Tuesday, April 3, 2018

Supreme Court puts the breaks on the narrow constructions of FLSA exemptions

Photo by Coolcaesar (Own work),
via Wikimedia Commons
Yesterday, in a narrow 5-4 decision, the Supreme Court held that automobile service advisors are exempt from the FLSA’s overtime requirements.

The exemption applies to “salesmen … primarily engaged in … servicing automobiles.” The majority broadly defined these terms to hold that the plaintiffs were exempt.

And while this aspect of the decision is interesting to automobile repair shops and car dealerships, it's the opinion’s broader implications that are more interesting to me.

It has long been believed that employers should apply FLSA exemptions narrowly to carry out the statute’s remedial purpose. This court rejected the idea of narrow exemption construction in favor of “fair” construction:
The Ninth Circuit also invoked the principle that exemptions to the FLSA should be construed narrowly. We reject this principle as a useful guidepost for interpreting the FLSA. Because the FLSA gives no “textual indication” that its exemptions should be construed narrowly, “there is no reason to give [them] anything other than a fair (rather than a ‘narrow’) interpretation.” Scalia, Reading Law, at 363. The narrow construction principle relies on the flawed premise that the FLSA “‘pursues’” its remedial purpose “‘at all costs.’” … But the FLSA has over two dozen exemptions in §213(b) alone, including the one at issue here. Those exemptions are as much a part of the FLSA’s purpose as the overtime-pay requirement.… We thus have no license to give the exemption anything but a fair reading. 

Employers should not read this “fair” construction as a license to reclassify all of their non-exempt employees as exempt. However, it should give employers some comfort that in closer cases, courts should not be so quick to conclude that they misclassified an employee.

The case is Encino Motorcars, LLC v. Navarro [pdf].