WORK WITH US
The United States Supreme Court Clarifies What Standard of Proof Applies When an Employer Seeks to Demonstrate That an Employee is “Exempt” Under the FLSA
On January 15, 2025, the United States Supreme Court issued a ruling in E.M.D. Sales, Inc. v. Carrera (2025) __ U.S. __, holding that the preponderance-of-the-evidence standard applies when an employer designates a classification as “exempt” under the Fair Labor Standards Act (FLSA), and an employee brings a lawsuit to challenge that designation.
Passed in 1938, the FLSA guarantees covered workers a federal minimum wage and generally requires overtime pay for work exceeding 40 hours per week. However, Congress recognized that applying a minimum wage and overtime pay might be impractical or inappropriate for certain jobs. As a result, the FLSA exempts many categories of employees from the minimum wage requirement and even more from the overtime pay requirement.
The descriptions of the exempt categories under the FLSA vary widely in their breadth and scope, ranging from narrowly tailored exemptions like casual babysitters to broadly defined roles such as executive, administrative, and professional employees. This flexibility allows the statute to adapt to evolving job classifications and business needs, and ensures that employers can align exemptions with the nature of specific job duties and industries. Employers are responsible for determining whether a classification qualifies for an exemption—a process called an “exemption determination.” If an employee challenges an exemption determination in court, the burden of proof rests on the employer to prove that the exemption applies.
In California, the Ninth Circuit, and nearly all other circuits, the standard an employer must meet to satisfy this burden in court has long been the preponderance-of-the-evidence standard. (See Coast Van Lines, Inc. v. Armstrong (9th Cir. 1948) 167 F.2d 705, 707.) However, in 2023, the Fourth Circuit created a split by upholding a district court’s ruling that E.M.D., the employer, was liable because it failed to prove “by clear and convincing evidence” that the employees qualified for an exemption as “outside salesmen” under 28 U.S.C. section 213(a)(1).
The clear and convincing standard demands a higher level of proof, requiring it to be highly probable that a classification meets the exempt status. In contrast, the preponderance-of-the-evidence standard only requires showing it is more likely than not that the classification meets the exemption criteria. The Supreme Court rejected the Fourth Circuit’s holding, reasoning that since the FLSA is silent on the standard, the traditional civil litigation standard of preponderance-of-the-evidence should apply. The Court noted how the standard functioned effectively for other labor and employment statutes, such as Title VII, and concluded it is equally suitable for FLSA cases.
Next Steps and Reminders
Although the ruling in E.M.D. Sales does not reflect a change in the law in California, it is an important reminder for employers to conduct thorough and accurate exemption determinations. A finding that an employer improperly classified a non-exempt employee as exempt may carry liquidated damages in addition to overtime or minimum wage payments for the classification going forward.
In order to avoid or limit liability, agencies should regularly audit job duties and descriptions as roles evolve. Job titles alone do not determine whether a classification is exempt; duties and salary thresholds are key factors.
Agencies must also train HR personnel and managers on the FLSA’s requirements. This training ensures they understand how to classify employees as either qualifying for one of the exemptions or not. This may also require strategic communication with employee associations if there is a determination that an employee(s) has been improperly classified as exempt or non-exempt. Liebert Cassidy Whitmore attorneys regularly deal with these issues and can help if you have questions about whether a classification is exempt or you have determined has been improperly classified.
If your agency needs assistance with exemption determinations or compliance with the FLSA, including the implementation of policies, procedures, training or forms, please contact our Los Angeles, San Francisco, Fresno, San Diego, or Sacramento office.