Encino Motorcars, LLC v. Navarro

Background

Encino Motorcars is a Mercedes-Benz dealership in California. Current and former service advisors there sued for unpaid overtime. The Department of Labor had issued a 2011 rule saying service advisors were not exempt, and the Ninth Circuit deferred to that rule and rejected the dealership’s claim that the advisors were exempt. This Court earlier vacated that agency rule as procedurally flawed and sent the case back. On remand the Ninth Circuit again held the advisors were not exempt, and the Court granted review a second time.

Reasoning

The narrow question was whether a service advisor counts as a "salesman primarily engaged in servicing automobiles" under the law that exempts certain dealership workers from overtime. The majority held that the ordinary meaning of "salesman" includes someone who sells services and that "servicing" can mean providing a service as well as repairing a vehicle. Because service advisors sell and coordinate vehicle servicing and are integral to the servicing process, the Court concluded they fall within the exemption. The Court rejected the Ninth Circuit’s reliance on a distributive reading of the statute, on a narrow-construction rule for exemptions, on an Occupational Handbook listing, and on silence in the legislative history.

Real world impact

The decision reverses the Ninth Circuit and finds service advisors exempt from the FLSA overtime-pay requirement, then sends the case back for further proceedings consistent with that ruling. Practically, service advisors and similar dealership workers will have a harder time winning overtime claims, and dealerships’ pay practices and liability exposure will change. The ruling resolves the statutory interpretation in favor of dealerships moving forward.

Dissents or concurrances

Justice Ginsburg dissented, arguing the Court improperly enlarged a three-job exemption to include service advisors, who she said work fixed schedules and should remain covered by overtime protections.