Encino Men (and Women) Can't Be Overtimed

A recent Supreme Court case provides us with a couple of noteworthy points, one of which is not new but interesting and the other which is both.  In Encino Motorcars LLC v. Navarro et al., confronted the Court with an issue that it had visited once before, namely whether so-called "service advisors" for automobile dealerships were exempt from overtime requirements under a narrow regulation of the Fair Labor Standards Act. 

The statute exempts from overtime pay requirements "any salesman, parts man or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements…"  Service advisors are usually the first people you encounter when you come into an automobile dealership.  They intake the car, record the customer's issues for service/repair, and generally act as an ombudsman in the event that there is some type of problem with the process.  Several of these service advisors claimed they were in fact nonexempt employees and entitled to overtime pay. 

The employer won the initial round at the District Court but the Ninth Circuit Court of Appeals reversed, finding that the advisors were entitled to overtime under a 2011 regulatory interpretation by the Department of Labor.  When the dealership appealed to the Supreme Court, the Court reversed and returned the case to the Ninth Circuit, saying that the DOL interpretation was flawed and invalid.  Undeterred, and not taking the hint, the Ninth Circuit again reversed the District Court, finding that the service advisors were nonexempt because they were not mentioned in the statutory exemption of the Act.

Again the dealership appealed.

The second time around the Court didn't mince any words with the Ninth Circuit, reversing it cleanly and determining that service advisors were encompassed by the plain language of the statute.

So the interesting but not surprising part of this decision is that the Ninth Circuit was again reversed by the Supreme Court.  The Ninth Circuit makes a practice of being reversed, and it's always gratifying to see some consistency in federal court decisions.

The interesting and novel proposition in the decision is in a relatively short section of the Opinion in which the majority rejects the idea that exemptions to the FLSA should be construed "narrowly".  Instead, the Court noted that courts supporting a narrow reading of these exemptions are mistakenly interpreting the FLSA.  The Court said that rather than using a narrow construction, courts should make a "fair reading" of FLSA exemptions, construing their meaning in a common sense type of way, rather than the overly restrictive Ninth Circuit analysis.

This latter holding is of particular interest to those of us who worry about how the statutory exemptions of the FLSA, and there are more than two dozen of them, are to be applied.  Interpreting them in a moderate and common sense way should make it easier for employers and plaintiffs’  lawyers alike to measure their cases effectively.