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No Overtime for Auto Service Advisors after
Court's Fair Reading of the FLSA
April 16, 2018
The Supreme Court concluded recently that car dealership employees who discuss service options with
customers are exempt from the Fair Labor Standards Act's (FLSA) overtime pay requirement. In Encino
Motorcars, LLC v. Navarro, the Court determined that these so-called service advisors fell within the
statute's exemption for any salesman, partsman, or mechanic primarily engaged in selling or servicing
automobiles[.] While the Court's decision would seem to affect only a small group of employees, it is
notable for what it said with regard to interpreting the FLSA.
Justice Thomas, writing for the majority, rejected the long-followed principle that the FLSA's exemptions
should be construed narrowly to promote the statute's remedial purpose. The majority maintained that the
exemptions are entitled to nothing more than a fair reading because the FLSA gives no 'textual
indication' that its exemptions should be construed narrowly . . . Application of this new fair reading
standard could result in a greater number of employees being deemed exempt from the FLSA's overtime
pay requirement. A dramatic increase in exempt workers could prompt Congress to consider an
amendment to the FLSA that perhaps identifies the exemptions with more specificity or prescribes a new
standard for evaluating the exempt status of employees.
The FLSA requires the payment of overtime compensation at a rate of not less than one and one-half
times an employee's hourly rate for hours worked in excess of a 40-hour workweek. Section 13 of the
FLSA identifies numerous employees who are exempt from this requirement. In addition to the
automobile salesmen, partsmen, and mechanics discussed in Encino Motorcars, individuals employed as
seamen, specified agricultural workers, and certain computer employees are also exempt. Workers
employed in a bona fide executive, administrative, or professional capacity arguably comprise the largest
category of exempt workers.
Since 1945, the Supreme Court has characterized the FLSA as humanitarian and remedial legislation
designed to ensure a fair day's pay for a fair day's work. In A.H. Phillips, Inc. v. Walling, the Court
declined to find employees working in the warehouse and central office of an interstate grocery store
chain exempt from the statute's overtime pay requirement. While the store chain attempted to
characterize the employees as within the FLSA's now-repealed section 13(a)(2) exemption for any
employee engaged in any retail or service establishment the greater part of whose selling or servicing is in
Congressional Research Service
https://crsreports.congress.gov
LSB10122
CRS INSIGHT
Prepared for Members and
Committees of Congress](ViewImageLocal?handle=hein.crs/govzgm0001&div=1&collection=&method=preview&ext=.png&size=3)
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