Skip to main content

One to Keep An Eye On: Encino Motorcars, LLC v. Navarro - United States Supreme Court


As with many labor and employment law related cases that are being litigated around the country, there are always a few always stand out.  This is one to keep an eye on.


Facts:  Encino Motorcars, LLC ("Encino") sells and services new and used Mercedes Benz cars.  The Respondents in the present suit before the United States Supreme Court are current and former employees of Encino.  In their employment at Encino, the Respondents would meet and greet car owners as they arrived in the service area, evaluate a customer's service and repair needs, suggest services be performed on the vehicle to address issues, and prepared estimates for repairs and services, among other tasks.  The Respondents claimed that they often worked more than 40 hours per week, yet Encino failed to pay them time and a half for overtime work.  

In September 2012, Respondents filed suit and alleged several violations of the Fair Labor Standards Act ("FLSA") and the California Labor Code.  However, Encino argued that the service advisers fell under an overtime pay exemptions provided in the FLSA and therefore were barred from proceeding on their claims.  Even though the District Court noted that the Department of Labor ("DOL") had previously stated that the overtime exemption of the FLSA did not apply to service advisers, Encino's motion to dismiss the FLSA claims was granted. 

On appeal, the Ninth Circuit reversed the District Court's ruling and held that the Respondents were not exempt from overtime pay requirements as provided by the FLSA.  In its ruling, the Court of Appeals noted that the FLSA "is to be construed liberally in favor of employees" and "exemptions are narrowly construed against employers."  In addition, the Court found the DOL had reasonably interpreted an ambiguous FLSA exemption and in doing so, had established that overtime exemptions did not apply to service advisers.  Interesting to note that while the Court acknowledged its ruling conflicted with decisions from the Fourth and Fifth Circuits, several district courts, and the Supreme Court of Montana, that did not sway its decision.

The Main Issue:  Are "service advisers" at car dealers exempt from the Fair Labor Standard's Act's overtime pay requirements? 

Current Status:  On January 15, 2016, the United States Supreme Court granted the petition and agreed to hear the case.

Looking Ahead:  Given that this petition was just granted, we are in the early stages of the Supreme Court deciding this case.  Additional briefs will be filed by both parties (likely along with additional amicus curiae briefs) in the coming months.  With any luck, the Court will set this one for oral argument sooner rather than later, which should give us a good idea of which way the Court might lean on the issue.

As was addressed in the petition before the Supreme Court, this case allows the Court to resolve a split about the issue among the circuits.  While I agree with the note in the petition that the Ninth Circuit's ruling was somewhat of an outlier (when taken in context with how other courts have ruled), I do not think the "court badly misconstrued the Section 213(b)(10)(A) exemption [of the FLSA]."  Even though the Ninth Circuit reached a different conclusion, I think the decision was properly based upon deference to how the DOL had decided the applicability of the exemption previously.


 For additional information, the SCOTUS Blog has some good links to filings in this case:    http://www.scotusblog.com/case-files/cases/encino-motorcars-llc-v-navarro/

Comments

Post a Comment

Popular posts from this blog

NLRB: Discussion Among Employees About Tip Pooling is Protected Concerted Activity

  This Advice Memorandum from the National Labor Relations Board’s Associate General Counsel, Jayme Sophir, addressed whether employees which discussed and complained about tip pooling at work constituted protected concerted activity. In relevant part, an employer in New York operated a chain of steakhouses.  While tip pooling was in place at these steakhouses, some of the employees objected to it on the grounds that it was not transparent and improperly divided tips among the workers.  Employees were told not to complain or talk to each other about the tip pool and were told that doing so would endanger their jobs.  Despite the employer later attempting to provide some clarity as to how the tips were being divided, rancor still existed among some employees.  At one point, the employees were told by a general manager that some employees that had been talking about the tip pool were “cleared out” and the employer would continue to do so. In the Advice Memorandum, it was noted that emplo
Post a Comment
Read more

What I’ve Been Reading This Week

A few years ago, I remember when the “Fight for $15” movement was taking off around the country.  Lo and behold, it appears that a $15/hour minimum wage is not the stopping point, which should be no surprise.  As the below article notes, New York is aggressively moving to ramp up hourly wage rates even higher.  While all the  below articles are worth a read, I called particular attention to that one. As always, below are a couple article that caught my eye this week. Disney World Workers Reject Latest Contract Offer Late last week, it was announced that workers at Disney World had rejected the most recent contract offer from the company, calling on their employer to do better.  As Brooks Barnes at The New York Times writes, the unions that represent about 32,000 workers at Disney World reported their members resoundingly rejected the 5 year contract offer which would have seen workers receive a 10% raise and retroactive increased back pay.  While Disney’s offer would have increased pa
Post a Comment
Read more

Utah Non-Compete Bill Falters in House

Last month, a non-compete bill sponsored by Representative Brian Greene (Republican from Pleasant Grove) & up for vote in the Utah House failed to make it through the Legislature.  The bill sought to ban enforcement of non-competes if they came after a worker was already employed, given no compensation (such as a bonus or promotion) for signing the non-compete, and laid off within six months.  However, by a 22 - 49 vote, the bill was resoundingly defeated after some business groups lobbied to kill the non-compete bill.  One group in particular, The Free Enterprise Utah coalition, argued that the Utah State Legislature should hold off on any changes to non compete laws in the state until a survey about non competes was done among Utah businesses.  Representative Greene had countered this claim and argued that a survey was not needed to show that the current non compete laws in the states allowed many businesses, including some small high tech companies in the state, to per
Post a Comment
Read more