Monday, April 23, 2018

Supreme Court Signals Different View of FLSA Interpretation

Not many people were paying close attention to the Encino Motorcars v. Navarro case before the Supreme Court this term. So, the Court’s somewhat surprising ruling caught many off guard.

The case itself was before the Court on the issue of whether automobile service advisers are exempt under the FLSA as part of the statutory exemption that includes “any salesman, parts-man or mechanic engaged in selling or servicing automobiles.” A service adviser is the guy who you talk to when you bring your car in for repair. He’s the one who tells you what kind of repair your car needs. He is not any one of the guys who actually does the repair, but he might in the process of giving you the bad news about the cost of repairing your car also try to sell you a few other things.

Twice the 9th Circuit Court of Appeals held that service advisers were not exempt from overtime requirements under the FLSA because they were not primarily salesmen, parts-men, or mechanics. This month the Supreme Court overruled the 9th Circuit for the second time on this issue. But that’s not really the interesting part of this case (except of course to the parties themselves, and auto dealers and service advisers in general).

The interesting part of the recent decision by the Court in this case is its apparent switch in the way it says FLSA cases should be interpreted. Historically, the FLSA has been narrowly interpreted to provide protection to the maximum number of workers. In Encino Motorcars, the Court did a veritable about-face.

In writing for the majority (a narrow one at that, at five to four), Justice Thomas said that the exemptions to overtime guarantees found in the FLSA deserved the same method of interpretation as the other provisions of the statute and there was no justification for giving a narrower interpretation to the exemptions as opposed to the remaining statutory language.

What does this mean for employers? Well, it’s good news all around. First of all, it sends a clear signal that employers, who often struggle to determine whether a particular job is exempt or not, can rest a little easier knowing that courts cannot place stricter interpretation guidelines on what jobs are exempt than they use to interpret other provisions of the Act.

Secondly, it sends another signal that a majority of these nine justices are more employer-friendly than previous court compositions in the past. Nevertheless, employers should still periodically audit the job duties of exempt employees to confirm that those employees still meet the tests for exempt status under the FLSA.