E.M.D. Sales v. Carrera

E.M.D. Sales Inc. (EMD) is a distributor of Latin American, Caribbean, and Asian food products to grocery stores in the Washington, D.C. area. Three of EMD’s sales representatives—Faustino Sanchez Carrera, Magdaleno Gervacio, and Jesus David Muro—sued EMD and its CEO, Elda Devarie, in 2017 for allegedly violating the Fair Labor Standards Act (FLSA) by denying them overtime wages. The plaintiffs claimed they worked about 60 hours per week, paid on commission without overtime compensation. The sales representatives were assigned routes of stores, spending most of their time servicing chain stores and some independent groceries. Their duties included restocking shelves, managing inventory, and submitting orders for EMD products. While they could make some sales to independent stores, their ability to make sales at chain stores was limited, as high-level negotiations between EMD management and corporate buyers typically determined product placement. EMD argued that the sales representatives were exempt from overtime pay under the FLSA’s “outside sales” exemption. The case went to a bench trial, where the court had to determine whether the plaintiffs’ primary duty was making sales, qualifying them for the exemption, or if their work was primarily incidental to sales made by others. The district court ruled in favor of the plaintiffs, finding that EMD failed to prove the outside sales exemption applied, awarded both unpaid overtime wages and liquidated damages, but limited the damages to a two-year period after concluding that EMD's violation was not willful. The U.S. Court of Appeals for the Fourth Circuit affirmed.