Wake Forest Law Review
27Feb

Workin’ 9 Past 5: Supreme Court Lowers the Evidentiary Standard for Employers Arguing FLSA Overtime Exemptions

Categories: Current Issues Blog
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By: Emma Rice

Background

The Fair Labor Standards Act (FLSA)[1] was first passed in 1938 to protect employees working in both the public and private sectors.[2] Among these protections are guaranteed federal minimum wage and overtime pay for employees working more than 40 hours per week.[3] However, the FLSA exempts many classes of workers from the overtime pay and minimum wage requirements.[4] Employers carry the burden of proof in disputes over whether their employees are exempt from FLSA protections. 

E.M.D. Sales, Inc. v. Carrera

The 4th Circuit addressed one such FLSA employee exemption dispute in 2023.[5] The employer, E.M.D. Sales, Inc., is an international food-products distributer.[6] Several of its employee sales representatives worked roughly 60-hour weeks and sued the company for unpaid overtime wages.[7] E.M.D. Sales argued that it was exempt from paying its employees overtime because they fell within the exempted category of “outside salesmen” who primarily work away from the employer’s place of business.[8] The 4th Circuit panel upheld a decision by the lower court holding E.M.D. Sales to a “clear and convincing” evidentiary standard in showing that their employees were covered by the outside sales exemption.[9] Because a prior 4th Circuit panel had explicitly held that the heightened standard applied to FLSA exemption cases, this panel concluded that it could not overrule that standard, given the fact that the standard was not contrary to any en banc or Supreme Court decision.[10]

The Supreme Court granted certiorari and on January 15, 2025, unanimously reversed the 4th Circuit’s decision in E.M.D. Sales, Inc. v. Carrera.[11] The Court held that employers must instead meet the preponderance-of-the-evidence standard when demonstrating that an employee is exempt from minimum-wage and overtime-pay provisions of the FLSA.[12] Justice Kavanaugh, writing for the Court, stated that preponderance-of-the-evidence is considered the “default” evidentiary standard in civil litigation.[13] There are three specific circumstances in which courts will deviate from this standard: (1) when a statute explicitly requires a heightened standard, (2) when the Constitution requires it, or (3) where the government seeks unusual coercive action against an individual.[14] FLSA exemption cases do not fall into any of these three categories. The statute itself is silent on the applicable standard of proof, which Justice Kavanaugh notes is generally interpreted to mean that Congress intended the default standard to apply.[15] Finally, the Court’s holding is supported by the fact that preponderance-of-the-evidence is also used in Title VII employment discrimination cases.[16]

Implications

The 4th Circuit had been an outlier in applying a heightened standard for employers in FLSA exemption disputes, [17] so the Supreme Court’s decision to bring it in line with other circuits is unsurprising. This decision is a continuation of the broader trend of business-friendly decisions by the Roberts Court. One study analyzing Supreme Court decisions from 1920 to 2020 found that the Roberts Court sided with businesses 63.4% of the time, which is 15 percentage points higher than the next highest rate of business wins over the past century (48.4% under Chief Justice Rehnquist).[18] It also found that the Roberts Court has become more business-friendly over time. For its first six terms, the Court sided with businesses an average of 53% of the time; by comparison, its average increased to 71% for the next ten terms.[19]

Within the FLSA context, the Court held in 2018 that judges are only required to give a “fair” reading of the FLSA’s exemptions, rather than a “narrow” one.[20] Justice Kavanaugh asserted in E.M.D. Sales that “the public interest in [FLSA] cases does not fall entirely on the side of employees.”[21] These decisions make easier for North Carolina employers to prove their employees are exempt from FLSA protections. The threat of litigation from employees is diminished, which will thereby encourage more employers to classify their workers as exempt and refuse to pay overtime wages. The lower chance of success for employees will likely discourage many from challenging their exemption status in court at all. 

From the employer perspective, this ruling is a victory that can save valuable time and resources. For employees, however, the decision contributes to a growing sense of precarity surrounding worker protections at a moment when the executive branch is weakening agencies’ ability to enforce regulations.

[1] 29 U.S.C. §§ 201–219.  

[2] Wages and the Fair Labor Standards Act, U.S. Dept. of Lab., https://www.dol.gov/agencies/whd/flsa (last visited Feb. 23, 2025). 

[3] 29 U.S.C. §§ 206(a), 207(a).

[4] Id. § 213(a). 

[5] Carrera v. E.M.D. Sales, Inc., 75 F.4th 345 (4th Cir. 2023). 

[6] Id. at 349. 

[7] Id. 

[8] 29 U.S.C. § 213(a)(1).

[9] Carrera, 75 F.4th at 353. 

[10] Id. at 352. See Shockley v. City of Newport News, 977 F.2d 18, 21 (4th Cir. 1993). 

[11] 145 S. Ct. 34 (2025).

[12] Id. at 41. 

[13] Id. at 38. 

[14] Id. at 38–39.

[15] Id. at 40.

[16] Id. at 41. 

