Fair Labor Standards Act returns to the US Supreme Court

OK, Folks, One more FLSA overtime case for you. This one is somewhat esoteric, applying to one specific type of employee and one specific type of employer: a "service advisor" at a car dealership. Yet it could have great importance because a decision hinges on whether or not a court must defer to a Department of Labor's statutory interpretation. Two big questions are involved: (1) Is the FLSA ambiguous? (2) Is the DOL's interpretation reasonable? The case is Encino Motorcars, LLC v. Navarro (certiorari granted 01/15/2015) [Read the briefs here.] What's a service advisor?

  • Employees' description: "Service advisors at automobile dealerships meet and greet customers, write up their requests for automobile services, suggest additional work, and forward these work orders to other dealership employees."
  • Dealership's description: The "primary job responsibilities involve identifying service needs and selling service solutions to the dealership’s customers."

Now you know.

The FLSA: The Fair Labor Standards Act provides for overtime pay, and then provides for exemptions. From 1961 to 1966, all automobile dealership employees were exempt, but in 1966 Congress narrowed the exemption to

"any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles."

The DOL's interpretation: In 1970, DOL interpreted the statute not to exempt employees known as "service advisors." In 2011, after notice-and-comment rulemaking, DOL issued a final legislative regulation, adhering to its original position and declining to broaden this exemption to cover service advisors.

The 9th Circuit: Navarro v. Encino Motorcars, LLC (9th Cir 03/24/2015). Some service advisors sued their employer claiming overtime payments under the FLSA. The District Court dismissed, concluding that the plaintiffs fell within the FLSA’s exemption for "any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles." The 9th Circuit reversed. The 9th Circuit applied the familiar analysis from Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984).

  • First, the court found the statute ambiguous, saying "It is not clear from the text of the statute whether Congress intended broadly to exempt any salesman who is involved in the servicing of cars or, more narrowly, only those salesmen who are selling the cars themselves."
  • Second, the court found that the DOL's interpretation was reasonable. After all, service advisors  do not personally sell cars and they do not personally service cars.

Other courts: The 9th Circuit's decision is in conflict with decisions of the Fourth and Fifth Circuits, several district courts, and the Supreme Court of Montana. Walton v. Greenbrier Ford, Inc., 370 F.3d 446 (4th Cir. 2004); Brennan v. Deel Motors, Inc., 475 F.2d 1095 (5th Cir. 1973); Brennan v. N. Bros. Ford, Inc., No. 40344, 1975 WL 1074 (E.D. Mich. Apr. 17, 1975) (unpublished), aff’d sub. nom Dunlop v. N. Bros. Ford, Inc., 529 F.2d 524 (6th Cir. 1976) (table); Brennan v. Import Volkswagen, Inc., No. W-4982, 1975 WL 1248 (D. Kan. Oct. 21, 1975) (unpublished); Yenney v. Cass Cnty. Motors Co., No. 76-0- 294, 1977 WL 1678 (D. Neb. Feb. 8, 1977) (unpublished); Thompson v. J.C. Billion, Inc., 294 P.3d 397 (Mont. 2013).

We expect the US Supreme Court to schedule oral argument sometime in the Spring.

[For a list of current employment law cases, see US Supreme Court Watch.]