Supreme Court Considers What Evidentiary Standard Applies in Exemption Cases

The U.S. Supreme Court heard oral arguments on whether employers must show by clear and convincing evidence that a worker is exempt from the Fair Labor Standards Act’s (FLSA’s) overtime requirements. 

Even the justices who ordinarily are sympathetic to plaintiffs seemed skeptical that this higher standard—rather than the usual, lesser preponderance-of-the-evidence standard—applies, Rob Pritchard, an attorney with Littler in Pittsburgh, told SHRM. Justice Sonia Sotomayor asked during the arguments about procedural mechanisms to send the case back to the lower court.

Regardless of what evidentiary test applies in showing that an employee is exempt, the case is “a good reminder that the employer will bear the burden of proof that the exemption applies,” Pritchard said. He added that the case shines another spotlight on how employees are classified.

It’s important to periodically re-evaluate exemptions with the assistance of counsel to determine whether job duties meet exemption requirements. Pritchard noted that jobs change as technology evolves.

Background on the Case

In this case (E.M.D. Sales, Inc. v. Carrera), three sales representatives for a food distribution company, E.M.D. Sales Inc., filed a lawsuit claiming that the employer failed to pay them the overtime compensation they were due under the FLSA. 

The company argued that the FLSA’s outside sales exemption applied, and thus the employees were not entitled to overtime. 

Applying the clear-and-convincing-evidence standard, the district court determined that the employer did not satisfy the burden of showing that the outside sales exemption applied. A 4th U.S. Circuit Court of Appeals panel agreed, and the en banc (all judges) 4th Circuit declined the employer’s petition for review.

“The 4th Circuit decision was an outlier,” Pritchard told SHRM. At least six other federal courts of appeal have applied the preponderance-of-the-evidence standard when employers are trying to show an exemption applies.

Employer’s Argument

“For over a century, this court has held that the default standard in civil cases is preponderance of the evidence,” said Lisa Blatt, an attorney with Williams & Connolly in Washington, D.C., arguing for the employer in the oral arguments. 

Nothing in the text of the FLSA suggests that Congress intended a clear-and-convincing-evidence standard to apply to the 34 exemptions under the FLSA, she added.

The sales representatives maintained that a heightened standard is appropriate because FLSA rights are important, Blatt told the court. However, a preponderance standard applies to rights in race discrimination and disability discrimination cases, as well as the rights to organize and to experience workplace safety—“all super-important rights,” she said. 

The Supreme Court has never read a clear-and-convincing-evidence standard into a statute for money damages, Blatt added. 

The sales representatives pointed out that overtime rights aren’t waivable, but “waivability and standards of proof are unrelated and don’t go hand in hand,” Blatt said.

DOJ Supports the Employer

Arguing in support of the employer, Aimee Brown, assistant to the solicitor general with the U.S. Department of Justice (DOJ) in Washington, D.C., said, “When Congress does not address the standard of proof in a statute, this court has long recognized that the preponderance of the evidence is a default rule for civil actions.”

She added that the court has departed from this default rule in a tiny number of cases, such as where the Constitution required it or in cases involving a significant deprivation more dramatic than money damages, such as deportation, denaturalization, and expatriation. 

The sales representatives’ claim seeking monetary remedies for alleged violations of the FLSA’s overtime requirements “is not remotely comparable to those cases,” Brown said.

“Did I understand your opening to say that if it’s just money, you wouldn’t address the clear-and-convincing standard at all?” Chief Justice John Roberts Jr. asked her.

Brown replied that the clear-and-convincing-evidence standard has never applied outside of the First Amendment context when solely money damages are remedies. 

“Should we just draw a clear line and say, when a higher standard of proof is not required by the Constitution and there is no liberty interest at stake, then … we presume conclusively that the standard is preponderance?” Justice Samuel Alito Jr. asked.

“I don’t think that there is any need to take that kind of further step,” Brown answered.

Sotomayor asked whether the plaintiffs might prevail under the preponderance-of-the-evidence standard. 

“We haven’t taken a position on whether the right outcome here under the preponderance-of-the-evidence standard is to find an exemption or not,” Brown said.

Plaintiffs’ Stance

The application of the clear-and-convincing-evidence standard is necessary to carry out the explicit purpose of the FLSA, argued Lauren Bateman, an attorney with Public Citizen in Washington, D.C.

“The FLSA is not your typical civil statute where only individual monetary damages are at stake,” she said. “Instead, it’s a statute that protects both the worker’s right to a fair day’s pay for a fair day’s work, but also the public’s right to an economic system that doesn’t depend on and inexorably lead to the impoverishment and immiseration of the American worker.”

Justice Clarence Thomas asked why FLSA cases should be treated more advantageously than discrimination cases.

The key difference between the FLSA and Title VII of the Civil Rights Act of 1964 is waivability, Bateman said. She noted that the court has said that private waivers of the FLSA’s provisions for back pay or liquidated damages would nullify the act’s purposes. 

Justice Elena Kagan asked if there really were no other nonwaivability rules of the same kind. 

“Yes, it is unique,” Bateman answered.

Pritchard predicted the justices would reverse the 4th Circuit’s ruling or send the case back to the district court.