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SCOTUS Issues Employer-Friendly FLSA Decision Involving Employees of Car Dealerships

Posted by Giovanna A. D'Orazio | Apr 03, 2018

On April 2, 2018, the Supreme Court issued its decision in Encino Motorcars, LLC v. Navarro, a case involving whether “automobile service advisors” employed at car dealerships are exempt from the overtime requirements of the Fair Labor Standards Act (FLSA).  The Court, in a 5-4 decision, held that service advisors are exempt and, therefore, not entitled to overtime (i.e., payment for hours worked beyond a 40-hour work week).

The FLSA is the federal statutory scheme that covers the payment of employee wages, among other things.  Most employers are subject to the FLSA.  (New York also has its own wage and hour laws set out in the Labor Law).  Typically, employees get overtime unless they are exempt.  The FLSA sets out various categories of these "exempt" workers and, obviously, employers would prefer that you fall into one of those categories. 

At issue in Encino Motorcars is whether service advisors are covered by the FLSA's statutory exemption for workers employed by automobile dealerships.  (A service advisor deals with customers with respect to servicing their vehicles but does not actually provide repair services, nor do they actually sell cars).  The applicable exemption provides that the FLSA's overtime requirement does not apply to: “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements, if he is employed by a nonmanufacturing establishment primarily engaged in the business of selling such vehicles or implements to ultimate purchasers.” 29 U.S.C. 213(b)(10)(A).

Statutory interpretation is not the most exciting thing in the world and, if you take the time to read the decision, you'll see that it can require going to the dictionary; applying cannons of statutory interpretation; and fighting over the meaning of an “or” or a comma.  Long story short, the majority in Encino Motorcars held that service advisors are, in sum and substance, salesman engaged in servicing automobiles and, therefore, fall within the 213(b)(10)(A) exemption.

While that finding may be important for automobile dealerships specifically, there is another part of the decision that could have much more far reaching consequences for employees and FLSA interpretation moving forward.  Specifically, when interpreting the statute, the Court rejected the notion that it should construe the FLSA exemptions “narrowly.”  In this context – since we are dealing with a law that deprives employees of the right to overtime – reading the exemption narrowly would mean that we don't expand it to include anyone not explicitly covered (i.e., erring on the side of more employees getting overtime).  So, in simplest terms, if the exemption doesn't say “service advisor”, it doesn't apply to them.  The Court, however, said that the exemption should merely be given its “fair” meaning.  So, since service advisors are essentially salespeople of services, they fit within the meaning of the exemption.

The majority opinion was authored by Justice Thomas. Justice Ginsburg authored a dissent that, in addition to disagreeing on the outcome, also criticized the majority for going against prior precedent on the “narrow” interpretation issue.

If you feel you have been denied wages to which you are entitled, or retaliated against for complaining about violations of your rights, give us a call. We are happy to see if we can help.  Employers can be sued both for violating the FLSA (or the NY Labor Law) and for retaliating against individuals who have complained that their rights are being violated.  

About the Author

Giovanna A. D'Orazio

Giovanna has experience litigating, among other things, commercial, general civil, employment, land use and personal injury matters in New York State and federal courts. Giovanna focuses her practice on plaintiff's employment and personal injury matters, with a particular interest in women's rights and employment discrimination and harassment.

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