Talk to us free: 215.884.2491

News | Apr 04, 2018

Today’s Troubling U.S. Supreme Court Opinion in “Encino Motorcars II”

Back in June 2016, the U.S. Supreme Court decided Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117 (2016).  In the June 2016 opinion, the Court invalidated 29 C.F.R. § 779.372(c)(1), a 2011 U.S. Department of Labor regulation deeming “service advisors” uncovered by the FLSA’s “salesman, partsman, or mechanic” exemption.  See 29 U.S.C. § 213(b)(10)(A).  The 2016 Opinion reasoned that the regulation was not entitled to Chevron deference, and remanded the case to the Ninth Circuit Court of Appeals so it could consider whether the plaintiff service advisor was exempt in the absence of the regulation.

On remand, the Ninth Circuit issued a January 2017 opinion holding that, even in the absence of the 2011 regulation, the plaintiff service advisor was not overtime exempt.  The car dealership appealed, the Supreme Court granted cert., and, earlier today, the Court issued a 5-4 opinion authored by Justice Thomas and joined by Justices Roberts, Kennedy, Alito, and Gorsuch.

Before going any further, let’s take a quick break for a multiple choice question:  “Earlier today, Justice Thomas wrote an opinion in an employment rights case that was decided 5-4 and joined by Justices Roberts, Kennedy, Alito, and Gorsuch.  Who won?:  (A) the employee; (B) the Mercedes Benz dealership; or (C) I have no idea because Supreme Court outcomes cannot be predicted based on which Justices write or join an opinion.”

And the correct answer is . . . . (B).  Now for my quick takeaway:

The opinion’s analysis of the actual issue — whether service advisors are covered by the “salesman, partsman, or mechanic” exemption in the absence of the 2011 DOL regulation — generally turns on a statutory construction analysis that, in my view, does not have any obvious implications on future FLSA cases.  So, while the Court’s holding stinks for “service advisors” and, maybe, a few other types of car dealership employees, it looked like today’s opinion was going to have a limited reach.  There’s even a faint silver lining tucked into the analysis:  the Court gives a favorable nod to an old provision in the Wage and Hour Division’s Field Operations Handbook.

But then, on page 9 of the 11-page opinion, the majority drops a bomb:  it “rejects” the longstanding principle that “exemptions to the FLSA should be narrowly construed.”  According to the majority:  “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.'”

. . . and just like that, an 80-year-old principle of FLSA law — a principle that has been repeated in many Supreme Court opinions and countless Circuit Court opinions — has been washed away in the final pages of an opinion that already was a lost cause.  As Justice Ginsberg wrote in dissent:  “In a single paragraph, the Court ‘reject[s]’ this longstanding principle as applied to the FLSA . . . without even acknowledging that it unsettles more than half a century of our precedent.”

This, my friends, is what conservative judicial activism looks like.

Attorney Advertising. This website is designed for general information only. The information presented at this site should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.