The Supreme Court has agreed to consider the standards of evidence for employers trying to prove that their workers should not qualify for overtime pay and other legal protections provided by U.S. wage laws.
The federal Fair Labor Standards Act (FLSA), which covers more than 140 million workers, guarantees eligible employees a minimum wage and overtime pay.
However, the statute also contains 34 exemptions from those mandates. Employers do not have to pay overtime to executives, agricultural workers, or outside salesmen.
The legal issue here is whether employers must prove the applicability of an FLSA exemption on a preponderance of the evidence, as six federal courts of appeal hold, or by the more stringent clear-and-convincing-evidence standard, as only the U.S. Court of Appeals for the Fourth Circuit holds.
The preponderance of evidence is the usual standard of proof in civil lawsuits. It requires a side to prove that something is more likely than not.
The petitioner, E.M.D. Sales, distributes Asian, Caribbean, and Latin American foods to grocery stores in and around the nation’s capital.
Respondent Faustino Sanchez Carrera and two other sales representatives sued the company, arguing that they should receive overtime pay because they routinely worked 60 hours per week.
But the company argued at trial in federal district court that they were outside salesmen who don’t legally qualify for overtime pay, which normally kicks in at the 40-hour mark. Because their primary duty involved selling and they generally worked outside of the company’s office, they were exempt from the FLSA’s overtime pay requirement, the company argued.
The salesmen testified that the company assigns each of its sales representatives a sales route that includes chain stores and independent stores.
They are not paid an hourly wage. Instead, under collective bargaining agreements negotiated by the company and the United Food and Commercial Works Union, Local 400, the sales representatives’ compensation consists entirely of commissions on sales of the company’s products.
The salesmen acknowledged that they spend most of their time outside of the company’s main office serving stores along their routes but disputed the company’s claim that their primary responsibility is making sales. They testified that their primary responsibilities are inventory management, with daily tasks such as re-stocking, replenishing depleted products, removing damaged and expired items from the shelves, and providing credits to stores for removed items.
U.S. District Court Judge James Bredar of Maryland weighed the evidence presented by both sides and rejected the company’s position in his ruling on March 19, 2019. The judge was appointed by President Barack Obama in 2010.
The salesmen were entitled to damages because the company “failed to demonstrate good faith or reasonable grounds for believing that their conduct was in accordance with the FLSA,” Judge Bredar wrote.
However, the salesmen failed to show that the company’s violation of the FLSA was intentional, so the judge denied their request that a permanent injunction be entered against the company.
E.M.D. Sales appealed to the Fourth Circuit, which on July 27, 2023, ruled against the company, finding that the tougher clear-and-convincing-evidence standard applied.
The three-judge panel was comprised of Judge James Wynn, who was appointed by President Barack Obama in 2010; Judge Pamela Harris, appointed by President Obama in 2014; and Judge Toby Heytens, appointed by President Joe Biden in 2021.
When the company asked the Supreme Court to review the Fourth Circuit’s decision, the nation’s highest court asked the Biden administration to weigh in on the case.
The circuit court’s decision to adopt the clear-and-convincing-evidence standard of proof for FSLA exemptions “is unreasoned and inconsistent with this Court’s precedent, which has long recognized that such a heightened standard of proof should not be applied to ordinary civil cases seeking monetary remedies,” Ms. Prelogar wrote.
The Fourth Circuit’s holding is based on a “misreading” of another circuit’s precedent that the court “never explained” and other circuits “have expressly rejected.”
The decision is so obviously wrong that the Supreme Court should “restore consistency among the circuits” by reversing the Fourth Circuit’s ruling without holding oral arguments, the top government lawyer wrote.
The attorney for E.M.D. Sales, Lisa Blatt of Williams and Connolly in Washington, and the attorneys for the salesmen, Lauren Bateman of Public Citizen in Washington and Omar Vincent Melehy of Melehy and Associates in Silver Spring, Maryland, did not respond to requests for comment by press time.
The Supreme Court is expected to hear the case in its new term that begins in October.
