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The New Supreme Court Ruling On Service Advisors Who Are Exempt From Overtime Rules Is Sloppy, At Best

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A new Supreme Court ruling leaves national uncertainties about whether car dealership employees have a right to overtime pay.

The opinion in Encino Motorcars, LLC v. Navarro centers on the question of whether service advisors at auto dealerships receive overtime pay as a right under the federal Fair Labor Standards Act (FLSA). The Supreme Court issued the opinion in response to a decision by the Ninth Circuit Court of Appeals (which includes California) that service advisors, who sell car service to customers, have a right to overtime under the FLSA.

Unfortunately, the Supreme Court decision doesn't clarify whether or not this is the correct interpretation of the FLSA, so uncertainty over this question may persist for some time.

For Years, Service Advisors Had No Right to Overtime

The FLSA requires that most workers who work overtime receive additional pay. It also contains a rule that overtime requirements do not apply to "any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles." The Department of Labor, which has the authority to enforce the FLSA, originally interpreted this rule to mean that service advisors are entitled to overtime, since they neither sell cars nor service cars. Numerous courts disagreed with Department of Labor, and the organization changed its interpretation of the law. The result was that, for many years, the rule across the U.S. was that service advisors do not have to receive overtime pay. In the 1980's, the Supreme Court created a precedent that courts should pay more respect to the interpretations of laws that federal agencies decide. After this, the Department of Labor changed the rule to again give service advisors the right to overtime pay.

Ninth Circuit Affirms Rule Giving Overtime to Service Advisors

This was a surprising change for many auto dealerships, and several fought the new rule in the courts. The auto dealerships were successful in more than one federal circuit court, but these decisions only apply in certain parts of the country. Recently, the Ninth Circuit heard a similar challenge to the rule requiring overtime for service advisors, and became the first circuit court to agree with the Department of Labor that service advisors should receive overtime. This created a disagreement among the different federal circuit courts, therefore the Supreme Court stepped in to resolve the conflict.

New Ruling Leaves Uncertainty on Overtime

The Supreme Court opinion that resulted was not very clear. The Court didn't believe that the Department of Labor gave a good explanation for why service advisors should now have the right to overtime. But the Court didn't decide whether or not the rule is correct. Instead, they sent the case back to the Ninth Circuit and instructed them to re-examine the case, and not to agree with the Department of Labor just because they are a federal agency. This means that we are still awaiting a Supreme Court decision on whether or not service advisors should receive overtime. And in the future, more disagreements about the rule will certainly ensue. It may also mean that the Department of Labor will be more careful in issuing new employment regulations.

California Overtime Laws: Additional Information

  • California Overtime Laws: What Exempt and Nonexempt Employees Should Know
  • New Overtime Laws: Which Employees Are Most Affected?
  • State of California Department of Industrial Relations: Overtime
  • State of California Department of Industrial Relations: Exemptions from Overtime Laws

Do you feel that your California employer is violating federal or state overtime laws? If so, you may have a legitimate case. Contact the passionate employment attorneys at Hennig Ruiz for a free consultation today.

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