The High Court’s decision in E.M.D. Sales v. Carrera puts to rest fears of a sharp increase in Fair Labor Standards Act misclassification cases claiming employers didn’t take enough care when making decisions about employees’ exempt or nonexempt status.
The case: A group of employees who worked for EMD Sales, a food products distributor, filed a lawsuit alleging they were misclassified as outside salespersons and therefore should have received overtime pay when they worked more than 40 hours in a workweek.
When employees challenge their exempt classification, employers have the burden of proving they classified the employees correctly. The must convince a judge or jury that they properly followed the specific classification tests laid out by Department of Labor rules.
But how heavy is that burden? Federal appeals courts have disagreed. In the E.M.D. Sales case, the 4th Circuit Court of Appeals said the company had to prove they were right by clear and convincing evidence. Think of that as a big tip of the burden-of-proof scales—in this case, in favor of the employees. Every other federal court of appeals that has addressed the issue has held that the preponderance-of-the-evidence standard applies, a much slighter tip of the scales.
The Supreme Court unanimously agreed that the preponderance-of-the-evidence standard was appropriate in FLSA classification cases. It sent the case back to a lower court for a judge to determine if the employer had proven it classified the employees correctly, under the preponderance-of-the-evidence standard. (E.M.D. Sales v. Carrera, U.S. Supreme Court, 2025)
Advice: Always be prepared to show how you arrived at an exempt/nonexempt decision and that you got the classification right. Do this by being able to describe your employees’ exact job duties. Then match those duties to each of the FLSA’s duties tests: administrative, executive, professional, highly compensated employee or, as in this case, outside salesperson. Be prepared to “show your work.” If you follow these steps, you will likely meet the preponderance-of-the-evidence standard.