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Supreme Court to again consider case of OT for service advisers

October 6, 2017
The U.S. Supreme Court for the second time will review whether service advisers at dealerships are exempt from federal overtime pay requirements. 
The Court had previously heard the case in 2016, but a subsequent split between circuit courts made a Supreme Court rehearing almost inevitable.
The case, Encino Motorcars v. Navarro, may have ramifications on how courts interpret statutory exemptions under laws such as the Fair Labor Standards Act. Generally, FLSA exemptions have been narrowly construed in favor of employees. 
The Court likely will hear oral arguments this fall, with a decision announced in 2018.
"The rejection or reinforcement of that ‘exemptions are narrowly construed’ canon will have ripple effects across FLSA jurisprudence," said Collin O’Connor Udell, an attorney with a Connecticut law firm. Udell isn’t involved in the case, but her practice focuses on Supreme Court litigation.
A broader reading of the FLSA’s exemptions potentially could reduce the number of workers allowed to bring minimum wage and overtime claims against their employers.
"But only to the extent those workers would not be covered under traditional methods of statutory interpretation, such as examination of the text, the structure of the statute, and, if necessary, legislative history," Udell said.
Salesmen, Mechanics, or Partsmen?
The present controversy, which centers on whether service advisers at a California dealership are entitled to overtime wages, went before the high court last year when only eight justices sat on the bench. The court sent the case back to the U.S. Court of Appeals for the Ninth Circuit without resolving the issue.
They found that the appeals court shouldn’t have relied on a 2011 Labor Department rule that said service advisers don’t fall within the FLSA’s exemption covering car salesmen, mechanics, and partsmen because they don’t sell or service automobiles. The majority in the 6-2 decision said no judicial deference was warranted because the DOL didn’t give adequate reasons for the regulation, which changed the agency’s long-running stance that service advisers weren’t entitled to overtime pay.
On its second look, the Ninth Circuit in January again held that service advisers are not FLSA-exempt. The appeals court relied on examining the law’s text and legislative history.
The dealership filed its petition for Supreme Court review in May, and the service advisers filed their opposition brief in July.
"It’s safe to assume that the justices will focus on statutory interpretation since the question of agency deference is no longer front and center in this case," Udell said.
The National Automobile Dealers Association filed a friend-of-the-court brief in the case in favor of all dealers who have for decades applied the OT exemption to service advisers.
"The NADA will continue to actively support the case in anticipation that the court will resolve the issue in favor of the dealer defendants and of all those dealers who have for decades applied the overtime exemption to service advisers," Jared Allen, an association spokesman, said in a Sept. 28 statement.