Supreme Court Rules on FLSA Exemptions in E.M.D. Sales, Inc. v. Carrera

In a major decision impacting employment law across the nation, the United States Supreme Court ruled in E.M.D. Sales, Inc. v. Carrera, that the preponderance-of-the-evidence standard governs the employer’s burden of proving an employee is exempt from the minimum wage and overtime requirements of the Fair Labor Standards Act (FLSA).

The ruling clarifies the evidentiary burden employers must meet and reinforces protections for workers who depend on fair pay and overtime compensation.

The Facts of the Case

Faustino Sanchez Carrera, a sales representative for E.M.D. Sales, Inc., filed a lawsuit alleging the company violated the FLSA by failing to pay him overtime wages. Mr. Carrera regularly worked more than 40 hours per week, but E.M.D. Sales claimed he was exempt from the FLSA’s overtime requirements under the “outside sales exemption.”

Mr. Carrera argued that his work involved significant non-sales activities, such as stocking shelves, handling deliveries, and performing promotional tasks that did not meet the criteria for the outside sales exemption. The employer maintained that these activities were incidental to his sales role and that Mr. Carrera qualified as exempt under the FLSA. The case turned on whether E.M.D. Sales could meet its burden of proving this exemption applied.

The Outside Sales Exemption

The outside sales exemption applies to employees whose primary duty is making sales outside of the employer’s primary place of business. The rationale is that outside sales employees typically are in a different situation from traditional employees. For example, outside sales workers often lack a fixed schedule and are compensated in part by commissions or other bonuses based on sales performance.

The Legal Issue

The primary issue before the Court was what evidentiary standard applies when an employer claims that their employee is exempt from the FLSA’s minimum wage and overtime protections. It is clear that the FLSA places the burden on employers to demonstrate that an employee qualifies for an exemption, and thus is not legally entitled to minimum wage or overtime pay. However, the level of proof required for the employer to do so had been the subject of varying interpretations.

Mr. Carrera argued in favor of the “clear and convincing evidence” standard, while E.M.D. Sales sought the lower “preponderance of the evidence” standard.

The Supreme Court’s Holding

The Supreme Court ruled that the preponderance of the evidence standard applies when an employer attempts to prove an employee is exempt from FLSA protections. Under this standard, the employer must show it is more likely than not that the employee meets the criteria for the claimed exemption.

Notably, the Supreme Court did not determine that E.M.D. Sales met this burden. Instead, the Court sent the case back to the Court of Appeals to answer that question.

The Court’s Reasoning

The Supreme Court based its decision on three key points:

1. The preponderance of the evidence standard was the default standard in all civil cases when the FLSA was passed into law.
2. The FLSA does not establish a specific standard of proof for exemptions, and in the absence of guidance in a civil statute, courts generally apply the preponderance of the evidence standard.
3. The case did not involve constitutional rights or coercive government action, either of which could justify applying a higher burden of proof.

Implications for Employees

The ruling in E.M.D. Sales, Inc. v. Carrera favors employers, because the case makes it somewhat easier for employers to establish that an employee is not eligible for the protections of the FLSA.

This decision also highlights the importance of understanding your job classification and duties. Employers sometimes misclassify employees to avoid paying overtime, often ignoring the law or misapplying an exemption. If you believe your employer has improperly classified your role as exempt from overtime pay, it is essential to seek legal guidance to evaluate your rights under the FLSA and the New Jersey Wage & Hour Law.

Contact Us to Protect Your Employment Rights

If you suspect your employer has misclassified your position as exempt to deny you minimum wage or overtime pay, the attorneys at Rabner Baumgart Ben-Asher & Nirenberg, P.C. can help. With decades of experience representing employees in a wide range of employment lawsuits, including wage and hour disputes, we are committed to protecting your rights and securing the pay you earned.

To learn more and to speak with a Bergen County employment lawyer about your case today, contact us to schedule a consultation. You can reach us by calling 201-777-2250 or by completing our secure online contact form.