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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/

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