Supreme Court Sides with Food Distributor in Outside Sales Exemption Dispute - Modern Distribution Management

Supreme Court Sides with Food Distributor in Outside Sales Exemption Dispute

The U.S. Supreme Court ruled unanimously in favor of Baltimore, MD-based food distributor EMD Sales and its interpretation of the Fair Labor Standards Act. We break down what this means for the industry.
Image Source: iStock/DNY59

On Jan. 15, the U.S. Supreme Court sided with a Baltimore, MA-based food and beverage distributor in a move that will simplify the process for distributors to prove exemption for outside sales reps from federal minimum wage and overtime requirements.

The court’s unanimous decision in favor of the wholesale distributor’s interpretation of the Fair Labor Standards Act (FLSA) means employers must only meet a “preponderance of the evidence” standard.

Why This Matters

This decision is seen as a win for distributors, according to the National Association of Wholesaler-Distributors (NAW) and the International Foodservice Distributors Association (IFDA), due to the industry being a major employer of outside salespeople. A converse decision would have required distributors in wage lawsuits to meet a higher legal standard — typically reserved for violations of constitutional rights — to prove an exemption.

How Did We Get Here?

In November 2024, EMD Sales was sued by workers in an overtime pay dispute. EMD countered the suit by saying those workers were classified as “outside salesmen,” one of several categories of workers under the FLSA who are not entitled to time-and-a-half overtime pay when working beyond 40 hours per week.

Still, lower courts ruled against the company, determining EMD did not provide “clear and convincing” evidence to prove their sales representatives were outside salespeople and therefore exempt from the FLSA requirements. The Supreme Court decision reversed that ruling.

“The employees contend that the [FLSA] focuses not on the individual’s interest in damages, but rather on the public’s interest in a well-functioning economy where workers are guaranteed a fair wage. But that premise, even if accepted, does not demand a heightened standard. After all, other workplace protections that vindicate important public interests remain subject to the preponderance standard. Eradicating discrimination from the workplace is undoubtedly important. Yet as explained above, this court has held that a preponderance standard is appropriate for Title VII cases.”  — Justice Brett Kavanaugh in the court’s opinion.

Back in August 2024 ahead of oral arguments for the case, NAW’s Legal Policy Center and IFDA urged the Supreme Court to adopt the “preponderance of the evidence” standard. In an amicus brief, the parties provided background on who outside salespeople are, why they are important to businesses, and how tracking their hours for overtime purposes is difficult.

About the Distributor

EMD Sales operates from a central location in Baltimore, delivering dry and refrigerated foods next-day to more than 1,570 customers in the Mid-Atlantic region. It serves customers between supermarket chains and independent stores with a fleet of over 17 trucks.

Image Source: iStock/DNY59

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