[17] See, e.g., Faludi v. U.S. Shale Solutions, L.L.C., 950 F.3d 269, 273 (5th Cir. 2020); Renfro v. Indiana Mich. Power Co., 497 F.3d 573, 576 (6th Cir. 2007); Yi v. Sterling Collision Centers, Inc., 480 F.3d 505, 506–508 (7th Cir. 2007); Coast Van Lines, Inc. v. Armstrong, 167 F.2d 705, 707 (9th Cir. 1948); Lederman v. Frontier Fire Protection, Inc., 685 F.3d 1151, 1158 (10th Cir. 2012); Dybach v. Florida Dept. of Corr., 942 F.2d 1562, 1566, n. 5 (11th Cir. 1991). 

[18] Lee Epstein and Mitu Gulati, A Century of Business in the Supreme Court, 1920-2020, 107 Minn. L. Rev. Headnotes 49, 54 (2022). 

[19] Id. at 59. 

[20] Encino Motorcars, L.L.C. v. Navarro, 138 S. Ct. 1134, 1142 (2018). 

[21] E.M.D. Sales, 145 S. Ct. at 40.

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18Nov

Clever Drafting Doesn’t Open the Door to Federal Court

Categories: 4th Cir. Blog
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By Chad M. Zimlich

The Fourth Circuit handed down a ruling today, in Martin v. Wood, on an interlocutory appeal from a district court decision denying sovereign immunity to two supervisors at Eastern State Hospital, a state-run hospital in Williamsburg, Virginia. The case was based on alleged violations of the Fair Labor Standards Act of 1938.

The Question of the Proper Defendant

The question before the Court was whether the District Court of the Eastern District of Virginia erred in allowing the named defendants, Jack Lee Wood and Milagros Alcala Jones, to be sued in their individual capacities. To answer this question, the Court had to determine what party was the proper party at interest in the case.

An Alleged Unfair Denial of Overtime Pay

Laura Martin, the plaintiff in this case, was a registered nurse and a former employee of the Eastern State Hospital (“Hospital”) in Williamsburg, Virginia. She alleged damages under the Fair Labor Standards Act of 1938 (“FLSA”), 29 U.S.C. § 201-219, against two of her supervisors for an improper refusal to authorize overtime pay for hours that she had worked in excess of 40 hours per week from November 2010 through January 2012. Because she worked on an hourly basis, and because of “transitional duties” that occurred during shift changes, she claimed she worked about 20 minutes before, and 30 to 90 minutes after her shift was over. She also claimed she regularly worked through her 30 minute lunch. Martin also alleges that when she complained to Jones, her coordinator, Jones refused to take action and chalked Martin’s alleged extra time to “inefficiency.” Furthermore, Martin asserts that Jack Wood, the CEO and director of the Hospital, “willfully and deliberately refused to correct,” the denied overtime.

Her supervisors responded with a motion to dismiss for failure to state a claim and lack of subject matter jurisdiction, claiming they had the same sovereign immunity as the Hospital because their conduct involved official duties on the Hospital’s behalf. As a state-run hospital, it was entitled to sovereign immunity as an agency of the Commonwealth of Virginia. They argued that the actions in the complaint were centered on their official authority, and failed to assert that they had acted in an ultra vires manner, or beyond their positions’ specified powers.

The district court denied the motion, relying on Martin’s assertions that Wood and Jones were being sued in their individual capacities due to alleged “intentional misconduct” that was committed. As this was an Eleventh Amendment question, the defendants were entitled to an interlocutory appeal.

The Implications of the Eleventh Amendment

The FLSA provides that “no employer shall employ any of his employees . . . for a workweek longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed.” 29 U.S.C. § 207(a)(1). The term “employer” is defined to include “any person acting directly or indirectly in the interest of an employer in relation to an employee and includes a public agency.” Id. § 203(d).

The Eleventh Amendment provides that “[t]he judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.” This removes jurisdiction over any suit brought against an unconsenting State in federal court by its own citizens. The Hospital is an agency of Virginia, and Virginia has not waived its sovereign immunity. Additionally, all officers acting in an official capacity have sovereign immunity through extension as agents. And though Congress can revoke this immunity as it did with Fourteenth Amendment claims, it did not do so for the FLSA.

This Suit is Really About the State

Martin contended that sovereign immunity does not extend to suits against state officials sued in their individual capacity, and, for this reason, Martin claimed that the Eleventh Amendment did not apply. However, the Court noted that any suit brought only against state officials, especially when it is a federal suit, begs the question of whether the suit should also be against the State.

The Court then turned to whether the State was truly the “substantial party in interest,” and in doing so examined the substance of Martin’s claims. There were five questions that the Court asked, namely (1) were the actions “tied inextricably” to the officials’ duties; (2) who would have borne the desired relief sought by Martin; (3) would the judgment operate against the State; (4) were the officials’ actions motivated by personal interests; and (5) were those actions ultra vires?

Ultimately, Martin’s complaint undid itself in this respect. It alleged that the Hospital failed to pay her overtime due to Wood and Jones’ refusal, that Wood and Jones were Martin’s supervisors, that their authority was to establish and control her hours of work, and that, in exercising that authority, Wood and Jones failed to include overtime hours. Though the complaint alleged that Wood and Jones “acted directly and indirectly in the interest” of the Hospital, the Court notes that there were no actual alleged ultra vires actions.

Cleverly Drafted Complaints Will Not Mask the State as the Proper Party

The Court concluded that “virtually every factor” indicated Wood and Jones were being sued in their official capacities. Therefore, Virginia was the proper party at interest in the case, and the Eleventh Amendment required the suits’ dismissal.

 

 

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