Supreme Court Considers Evidence Standard in Overtime Lawsuits

The U.S. Supreme Court appeared inclined on Nov. 5 to reject a heightened standard of proof for employers to prove that federal law does not mandate the payment of overtime to workers.

During oral arguments in the case E.M.D. Sales Inc. v. Carrera, the justices considered the issue.

The federal Fair Labor Standards Act (FLSA) covers over 140 million workers and ensures eligible employees receive a minimum wage and overtime pay, with 34 exemptions from these requirements. Certain employees, such as executives, agricultural workers, and outside salesmen, are not entitled to overtime pay.

The legal question at hand is whether employers must demonstrate the applicability of an FLSA exemption with a preponderance of evidence, a standard adopted by six federal appeals courts, or with a more stringent clear-and-convincing-evidence standard, as ruled by the U.S. Court of Appeals for the Fourth Circuit.

The preponderance of evidence is the typical burden of proof in civil cases, where one side must prove something is more likely to be true than not.

The petitioner, E.M.D. Sales, supplies Asian, Caribbean, and Latin American foods to supermarkets in and around the nation’s capital.

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Three sales representatives sued the company, claiming they should be compensated for overtime because they regularly worked 60 hours per week.

However, the company contended that they were outside salesmen who are not entitled to overtime pay, which is typically triggered after 40 hours of work. Since their main responsibility included sales and they primarily worked outside the company’s office, they were exempt from the FLSA overtime pay requirement.

The salesmen stated that the company assigns each representative a sales route comprising chain and independent stores.

They do not receive an hourly wage. Instead, under negotiated collective bargaining agreements between the company and a trade union, their compensation consists entirely of commissions on product sales.

While acknowledging that they spend most of their time outside the company’s main office serving stores along their routes, they disputed the company’s claim that selling was their primary duty. They argued that they also handle inventory management tasks like restocking and issuing credits to stores for returned items.

E.M.D. Sales appealed to the Fourth Circuit, which in July 2023 overturned the decision, citing the need for the stricter clear-and-convincing-evidence standard.

During oral arguments on Nov. 5, the attorney representing E.M.D. Sales, Lisa Blatt of Williams and Connolly in Washington, urged the justices to reject the more rigorous standard.

She argued, “For over a century, this Court has held that the default standard in civil cases is preponderance of the evidence. That default rule should resolve this case.”

“Nothing in the text of [FLSA] suggests that Congress intended a clear and convincing evidence standard to apply to the 34 exemptions” specified in the act, she added.

She contended that employers only need to show that employees were more likely than not exempt from the overtime rule.

Justice Clarence Thomas asked Blatt if there were instances other than those involving actual malice where the Supreme Court had demanded the clear-and-convincing standard.

Blatt mentioned that the court only required it in water rights and sovereign government cases.

Chief Justice John Roberts questioned how the court could determine the necessity of the heightened standard when there is a “disparity [in] … bargaining power between the people who are seeking the wage and the employer.”

Blatt responded, emphasizing that in labor cases like National Labor Relations Act and Occupational Safety and Health Act disputes, the preponderance standard has always been applied.

Justice Brett Kavanaugh inquired, “Are you saying we should never expand the category of where we’ve done clear-and-convincing?”

Blatt affirmed, saying “yeah.”

U.S. Justice Department attorney Aimee Brown argued that in the absence of a specific standard in the FLSA, the preponderance standard must be utilized.

She stated, “The court has only departed from that default in a tiny number of cases, where the Constitution required it or in cases involving a significant deprivation, more dramatic than money damages, like deportation, denaturalization, and expatriation.”

The attorney for the salesmen, Lauren Bateman of Public Citizen, noted that while neither the FLSA nor the U.S. Constitution specifies the applicable standard of proof for factual determinations, the decision is typically left to the judiciary.

According to Bateman, the clear-and-convincing standard is necessary “to fulfill the explicit public purpose of the Fair Labor Standards Act,” which aims to enhance labor conditions.

When Thomas asked why the FLSA should be treated more favorably than discrimination cases that use the preponderance standard, Bateman acknowledged the distinction but argued for the need for the heightened standard in this case.

The Supreme Court is projected to issue a ruling on the matter by June 2025.