Encino Motorcars, LLC v. Navarro - 138 S. Ct. 1134 (2018)

Rule:

Because the Fair Labor Standards Act gives no textual indication that its exemptions should be construed narrowly, there is no reason to give them anything other than a fair, rather than a narrow, interpretation. 

Facts:

Respondents, current and former service advisors for petitioner Encino Motorcars, LLC, sued petitioner for backpay, alleging that petitioner violated the Fair Labor Standards Act (FLSA) by failing to pay them overtime. Petitioner moved to dismiss, arguing that service advisors are exempt from the FLSA’s overtime-pay requirement under 29 U. S. C. §213(b)(10)(A), which applies to “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements.” The District Court agreed and dismissed the suit. The Court of Appeals for the Ninth Circuit reversed. It found the statute ambiguous and the legislative history inconclusive, and it deferred to a 2011 Department of Labor rule that interpreted “salesman” to exclude service advisors. This Court vacated the Ninth Circuit's judgment, holding that courts could not defer to the procedurally defective 2011 rule, Encino Motorcars, LLC v. Navarro, 579 U. S. ___, 136 S. Ct. 2117, 195 L. Ed. 2d 382, (Encino I), but not deciding whether the exemption covers service advisors. On remand, the Ninth Circuit again held that the exemption does not include service advisors.

Issue:

Were automobile dealership's service advisors exempt from general Fair Labor Standards Act (29 U.S.C.S. § 201 et seq.) overtime-pay requirements under 29 U.S.C.S. § 213(b)(10)(A), which exempted any salesman primarily engaged in selling or servicing automobiles?

Answer:

Yes.

Conclusion:

The court held that automobile service advisors were exempt from the FLSA overtime requirement because they were salesmen primarily engaged in servicing cars since they sold customers services for their vehicles and they were also primarily engaged in servicing cars since they were integral to the servicing process as they met customers, suggested and sold repair and maintenance services, and followed up as the services were performed. Although service advisors did not spend most of their time physically repairing cars, 29 U.S.C.S. § 213(b)(10)(A) was not so constrained, and use of the disjunctive word "or" to join "selling" and "servicing" suggested that the exemption covered a salesman primarily engaged in either activity. There was no reason to construe FLSA exemptions narrowly, and neither an agency handbook nor the FLSA's legislative history supported a contrary interpretation.