Interpreting overtime exmptions can be tricky. While the April 2nd, 2018, Supreme Court ruling may only apply to a very small segment of workers and probably only affects a single wage and hour lawsuit currently, this departure from the longstanding approach at interpreting overtime exemption will likely have broader implications and affect more workers in the future.
As a rule, since the 1940s the courts have applied narrow construction when interpreting overtime exemption. This week marks a turning point in the court’s approach. Narrow construction is the approach in which the courts construe FLSA overtime exemptions narrowly. This approach had the benefit to the employee in mind.
The Court Case
In summary, in the case of Encino Motorcars, LLC v. Navarro, five service advisor employees sued their employer. The service advisors believed that their employer didn’t compensate them properly for overtime, which meant that their employer was underpaying them for their work. According to their knowledge of FLSA policies, they didn’t earn overtime for any hours in excess of 40 hours in the workweek.
However, the employer combated this and said that the service advisors were the same as “any salesman or mechanic primarily engaged in selling or servicing automobiles”. In that case, the employees were not entitled to any overtime.
What Happened With the FLSA’s Narrow Construction Rule?
On Monday, Justice Clarence Thomas said, “We reject [the narrow construction] principle as a useful guidepost for interpreting the FLSA. Because the FLSA gives no textual indication that its exemptions should be construed narrowly, there is no reason to give them anything other than a fair (rather than a ‘narrow’) interpretation.”
In the Encino Motorcars, LLC v. Navarro et al. case the Supreme Court reversed the 9th Circuit Court of Appeal’s ruling, which granted overtime to car service advisers. These employees were salespeople selling a service. Ultimately, they should not be entitled to overtime, says the Supreme Court this week.
Since this ruling, employees at the Mercedes Benz dealership will not be going through with their overtime lawsuit.
Want to Learn More?
For more information on the background and details of the ruling on narrow construction, read the write-up by Paul DeCamp on Epstein Becker Green.
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