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Supreme Court Rejects a Longstanding FLSA Exemption ‘Narrow Construction’ Rule

The U.S. Supreme Court has maintained a standard of construing exemptions to the Fair Labor Standards Act (FLSA) narrowly for more than 70 years. However, on April 2, 2018, it issued a ruling in Encino Motorcars, LLC v. Navarro that broke this tradition.

The court ruled 5-4 that the employees involved in the case were exempt from the overtime requirements outlined in the FLSA. The ruling is significant for its rejection that the courts construe FLSA exemptions narrowly. In other words, it could be a major blow to employees involved in these types of cases.

Issues behind the ruling

The FLSA stipulation that played the largest role in the case reads that “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 purchasers” should be exempted from the FLSA’s overtime requirements.

Early in the 1970s, the Department of Labor interpreted the language as not applying to “service advisors” who offer consultation services to customers at dealerships about their vehicle service needs. However, the courts took a different view, believing those advisors to be exempt.

This case dates back to 2012, when current and former service advisors sued a dealership in California (Encino Motorcars, LLC), asserting they were entitled to overtime. The dealership moved to dismiss the complaint on the grounds of the above stipulation, but the U.S. Court of Appeals for the Ninth Circuit reversed the district court’s dismissal. The Supreme Court then reversed the Ninth Circuit in a 6-2 ruling, ordering the Ninth Circuit to reconsider the meaning of the language.

The Ninth Circuit held for a second time that advisors were not exempt, and once again the court reversed the ruling, this time in a 5-4 vote.

To learn more about what this means for FLSA protections for vehicle specialists, speak with a skilled Dallas attorney at Kardell Law Group.

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