233 South Wacker Drive, Suite 4450, Willis Tower, Chicago, Illinois 60606

U.S. Supreme Court Holds: Dealership Service Advisors are Exempt from the Fair Labor Standards Act’s Overtime-Pay Requirement

By Maureen Murphy

On April 2, 2018, the United States Supreme Court in the case of Encino Motorcars, LLC v. Navarro, in a 5-4 decision, and based upon what it called a “fair reading” of the statutory language in the Fair Labor Standards Act, held that service advisors at auto dealerships are exempt from the overtime-pay requirements of the FLSA.  In so holding, the Court concluded that the exemptions in the FLSA for certain categories of workers should not be narrowly construed since the “over two dozen exemptions . . . are as much a part of the FLSA’s purpose as the overtime-pay requirement. . . [w]e thus have no license to give the exemption anything but a fair reading.”  Based upon a fair reading of the Section 213(b)(1)(A) of the FLSA, it was clear to the Court’s majority that service advisors were among the employees described in that section who are exempt from the overtime-pay requirement:  “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements, if he is employed by a nonmanufacturing establishment primarily engaged in the business of selling such vehicles or implements to ultimate purchasers.”

What this means for employers:  The Court’s holding applies not only to service advisors employed at auto dealerships, but also to service advisors employed at other employer’s described in this section of the FLSA–truck dealerships and dealerships of farm implements.  Furthermore, the Court’s holding indicates that the FLSA exemptions to the overtime-pay requirements of the law are not to be narrowly construed but are to be interpreted based upon the plain language of the exemptions themselves.

If you have questions or concerns regarding this ruling and how it affects your business, please contact Maureen A. Murphy at (312) 506-4475 or  [email protected].