EMPLOYMENT LAW ALERT: Supreme Court Decision Lightens Employer Burden in FLSA Disputes

On April 2, 2018, the U.S. Supreme Court issued an opinion which may have long-lasting effects on wage and hour law.  The dispute in Encino Motorcars, LLC v. Navarro, 584 U.S. _____ (2018) involved a claim brought by current and former service advisors against a car dealership employer, seeking damages for alleged failure to pay overtime wages in violation of the Fair Labor Standards Act (“FLSA”).

Central to the dispute was whether the service advisors fell within the FLSA’s overtime exemption which applies to “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles” at a dealership.  The Ninth Circuit Court of Appeals held that this FLSA exemption did not apply to service advisors for several reasons, including that exemptions to the FLSA should be construed narrowly.  The Supreme Court reversed the Ninth Circuit’s decision, deciding that service advisors are included in the aforementioned FLSA exemption, and thus they are not entitled to overtime pay.  The Court cited several reasons for its decision, but one section of the opinion in particular may have a meaningful impact on FLSA litigation throughout the country.

It has long been understood that “[t]he FLSA is a remedial act and exemptions from its coverage are to be narrowly construed against employers.”  Klein v. Rush-Presbyterian-St. Luke’s Med. Ctr., 990 F.2d 279, 282 (7th Cir. 1993).  However, in this week’s Supreme Court decision, the Court stated in no uncertain terms: “We reject this principle as a useful guidepost for interpreting the FLSA. . . . The narrow-construction principle relies on the flawed premise that the FLSA ‘pursues’ its remedial purpose ‘at all costs.’” 

While the full impact of this decision has yet to play out in courts throughout the United States, one thing is certain:  employers now may have a better chance at a “fair shake” when disputing a claim under the FLSA.  If you are facing an FLSA claim (or better yet, to take measures to avoid one altogether), we would be happy to discuss with you.

Justin O. Sorrell

Justin O. Sorrell

Partner

Author Justin O. Sorrell

Justin is an experienced litigator who represents and advises business clients in many types of disputes in federal and state courts across Indiana. He regularly defends employers in lawsuits including wage and retaliation claims, trade secret and confidentiality claims, non-competition and non-solicitation covenants, and breach of contract claims. Additionally, Justin has experience in defending claims involving construction-related commercial property damage, products liability, insurance coverage, collections, and appeals, and he has served as local counsel in federal and state courts across Indiana. He defends employers before the Indiana Worker’s Compensation Board, and has experience in other business-related areas, including bank loan transactions, loan work-outs, and bankruptcy. He also has significant experience in discovery of electronically-stored information (“ESI”), and advises clients on how to maximize value and minimize expense.

He is a problem-solver, and seeks creative solutions to his clients’ issues while emphasizing the business impact of litigation choices to help guide his clients’ decision-making. When an amicable resolution is not possible, he aggressively and diligently pursues his clients’ interests.

© Riley Bennett Egloff LLP

Disclaimer: Article is made available for educational purposes only and is not intended as legal advice. If you have questions about any matters in this article, please contact the author directly.

Permissions: You are permitted to reproduce this material in any format, provided that you do not alter the content in any way and do not charge a fee beyond the cost of reproduction. Please include the following statement on any distributed copy:  “Justin O. Sorrell© Riley Bennett Egloff LLP – Indianapolis, Indiana. www.rbelaw.com”

Posted on Apr. 06 2018, by Justin O. Sorrell