered E.M.D. to pay them overtime wages and liquidated damages under the FLSA.

Appeal and Fourth Circuit’s unique standard. On appeal to the Fourth Circuit, E.M.D. argued that the district court should have applied the less stringent preponderance-of­-the-evidence standard rather than the clear-and-convincing-evidence standard. The appeals court disagreed and affirmed the judgment of the district court, following Fourth Circuit precedent requiring employers to prove the applicability of FLSA exemptions by clear and convincing evidence. Although the three-judge panel suggested that the full court might want to reconsider that precedent en banc, the federal appeals court later denied en banc review.

The Fourth Circuit, the Supreme Court observed, stands alone in requiring employers to prove the applicability of FLSA exemptions by clear and convincing evidence. Every other federal appeals court to address the issue has held that the preponderance standard applies. The High Court granted certiorari to resolve the conflict.

Default standard in 1938. Justice Kavanaugh initially observed that, in 1938, when Congress enacted the FLSA, “the established default standard of proof in American civil litigation was the preponderance-of-the­-evidence standard.” The Court’s cases pre-dating the FLSA recognized this, as did prominent treatises, such as Wigmore on Evidence. And since then, the preponderance-of-the-evidence standard has remained the default standard of proof in U.S. civil litigation. “That default makes sense,” Kavanaugh noted. “The preponderance standard allows both parties in the mine-run civil case to ‘share the risk of error in roughly equal fashion.’”

Three circumstances warranting deviation. In civil litigation, Kavanaugh noted, the Court has deviated from the preponderance standard in three main circumstances. First, courts must apply a heightened standard of proof if a statute specifically establishes one. Second, courts likewise must apply a heightened standard when the Constitution requires one. And finally, under the Supreme Court’s precedents, a heightened standard may be appropriate in certain other “uncommon” cases that “ordinarily” arise “when the government seeks to take unusual coercive action—action more dramatic than entering an award of money damages or other conventional relief—against an individual,” expatriation or denaturalization proceedings, for example. “Importantly,” Kavanaugh observed, “the Court has not otherwise used a heightened standard in civil matters.”

Default standard governs. The Supreme Court thus concluded that the default preponderance standard governs when an employer seeks to prove that an employee is exempt under the FLSA.

First, as the employees in the case acknowledged, the FLSA does not specify a standard of proof for its exemptions. Faced with silence, courts usually apply the default preponderance standard. “Statutory silence,” Justice Kavanaugh noted, “is generally ‘inconsistent with the view that Congress intended to require a special, heightened standard of proof.’”

Second, as the employees recognized, the case also does not implicate any constitutional rights that might require a heightened standard.

Third and finally, this was not a case in which the government otherwise seeks to take “unusual coercive action” against an individual. “Cases under the Fair Labor Standards Act,” said Kavanaugh, “are more akin to the Title VII cases where the Court has held that a preponderance standard applies. If clear and convincing evidence is not required in Title VII cases, it is hard to see why it would be required in Fair Labor Standards Act cases.”

Policy arguments rejected. Finally, Justice Kavanaugh noted that the Court was not “persuaded by the employees’ policy-laden arguments for a heightened standard when an employer seeks to show that an employee is exempt.” The employees argued that the FLSA focuses not on the individual’s interest in damages but on the public’s interest in a well-functioning economy in which workers are guaranteed a fair wage. “[T]hat premise,” according to Kavanaugh, “even if accepted, does not demand a heightened standard. After all, other workplace protections that vindicate important public interests remain subject to the preponderance standard. Eradicating discrimination from the workplace is undoubtedly important. Yet as explained above, this Court has held that a preponderance standard is appropriate for Title VII cases.”

Nor did the lack of waivability of at least some FLSA rights dictate otherwise. “[T]he waivability of a right and the standard of proof are two distinct inquiries,” said the Court. “Therefore, although at least some Fair Labor Standards Act rights are not waivable, it does not follow that a heightened standard of proof must apply when an employer attempts to show that an employee is exempt.”

Concurrence. In a brief concurring opinion joined by Justice Thomas, Justice Gorsuch wrote to observe that, in civil cases, though the background legal principles against which Congress is understood to legislate typically require proof by a preponderance of the evidence, the “default ‘common-law rule’” occasionally “provides instead for a ‘heightened standard of proof.’” Regardless, courts apply the default standard unless Congress alters it or the Constitution forbids it, and the court’s decision “is consistent with this understanding.”

The case is No. 23–217.

Judge: Kavanaugh, B.

Attorneys: Lisa S. Blatt (Williams & Connolly) for E.M.D. Sales, Inc. Lauren Elizabeth Bateman (Public Citizen) for Faustino Sanchez Carrera.

Companies: E.M.D. Sales, Inc.

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