April 02, 2018

Supreme Court Decides Encino Motorcars, LLC v. Navarro

On April 2, 2018, the Supreme Court decided Encino Motorcars, LLC v. Navarro, No. 16-1362, holding in a 5-4 decision that the Fair Labor Standards Act (FLSA) exempts service advisors at car dealerships from the Act’s overtime-pay requirement.

The FLSA requires employers to pay overtime to covered employees who work more than 40 hours in a week. But the FLSA exempts many categories of employees from this requirement, including “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements….” The question in this case was whether this exemption applies to service advisors at car dealerships — employees who consult with customers about their servicing needs and sell them servicing solutions.

The District Court ruled that service advisors are exempt, but the Ninth Circuit reversed, holding that FLSA exemptions are to be narrowly construed, and that while a service advisor is a “salesman,” Congress did not intend to exempt them because they are not primarily engaged in “servicing” automobiles, as they do not actually repair and maintain vehicles.

The Supreme Court reversed, holding that service advisors fall within the FLSA’s exemption for “salesm[e]n … primarily engaged in … servicing automobiles.” The Court concluded that “a service advisor is obviously a ‘salesman’” and that “service advisors are also ‘primarily engaged in … servicing automobiles.’” Although service advisors do not physically repair automobiles, the Court held that “the statutory language is not so constrained.” The Court rejected the Ninth Circuit’s reliance on the distributive canon of statutory interpretation, under which the Ninth Circuit matched “salesman” with “selling” and “partsma[n] [and] mechanic” with “servicing.” The Court noted that the distributive canon would not allow “one-to-one matching” in this case because there were three nouns but only two gerunds, and was otherwise an “unnatural fit” for the exemption’s otherwise expansive language.

The Court also rejected the principle that the FLSA’s exemptions should be construed narrowly, holding that “[b]ecause the FLSA gives no ‘textual indication’ that its exemptions should be construed narrowly,” the exemptions should be given a “fair (rather than a ‘narrow’) interpretation.”

Justice Thomas delivered the opinion of the Court, joined by Chief Justice Roberts and Justices Kennedy, Alito, and Gorsuch. Justice Ginsburg dissented, joined by Justices Breyer, Sotomayor, and Kagan.

Download Opinion of the Court.

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