SCOTUS Set to Take On Important Employment Law Cases

By John S. Gannon - Skoler Abbott P.C.

November 5, 2024

In October, the Supreme Court of the United States (also known as “SCOTUS”) began hearing cases for its 2024 -2025 term. The Court will hear a few cases that could have a big impact on major employment law issues – including the standard for determining whether a “white collar” overtime exemption applies, as well as the extent to which worker protections under the Americans with Disabilities Act extend to ex-employees. Here is a recap of both cases with some analysis on the impact these decisions will have on businesses.

E.M.D. Sales v. Carrera (Overtime Exemptions)

As we previously reported, earlier this year the Department of Labor increased the minimum salary level for workers classified as exempt under the Executive, Administrative, and Professional (“EAP”) exemptions to $58,656 annually (effective January 1, 2025). But, as readers are likely aware, meeting the minimum salary threshold only satisfies one piece of the overtime exemption puzzle. The bigger question, and more frequently litigated issue, has to do with whether the worker’s “primary job duties” meet the exemption test relied on by the employer.  For example, in E.M.D. Sales v. Carrera, the employer classified certain workers as exempt from overtime under the FLSA’s “outside sales” exemption. The “outside sales” exemption requires employers to prove that the employee’s primary duty is making sales or obtaining orders. The plaintiffs in this case were three sales representatives who alleged that E.M.D. Sales – a distributor of food to grocery stores — did not pay them the overtime wages required by the FLSA.  They argued that E.M.D. Sales improperly classified them as exempt from overtime under the “outside sales” exemption because their primary duty did not involve making sales.  Instead, they were mainly responsible for restocking shelves, managing inventory, and submitting orders for EMD products.

The case went all the way to trial in Maryland, and the court found in favor of the employees.  This decision was affirmed by the U.S. Court of Appeals for the Fourth Circuit. What’s important in this case, and why it proceeded all the way to the US Supreme Court, is that the trial judge required that E.M.D. Sales prove by “clear and convincing evidence” that the “outside sales” exemption applied. This “clear and convincing evidence” standard is a high burden of proof – much higher than the “preponderance of the evidence” standard (often referred to as “more probable than not”) that typically applies in employment law cases (and, in civil cases in general). Adding to the confusion is the fact that courts in other parts of the country that have addressed this standard-of-proof question in FLSA exemption cases have used the “preponderance of the evidence” standard to decide whether the employee was properly classified as exempt from overtime.

Analysis:  The Supreme Court’s decision in this case will have significant ramifications for businesses across the country, and especially in Massachusetts, where potential wage and hour violations also carry the risk of paying mandatory triple damages and attorney’s fees to successful plaintiffs. The lower court’s decision in E.M.D. Sales v. Carrera makes it more difficult for employers to prove that employees are exempt from overtime under one of the EAP exemptions.  If the decision is affirmed by SCOTUS, it will undoubtedly increase the number of misclassification lawsuits because – in layperson’s terms – it’s hard to prove anything to a jury or judge by clear and convincing evidence.  On the other hand, if the Supreme Court adopts the preponderance of the evidence rule, employers will have an easier time proving an employee is properly classified as exempt from overtime.


Stanley v. City of Sanford, Florida (Post-Employment ADA Protections)

In this case, SCOTUS will review the extent to which employee protections under the Americans with Disabilities Act (ADA) extend to former employees. The Stanley case involves a former firefighter for the City of Sanford, Florida. The plaintiff, Karyn Stanley, retired from the City in 2018 at the age of 47 due to Parkinson’s disease. When she started working for the City in 1999, employees were entitled to free health insurance until age 65 if they retired due to disability.  However, in 2003, the City changed its plan, limiting free health insurance for disabled retirees to 24 months post-retirement.

Ms. Stanley was unaware of this change when she retired. In April 2020, shortly before her 24 months of free health insurance was set to expire, she sued her former employer alleging that the City’s benefits plan change discriminated against disabled workers in violation of the ADA.  The district court dismissed her ADA claim, and the U.S. Court of Appeals for the Eleventh Circuit affirmed. According to both courts, the ADA only protects individuals who “hold” or “desire” an employment position with the employer at the time of the allegedly unlawful conduct.  Here, because Ms. Stanley was no longer an employee of the City when she filed her lawsuit, she could not advance an ADA claim even though she earned these post-employment benefits while employed by the City.

Analysis:  The language in the ADA appears clear (to me at least) that it only protects current employees and applicants. Specifically, the law protects “qualified individuals with a disability.”   The statute defines a “qualified individual with a disability” as someone “who, with or without reasonable accommodation, can perform the essential functions of the employment position that such individual holds or desires.” Because retired employees neither hold nor desire an employment position with an employer, the ADA does not protect them. However, the problem with this reading, from the plaintiff’s side, is that it could encourage employers to discriminate against disabled workers by changing the terms of their retirement plans based on disability bias. On the flip side, extending ADA protections to former employees might discourage employers from offering any post-employment health insurance (or other) benefit plans at all, as they may find it more difficult to change the terms of their plans without risking an ADA lawsuit.

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