Supreme Court Denies Overtime Pay to Service Advisors at Auto Shops & Dealerships

This week in Encino Motorcars, LLC v. Navarro, the Supreme Court limited overtime pay for service advisors at car dealerships nationwide, ruling that those employees are primarily salespeople who sell brake jobs, oil changes and other service work. Encino Motorcars' current and former service advisors sought backpay under the Fair Labor Standards Act (FLSA) overtime-pay requirement, 29 U.S.C. 213(b)(10)(A). The requirement exempts “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements.”

The Supreme Court, in an 5-4 opinion authored by Justice Thomas, reinstated the dismissal of the suit. According to the Court, service advisors are “salesm[e]n . . . primarily engaged in . . . servicing automobiles." The ordinary meaning of “salesman” is someone who sells goods or services, and service advisors “sell [customers] services for their vehicles,” Service advisors are also “primarily engaged in . . . servicing automobiles.” “Servicing” can mean either “the action of maintaining or repairing” or “[t]he action of providing a service.” Service advisors satisfy both definitions. They meet customers; listen to their concerns; suggest repair and maintenance services; sell new accessories or replacement parts; record service orders; follow up with customers as services are performed; and explain the work when customers return for their vehicles. While service advisors do not spend most of their time physically repairing automobiles, neither do partsmen, who are “primarily engaged in . . . servicing automobiles.”

The Court rejected giving Chevron deference to the federal agency and rejected the interpretation of the Department of Labor and the Ninth Circuit Court of Appeals, who had both relied on matching “salesman” with “selling” and “partsman [and] mechanic” with “[servicing]”. The but the word “or” is “almost always disjunctive.” Using “or” to join “selling” and “servicing” suggests that the exemption covers a salesman primarily engaged in either activity. The Court held that the FLSA gives no textual indication that its exemptions should be construed narrowly, thus ignoring the long-standing precedent that remedial statutes should be interpreted in order to provide broad protections to the individuals they seek to protect. 

Writing in dissent, Justice Ruth Bader Ginsburg said the service advisors at Encino Motorcars "work regular hours, 7 a.m. to 6 p.m., at least five days per week, on the dealership premises. Their weekly minimum is 55 hours." Federal law calls for a time-and-a-half pay after 40 hours in a week, she noted. "Because service advisers neither sell nor repair automobiles, they should remain outside the exemption and within the act's coverage," she said. Justices Stephen G. Breyer, Sonia Sotomayor and Elena Kagan agreed.

This is but one of many examples to come that will demonstrate the importance of elections on the Court. The election of Trump coupled with the Senate's highly questionable antics used to nab a seat for Justice Gorsuch has led to the elimination of overtime protections for thousands of workers across the country. Many will never see Justice Gorsuch as a legitimate member of the Court. However, his votes (expected to be 100% anti-worker) on the Court will be powerful all the same.

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