Salesmen vs. Overtime: Preserving the Integrity of the FLSA

The Fair Labor Standards Act (FLSA) was enacted in 1938 under President Franklin D. Roosevelt as part of the New Deal to protect workers from exploitative labor practices. It established a federal minimum wage, required overtime pay for employees working more than 40 hours per week, and imposed child labor restrictions. Over time, the law has been amended to expand protections and adjust wage standards. However, the FLSA also includes several exemptions, meaning certain workers are not entitled to overtime pay. Among them are bona fide executives, agricultural workers, and outside salesmen—employees who primarily work away from their employer’s place of business. The recent Supreme Court ruling in EMD Sales, Inc. v. Carrera (2025) reaffirms this important exemption and ensures that the legal standard for classification remains consistent and reasonable.

In this case, EMD, a food distribution company, was sued by its sales representatives for failing to provide overtime pay, arguing they were misclassified under the FLSA. EMD contended that its sales representatives were outside salesmen and, therefore, exempt from overtime requirements. The legal question revolved around which standard of proof employers must meet to prove an exemption: a standard of clear and convincing evidence (meaning that the evidence leads to a firm belief in the allegations) or a standard of preponderance of the evidence (meaning that a claim is more likely true than not, requiring a much lower burden of proof). In a unanimous decision, the Supreme Court ruled that the preponderance of the evidence standard applies when an employer claims an FLSA exemption. In the opinion, delivered by Associate Justice Brett Kavanaugh, the Court reasoned that 1) the FLSA does not specify a heightened burden of proof; 2) the default standard in civil litigation is preponderance of the evidence; and 3) no constitutional rights or unusual coercive actions necessitate a stricter standard. Thus, the case was remanded for reconsideration under the correct legal standard.

Before this ruling, courts were split on the level of proof required for employers to classify workers as exempt from FLSA protections. The Fourth Circuit’s higher standard made it harder for employers to claim exemptions. The preponderance of the evidence standard, used by six other circuits, aligns with broader civil litigation practices, ensuring fairness and consistency. By ruling on the lower standard, the Supreme Court brings much needed uniformity across jurisdictions, making it easier for businesses to operate without excessive legal hurdles.

This decision reinforces that outside salesmen operate differently from traditional hourly employees. A precedent for this distinction was set in Christopher v. SmithKline Beecham Corp. (2012), where the Supreme Court ruled that pharmaceutical sales representatives qualify as outside salesmen under the FLSA and are therefore exempt from overtime pay. The Court emphasized that these employees were compensated primarily through commissions, exercised a high degree of autonomy, and performed work consistent with the traditional definition of sales. This ruling aligns with EMD Sales, Inc. v. Carrera by reaffirming that outside salesmen are distinct from hourly workers.

Unlike hourly workers, salesmen typically receive performance-based compensation such as commissions and bonuses, which often far exceed what they would earn under an hourly wage structure. Since the nature of their work is independent, flexible, and results-driven, they are not subject to the same protections as other workers. So while the FLSA’s exemption for outside salespeople may at first seem like a loophole, it is actually a necessary distinction that acknowledges the unique compensation structures and responsibilities of these roles.

This ruling preserves the original intent of the FLSA by maintaining a balanced approach to worker classification. Ensuring that sales representatives remain exempt from overtime, recognizes their earning potential and rewards their performance rather than hours worked. If commissioned salespeople were subjected to overtime requirements, the industry’s compensation model would be completely disrupted and would result in unintended consequences such as lower base salaries or reduced commission structures.

The FLSA protections affect over 140 million workers in the US, making it crucial to uphold a fair and predictable framework that benefits both employers and employees. By affirming the preponderance of the evidence standard, the Supreme Court’s decision upholds a fair and pragmatic interpretation of the FLSA. This ruling does not diminish worker protections but rather reinforces a system that has functioned effectively for decades, allowing businesses and employees alike to thrive under established compensation models. As the labor market evolves, maintaining clear and consistent standards is essential for ensuring economic stability and continued opportunities for workers in commission-based roles.