The U.S. Supreme Court agreed to review a case on appeal from the Fourth Circuit involving the burden of proof required for an employer to show that an employee’s job position is exempt from overtime under the Fair Labor Standards Act (FLSA). The high court’s decision will have a notable impact on the ability of employers to defend misclassification claims brought under the FLSA.

While the Fifth, Sixth, Seventh, Ninth, Tenth, and Eleventh Circuits have applied the “preponderance of the evidence” standard, the Fourth Circuit has repeatedly applied the notably higher “clear and convincing” standard, including most recently in Carrera v. EMD Sales, 75 F.4th 345 (4th Cir. Jul. 27, 2023). The Court agreed to review the Fourth Circuit’s decision in Carrera to resolve this split among the federal circuits on the appropriate burden of proof for FLSA exemptions.

In Carrera, three salespeople filed a lawsuit alleging that their employer improperly classified them as exempt and that they were entitled to overtime wages. The employer, a food distributor, argued that their jobs fell under the “outside sales” exemption, which exempts certain sales employees from overtime when they work primarily outside the office meeting with customers. Despite that the Fourth Circuit had previously applied a “clear and convincing” standard as the employer’s burden of proof on this issue, the employer argued that lower “preponderance of the evidence” standard was the correct standard given the U.S. Supreme Court’s decision in Encino Motorcars, LLC v. Navarro, 138 S. Ct. 1134, (2018), which rejected a narrow reading of the FLSA’s exemptions.

The Fourth Circuit affirmed the district court finding it properly required the employer to show by a “clear and convincing” burden of proof that the employees were covered by the outside sales exemption. While the Fourth Circuit acknowledged Encino Motorcars may suggest that the “clear and convincing” standard is outdated, the Fourth Circuit’s prior precedent applying the higher standard had never been overturned because the U.S. Supreme Court had not squarely addressed the burden of proof issue.

Now, the Supreme Court’s decision to review this case signals that the high court will clarify the appropriate burden of proof standards to be used across the federal circuits. Which standard applies will have a notable impact on the ability of employers to defend against employee challenges to their exempt classification and claims for unpaid overtime. Employers should watch closely as this case unfolds.

If you have any questions on these developments, need assistance evaluating employee classifications, or have other questions related to wage and hour compliance, please contact Betty Graumlich at, Noah Oberlander at, or the Reed Smith lawyer with whom you normally work.