SCOTUS Rejects Obama DOL Overtime Interpretation

In a win for auto dealerships, the Supreme Court has ruled 5-4 that “service advisers” — those individuals who advise customers on which type of servicing or repair is needed on their car — are exempt from overtime.

supreme-court-rejects-overtime-rule

The U.S. Supreme Court building, completed in 1935.

The Department of Labor (DOL) in 2011 ruled that they are overtime eligible, even though the Fair Labor Standards Act (FLSA) clearly excludes from overtime “any salesman, partsman or mechanic” who is “primarily engaged in selling or servicing automobiles.”

Today’s ruling hinged on the word or — “selling or servicing” rather than “selling and servicing.”

“[T]he use of ‘or’ to join ‘selling’ and ‘servicing’ suggests that the exemption covers a salesman primarily engaged in either activity,” Justice Clarence Thomas wrote for the majority in the case, Encino Motorcars v. Navarro.

Thomas was joined by Chief Justice John Roberts and Justices Anthony Kennedy, Samuel Alito and Neil Gorsuch, the most-of-the-time conservative wing of the court.

The liberals disagreed. “Because service advisers neither sell nor repair automobiles, they should remain outside the exemption and within the act’s coverage,” Justice Ruth Bader Ginsburg wrote in an opinion joined by Justices Elena Kagan, Sonia Sotomayor and Stephen Breyer.

Because service advisers work odd and often long hours, Congress in the mid-1960s amended the FLSA to exclude them from overtime.

The April 2 decision reverses a 9th Circuit Court ruling in 2016 that service writers at an Encino, Calif., dealership were owed back pay for working 55-hour weeks.

In making its decision, the lower court relied upon an earlier Supreme Court decision that argued for overtime exempt statuses to be “narrowly construed;” i.e., very little leeway for interpreting the exemption. Upon review, the Supreme Court this time, in the words of Justice Thomas, argued for a “fair reading” standard — giving more leeway for interpreting the exempt status of any given employee.

Broader Overtime Rule Rejected

A 2016 rewrite of overtime regulations to make everyone who earns up to $47,476 a year eligible for overtime was struck down days before it was to take effect by a federal district court. Technically, that ruling is still before the 5th U.S. Circuit Court of Appeals, which could resurrect the plan by lifting the injunction. Though the Trump administration is not in favor of the Obama-era overtime rewrite, it has asked the court to clarify if the DOL has the power to set a salary threshold.

The FLSA mandates that, if not exempt by statute, all employees who work more than 40 hours in a week are eligible for time-and-a-half pay for every hour worked over 40. Some states mandate that overtime kicks in each time an employee works more than eight hours at a time.


NOTE: The details in this blog are provided for informational purposes only. All answers are general in nature and do not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The author specifically disclaims any and all liability arising directly or indirectly from the reliance on or use of this blog.
You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Leave a Reply

Your email address will not be published. Required fields are marked *

* Copy This Password *

* Type Or Paste Password Here *

Leave a Reply

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Comments (required)*