The Supreme Court’s recent opinion in E.M.D. Sales Inc. et al. v. Carrera et al., No. 23-217, 2025 WL 96207 (U.S. Jan. 15, 2025) provides clarity for employers navigating the complexities of exemptions to the Fair Labor Standards Act (FLSA). This ruling set the “preponderance of the evidence” standard as the benchmark for proving exemptions, offering employers a more predictable and manageable framework for compliance and litigation.
E.M.D. Sales, Inc. (EMD) is a food distribution company in the Washington, D.C. area that employs sales representatives to manage its products in partner grocery stores. In 2017, several sales representatives sued EMD in Maryland federal court, claiming they were entitled to overtime pay under the FLSA. EMD argued they were exempt under the FLSA “outside salesman” exemption. Following a bench trial, the district court ruled in favor of the sales representatives, finding that EMD failed to prove the outside sales exemption applied. Applying Fourth Circuit precedent, the court required EMD to prove the exemption applied by clear and convincing evidence, a higher standard than the preponderance-of-the-evidence test used in most federal courts. On appeal, EMD argued for the lower standard, but the Fourth Circuit upheld the district court’s decision. EMD then sought and obtained U.S. Supreme Court review.
The Supreme Court unanimously overturned and remanded the case, holding that the preponderance-of-the-evidence standard applies when employers claim FLSA exemptions. The Court reasoned that since the FLSA does not specify a standard of proof, the default rule should apply, as none of the exceptions warranted a higher burden.
How This Standard Benefits Employers: A Foundation for Fairness and Predictability
The Supreme Court confirmed that the “preponderance of the evidence” standard—not the heightened “clear and convincing evidence” standard—is the appropriate burden of proof for employers seeking to establish FLSA exemptions. Previously, employers faced ambiguity regarding the precise level of proof required, creating challenges regarding compliance. This decision aligns FLSA exemption cases with the general standards of civil litigation, reinforcing a sense of fairness and balance within the legal system. For businesses, this decision removes the uncertainty surrounding exemption classifications and strengthens their ability to defend legitimate exempt employee designations.
The “preponderance of the evidence” standard means that it is more likely than not that the facts asserted by the employer are true. In practical terms, if an employer can demonstrate that it is at least 51% likely that an employee meets the criteria for an exemption, they have satisfied their burden of proof. This is a much more attainable standard than requiring near certainty or significantly more compelling evidence.
Employers asserting an exemption under the FLSA (e.g., executive, administrative, professional, or outside sales exemptions) must demonstrate that an employee’s job duties and salary meet the criteria established by the Department of Labor (DOL). The preponderance standard ensures that minor ambiguities or disputes over duties do not automatically result in costly misclassification rulings against employers. Employers can meet this burden by maintaining thorough documentation, including:
- Job descriptions clearly outlining duties, decision-making authority, and exempt responsibilities.
- Performance evaluations demonstrating that the employee primarily performs exempt duties.
- Timesheets and work schedules showing how employees allocate their work hours, supporting claims of exemption.
- Payroll records confirming salary thresholds for exemption eligibility.
Ensuring that these documents are up to date and accurately reflect job responsibilities, employers can confidently assert exemptions.
How Employers Can Use This Standard to Their Advantage
The Supreme Court’s affirmation of the preponderance standard provides employers with a stronger legal footing in FLSA disputes. By meeting the burden of proof through proper documentation and compliance measures, businesses can significantly reduce the risk of adverse rulings. Employers should ensure that written job descriptions reflect the actual duties performed. This means regularly updating job responsibilities to confirm they align with exemption criteria. Compensation structures should also be clearly defined, particularly for employees close to salary thresholds.
Notably, the Court’s decision discourages employees from bringing weak misclassification claims. With a clear evidentiary threshold, courts are less likely to side with employees who present vague allegations rather than substantive misclassification proof, strengthening an employer’s defense. By establishing a clear and reasonable standard of proof, plaintiffs must present credible evidence to challenge an employer’s exemption classification, making it less likely that baseless claims or weak cases will proceed. Employers can proactively use this decision to strengthen defenses in wage and hour lawsuits. By documenting job duties, responsibilities, and compensation structures, employers can create a strong record that satisfies the preponderance of the evidence standard. This proactive approach can significantly increase the likelihood of a favorable outcome in litigation.
Implementing Best Practices to Stay Compliant: Proactive Measures for Long-Term Success
While the high court’s decision offers employers’ valuable clarification regarding exemption standards, it is crucial to maintain proactive compliance measures. Simply relying on the preponderance standard without implementing robust internal processes is a recipe for potential problems. Businesses must still take proactive steps to ensure compliance with FLSA exemption rules. By implementing strong internal processes, employers can reduce exposure to litigation and maintain well-documented exemption justifications.
Best practices to implement:
Regularly Review Classifications
Job duties evolve, so review and update exemption classifications on a regular basis to ensure FLSA compliance.
Maintain Records
Keep organized, detailed documentation of job functions, salaries, and exemption justifications.
Train HR and Legal Teams
Ensure HR and legal staff understand FLSA exemptions and proper classification practices.
Conduct Audits
Periodically audit classifications to identify compliance risks.
Seek Legal Counsel
Consult employment lawyers for guidance on complex exemption issues and compliance strategies.
The Bottom Line
The Supreme Court decision in E.M.D. Sales, Inc. v. Carrera provides a much-needed win for employers by reaffirming that FLSA exemptions must be proven by a preponderance of the evidence, not a stricter standard. This ruling gives businesses greater confidence in their classification decisions, reduces unnecessary litigation, and aligns FLSA litigation with general civil law principles. By maintaining strong documentation, conducting regular exemption audits, and training HR teams on compliance best practices, employers can fully leverage this decision to protect their businesses and streamline their workforce management strategies.
Edwin Cruz is a Partner in the Ft. Lauderdale, Fla. office of Kaufman Dolowich LLP. He focuses his practice in the areas of labor and employment law and commercial litigation, and has more than 15 years of litigation experience defending employers in a wide variety of matters. He can be reached at edwin.cruz@kaufmandolowich.com.
Jaelyn Harrington is a law clerk in the Ft. Lauderdale, Fla. office of Kaufman Dolowich LLP, supporting the firm’s Labor & Employment practice group.
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