Wednesday, September 5, 2018

The FLSA's exemptions are becoming more "fair" for employers

In Encino Motorcars, LLC v. Navarro, the Supreme Court ruled that overtime exemptions under the Fair Labor Standards Act "are to be given a 'fair reading,' meaning they are not to be construed too narrowly" (as had historically been the case).

The Court applied this "fair reading" standard to conclude that automobile service advisors are exempt under the FLSA's automobile-service exemption.

Since Encino, federal courts have applied the "fair reading" standard to find that various classes of employee are non-exempt (or likely non-exempt) under various of the FLSA's categories of exemptions:

Recently, the Department of Labor itself applied this "fair reading" standard to conclude, in an Opinion Letter [pdf], that the FLSA's "retail or service establishment" exemption applies to sales representatives who sell credit-card-payment platforms to merchants.

Courts and the DOL are more willing than ever to conclude that employees are exempt under the FLSA. Yet, employers should not read this "fair" construction test 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 mis-classified an employee.