The federal Fair Labor Standard Act (“FLSA”) guarantees covered employees minimum wages and overtime pay. It also establishes a number of exemptions from the overtime pay requirements, including an exemption for outside salesmen who primarily work away from their employer’s place of business. The law places the burden on the employer to show that the exemption applies.
1. The Overtime Exemption Issue
The U.S. Supreme Court addressed the evidence standard applicable to FLSA exemptions on January 15, 2025. In E. M. D. Sales, Inc. v. Carrera, ___U.S.___ (2025), several sales representatives who manage inventory and take orders at grocery stores sued their employer, EMD, which distributes food products in the Washington D. C. area. The employees claimed they were unlawfully denied overtime pay. In response, the employer argued they were exempt outside salesmen and thus not entitled to overtime pay.
2. The Lower Court Decisions Applied The Clear And Convincing Evidence Standard
The federal district court found EMD liable for overtime because it did not prove by “clear and convincing evidence” that the sales representatives were outside salesmen. On appeal, EMD argued that the district court should have used the less stringent “preponderance-of-the-evidence” standard instead of the clear and convincing evidence standard. The Fourth Circuit Court of Appeals disagreed with EMD and affirmed the district court’s judgment.
3. The Supreme Court Disagreed
After agreeing to hear the case, the U.S. Supreme Court unanimously held that the predominance-of-the-evidence standard applies when an employer seeks to demonstrate that an employee is exempt from the minimum wage and overtime pay provisions of the FLSA. It reasoned that the FLSA was enacted in 1938, when the preponderance-of-the-evidence standard was the default in American civil litigation, and it remains so today. Where a statute, like the FLSA, does not specify a standard of proof for exemptions, courts typically apply the preponderance standard. The Supreme Court thus found the employees’ policy-laden arguments for a heightened standard unconvincing. It reversed the Fourth Circuit’s decision and returned the case to the court of appeals to determine whether the employees would fail to qualify as outside salesman even under a preponderance standard.
4. Practical Considerations
The Supreme Court’s E.M.D. Sales decision is extremely important. It reinforces the rule that employers bear the burden of establishing the application of minimum wage and overtime exemptions under the FLSA. It identifies the correct evidentiary standard that applies in cases where the outside salesman exemption is litigated. It follows that the preponderance-of-the-evidence standard will also apply in cases where other exemptions are litigated, e.g., for executive, administrative, and professional employees.
The exemptions are reviewed at length in Chapter 10 of the Wage and Hour Manual for California Employers by Attorney Richard J. Simmons of Sheppard Mullin. The discussion emphasized the governing legal standards and many differences between the California law and the FLSA standards. The Manual is available through Castle Publications, LLC.
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About The Author
Richard J. Simmons is a Partner in the law firm of Sheppard, Mullin, Richter & Hampton LLP in Los Angeles. He represents employers in various employment law matters involving litigation throughout the country and general advice regarding state and federal wage and hour laws, employment discrimination, wrongful discharge, employee discipline and termination, employee benefits, affirmative action, union representation proceedings, and arbitrations. Mr. Simmons received his B.A., summa cum laude, from the University of Massachusetts, where he was a Commonwealth Scholar and graduated in the Phi Kappa Phi Honor Society. He received his J.D. from Berkeley Law at the University of California at Berkeley where he was the Editor-in-Chief of the Industrial Relations Law Journal, now the Berkeley Journal of Employment and Labor Law.
Mr. Simmons argued the only case before the California Supreme Court that produced a victory for employers and business in 2018. He was recently recognized as the Labor and Employment Attorney of the Year by the Los Angeles Business Journal and was inducted into the Employment Lawyers Hall of Fame. He has lectured nationally on wage and hour, employment discrimination, wrongful termination, and other employment and labor relations matters. He is a member of the National Advisory Board to the Berkeley Journal of Employment and Labor Law, published by Berkeley Law at the University of California at Berkeley. He was also appointed by the California Industrial Welfare Commission as a member of three Minimum Wage Boards for the State of California.