Several EMD sales representatives sued EMD Sales, Inc. in the U.S. District Court for the District of Maryland, alleging violations of the Fair Labor Standards Act (FLSA) for failing to pay overtime compensation. The District Court ruled in favor of the employees after applying a clear and convincing evidence standard, EMD appealed to the Fourth Circuit which affirmed, and the Supreme Court granted certiorari to resolve a circuit split regarding the appropriate standard of proof for FLSA exemptions.
Factual Overview
EMD Sales, Inc. distributes international food products in the Washington, D.C. metropolitan area and employs sales representatives who manage inventory and take orders at grocery stores that stock EMD products. The sales representatives worked more than 40 hours per week without receiving overtime pay. EMD argued that the employees were exempt from overtime requirements under the FLSA’s “outside salesman” exemption. After a bench trial, the District Court found that EMD failed to prove “by clear and convincing evidence” that the employees qualified as outside salesmen. The Fourth Circuit affirmed, following circuit precedent requiring employers to prove FLSA exemptions by clear and convincing evidence, though it stood alone among circuits in requiring this heightened standard.
Legal Analysis
Standard of Proof for FLSA Exemptions: The Court held that the preponderance of evidence standard applies when employers seek to prove that employees are exempt from FLSA’s minimum wage and overtime provisions. The Court explained that this standard is the default in civil litigation unless Congress specifies otherwise, constitutional rights are at stake, or the government seeks unusual coercive action against an individual. None of these exceptions applied here.
Employee Arguments: The Court rejected several policy arguments raised by the employees. First, it dismissed the argument that the FLSA’s public interest in fair wages required a heightened standard, noting that other workplace protections serving important public interests use the preponderance standard. Second, it rejected the argument that the non-waivable nature of FLSA rights required a higher standard, explaining that waivability and standard of proof are distinct concepts. Finally, it dismissed arguments about employers controlling evidence and employee income levels, noting these factors exist in other employment cases using the preponderance standard.
Concurrence
Justice Gorsuch, joined by Justice Thomas, wrote separately to emphasize that courts must apply default standards of proof unless Congress alters them or the Constitution forbids it, avoiding policy choices in favor of declaring the law.
The Supreme Court reversed and remanded, holding that the preponderance-of-the-evidence standard applies when an employer seeks to demonstrate that an employee is exempt from the FLSA’s minimum-wage and overtime-pay provisions.
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