Encino Motorcars, LLC v. Navarro
The Court ruled that car dealership service advisors are exempt from the federal overtime-pay requirement because they qualify as "salesmen" primarily engaged in "servicing" automobiles under a decades-old carve-out for dealership employees.
The decision also rejects the long-standing practice of reading exemptions to the federal overtime law narrowly, a shift that could affect how courts interpret dozens of other exemptions in the same statute.
How it got here: A trial court sided with the dealership, the Ninth Circuit reversed twice, and the Supreme Court previously vacated once before this second review.
The Case in Depth
What happened
Current and former service advisors at a Mercedes-Benz dealership sued their employer for unpaid overtime, arguing the Fair Labor Standards Act required time-and-a-half pay for hours over 40 per week. The dealership argued service advisors fall under a statutory exemption covering "salesmen, partsmen, or mechanics" who primarily sell or service cars, trucks, or farm equipment at dealerships, so no overtime was owed.
The question before the Court
Are car dealership "service advisors," who meet with customers and sell them repair and maintenance services, exempt from federal overtime pay rules?
The Court's answer
Yes — the Court ruled that car dealership service advisors are exempt from the federal overtime-pay requirement. It read "salesman" in its ordinary sense to include anyone who sells goods or services, which covers service advisors because they sell customers repair and maintenance services for their vehicles. It also read "servicing automobiles" broadly enough to include employees who are deeply involved in the repair process even without physically fixing cars themselves.
The Court rejected the lower court's narrower reading, which had tried to pair specific job titles with specific tasks and had leaned on a general rule that overtime-law exemptions should be read narrowly. The Court discarded that narrow-reading rule for this law entirely, saying the exemption deserved the same fair reading as any other statutory text, and that reading led it to conclude service advisors are covered.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
Service advisors at car dealerships nationwide will not receive overtime pay for hours worked beyond 40 per week, affecting take-home pay for a large workforce often compensated by commission. The ruling also gives employers and courts a friendlier standard for arguing that other categories of workers fall within the many exemptions Congress wrote into the overtime law.
What changes now
The case goes back to the lower courts for further proceedings consistent with the ruling, meaning the service advisors' overtime claims will now be assessed under the understanding that they are exempt from the overtime requirement. The decision is final on the legal question of whether the exemption covers service advisors, though it does not resolve every individual factual dispute about specific workers' duties.
What this does not decide
The Court did not decide any dispute about how much money, if any, individual service advisors might be owed under other wage laws, nor did it address the separate commission-based overtime exemption the dissent discussed. It also does not extend the ruling beyond salesmen, partsmen, and mechanics at qualifying dealerships.
Concurrences and dissents
Dissent — Justice Ginsburg
“Because service advisors neither sell nor repair automobiles, they should remain outside the exemption and within the Act’s coverage.”The dissent's core objection that service advisors don't fit either exempt category.
Justice Ginsburg argued Congress explicitly listed only three exempt jobs—salesmen, partsmen, and mechanics—and that service advisors, who neither sell nor repair cars in the ordinary sense, do not belong in any of those categories. She contended the majority's broad reading revives the kind of blanket dealership exemption Congress deliberately narrowed in 1966, and that existing reliance and commission-pay protections already shield employers from retroactive liability, so there was no need to stretch the exemption to cover service advisors.
How the Court got there
The legal reasoning, step by step
- The Court read the exemption's ordinary language first: "salesman" means someone who sells goods or services, and service advisors clearly sell customers repair and maintenance services for their cars, so they fit that word's plain meaning.
- The Court then asked whether service advisors are "primarily engaged in ... servicing automobiles." It found that "servicing" can mean either physically repairing a car or providing a service related to it, and service advisors satisfy both meanings because they are deeply involved in the repair process even without turning wrenches themselves.
- The Court rejected the Ninth Circuit's use of the distributive canon, a reading technique that matches each noun in a list with only one specific verb (matching "salesman" only to "selling" and "partsman"/"mechanic" only to "servicing"). The Court reasoned that the word "or" connecting all the terms is almost always meant to offer alternatives, not to lock each job title to just one activity.
- The Court found the distributive reading especially unnatural here because the exemption already uses broad, open-ended words like "any" and repeats "or" three times, signaling Congress wanted wide coverage rather than a rigid one-to-one pairing of jobs and tasks.
- The Court also discarded the older practice of interpreting Fair Labor Standards Act exemptions narrowly, reasoning that the statute gives no textual signal that exemptions deserve stingier treatment than any other part of the law, so they should get a fair, ordinary reading like any other statutory text.
- Applying a fair, ordinary reading rather than a narrow one, the Court concluded that service advisors are "salesmen ... primarily engaged in ... servicing automobiles" and therefore fall within the exemption from overtime pay.
Doctrinal impact
Cases affected by this decision
Abrogates Arnold v. Ben Kanowsky, Inc. (361 U. S. 388)
The Court stops applying the old rule that overtime-law exemptions must always be read narrowly.