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.
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