Seyfarth’s SCOTUS Employment Law Roundup: A Win for Employers Defending Exemptions Under the FLSA, and Two Other Cases to Watch

Seyfarth Synopsis: In an important opinion for employers defending against misclassification claims, the Supreme Court has issued its first major employment law decision of the current term in EMD Sales v. Carrera, with two other marquee employment law cases still to be decided before the end of the current 2024-2025 term.

As 2025 ushers in a new presidential administration, the Supreme Court has already issued a consequential decision addressing employers’ burden of proof when asserting exemptions under the FLSA, and the high court is poised to make its mark in a number of other cases involving ERISA, the FLSA, the ADEA, and others, as well as two specific key cases of great interest to employers.  Still to be decided are cases addressing the application of the Americans with Disabilities Act to claims of discrimination brought by former employees concerning discrimination occurring post-termination; and, the court’s first foray into the nature and standard of proof required to establish a viable claim of discrimination where the plaintiff belongs to a “majority” group.

1. EMD Sales v. Carrera: No Heightened Standard for Employers to Prove the Application of an Exemption from the FLSA. The FLSA guarantees payment of the minimum wage and overtime premium pay to many workers. Woven into the fabric of the statute, though, are a number of exemptions from the Act’s coverage—including the so-called “white collar” exemptions for professional, administrative, and executive employees, and an exemption for outside salespersons.            

Carrera involved claims of unpaid overtime under the FLSA asserted by employees who worked as sales representatives for an international food distributor.  The employees’ responsibilities included managing inventory and taking orders at grocery stores carrying their employer’s products. As part of its defense of the lawsuit, the employer argued that the sales representatives were outside salespersons exempt from the FLSA’s minimum wage and overtime requirements. At trial, the District Court, bound by Fourth Circuit precedent, determined that an employer must establish its entitlement to an exemption under the FLSA by “clear and convincing evidence,” a higher bar than the preponderance standard that applies in most civil cases. The trial court concluded that the employer failed to prove its outside sales exemption defense by clear and convincing evidence, and consequently found for the employees. The Fourth Circuit—again, constrained by circuit precedent—affirmed. The Supreme Court granted certiorari to resolve the circuit split over the applicable standard of proof when an employer seeks to prove an exemption under the FLSA.

In a unanimous decision, the Supreme Court reversed, holding that the default evidentiary standard in civil litigation, preponderance of the evidence, applies when employers invoke FLSA exemptions. The court explained that a higher standard will apply only when (1) the applicable statute expressly provides one (and the FLSA does not), (2) when required for constitutional reasons (for example, the First Amendment-driven actual malice standard applicable in defamation cases), and (3) in discrete types of “uncommon” cases involving government conduct significantly more coercive than an order to pay money—such as, for example, revocation of a person’s citizenship or involuntary civil commitment). Because the FLSA implicates none of these bases to apply a heightened standard, the court held, the preponderance standard applies.

The result is not surprising.  Indeed, the writing has been on the wall for the Fourth Circuit’s clear and convincing evidence rule for FLSA exemptions ever since the Supreme Court issued its 2018 decision in Encino Motor Cars v. Navarro.  There, the Supreme Court rejected a canon of construction that a number of federal appellate courts had adopted requiring FLSA exemptions to be “construed narrowly.” The court emphasized in Navarro that the FLSA’s exemptions were “as much a part of the FLSA’s purpose as the overtime-pay requirement” and thus must be given a “fair” reading.

Carrera finally puts to rest the oft-repeated argument in FLSA litigation that the playing field should somehow be tilted in employees’ favor when it comes to an employer’s exemption defenses.

2. Stanley v. City of Sanford, FL: Does the ADA Apply to Retired Employees? On January 13, 2025, the Supreme Court heard oral argument in an appeal from the Eleventh Circuit raising an issue that has divided lower federal courts: can a former employee sue regarding fringe benefits, such as health insurance, that are provided to the employee after her employment has ended? In the case of a disabled retired firefighter from Florida, the Eleventh Circuit joined the Sixth, Seventh, and Ninth Circuits—and parted ways with the Second and Third Circuits—in answering this question “No.” The Supreme Court took cert to resolve the circuit split.

It is hard not to be sympathetic to the plaintiff in Stanley, a long-time firefighter who became too disabled to continue working due to a Parkinson’s Disease diagnosis. While Stanley was employed, the city allegedly changed its retirement policy to treat disabled retirees differently (and less favorably) than some non-disabled retirees in the amount of time for which they were entitled to receive continued health insurance benefits after retirement. When her health insurance coverage was terminated two years into her retirement, the plaintiff brought suit under the ADA. The trial court granted the employer’s motion to dismiss, concluding that the relevant discriminatory act (the cessation of health insurance benefits) occurred after the plaintiff was no longer an employee of the City, and therefore the plaintiff failed to state a viable ADA claim.  On appeal, the Eleventh Circuit affirmed.

Although the justices granted cert to decide the broad question of whether retired employees may bring post-employment claims under the ADA related to their retirement benefits, the court may opt to decide the case on narrower grounds. In particular, the court could decide, as the plaintiff’s lawyer argued, that the suit may proceed because the plaintiff plausibly alleged that she was subjected to a discriminatory policy while she was still employed—after her Parkinson’s diagnosis but before her retirement—even if the effects of the policy did not materialize until after her employment ended.

A broad ruling from the justices in favor of former employees’ standing to sue under the ADA to challenge post-employment conduct could have significant implications for employers, especially those that administer benefits programs for retired workers.

3. Ames v. Ohio Department of Youth Services: Adjudicating Discrimination Claims of Members of ‘Majority’ Groups. In this case out of the Sixth Circuit, the court addresses the elements required to establish a prima facie case of discrimination under Title VII when the plaintiff is a member of a “majority” group.

In Ames, the plaintiff, a heterosexual woman, alleged that she was denied a promotion and ultimately demoted because of her sexual orientation, and she brought suit under Title VII.  Under Sixth Circuit case law, however, for majority group plaintiffs to survive summary judgment on employment discrimination claims, they must point to evidence of the existence of “background circumstances to support the suspicion that the defendant is the unusual employer who discriminates against the majority.” Such “background circumstances” could include, for example, evidence that a member of the minority group (here, LGBTQ+ persons) made the relevant employment decision, or statistical evidence showing a pattern of discrimination against members of the majority group.  But because the plaintiff in Ames failed to muster any such evidence, the Sixth Circuit affirmed the grant of summary judgment in the employer’s favor. 

In addition to the Sixth Circuit, four other federal circuit courts similarly require evidence of “background circumstances” as a plus factor in addition to the ordinary prima facie case of discrimination under Title VII where the plaintiff belongs to the majority group.  The Third and Eleventh Circuits, meanwhile, have explicitly rejected a background circumstances requirement.  The Supreme Court granted cert to resolve the split, and will hear oral argument on February 26, 2025.  Particularly as the number of employment discrimination cases brought by plaintiffs who do not belong to historically marginalized communities continues to increase, the court’s ruling in Ames is almost certain to have immediate and broad impacts on the legal landscape for employers.

We’ll be closely following these important employment cases at the Supreme Court, so stay tuned for more insight and analysis as developments occur. For more information about how these cases could impact your workplace, please contact one of the authors or any member of Seyfarth’s Employment Litigation and Counseling team.