U.S. Supreme Court Agrees to Review Ninth Circuit Ruling Denying FLSA Exempt Status To Service Advisors at Automobile Dealerships
Navarro v. Encino Motorcars, LLC, is a wage and hour case brought by five service advisors who worked at a California automobile dealership, seeking overtime pay under the Fair Labor Standards Act (FLSA) and state law. The dealership obtained dismissal of the FLSA claims, citing FLSA section 13(b)(10), which exempts from federal overtime “any salesman . . . primarily engaged in selling or servicing automobiles or trucks.” But last March, the Ninth Circuit Court of Appeals reversed the dismissal and held that service advisors do not qualify for the exemption. Its decision was notable because it reversed more than 40 years of case law, and even previous Department of Labor (DOL) interpretations, holding that service advisors qualify for this exemption because they are sales personnel who are primarily engaged in servicing automobiles. The Ninth Circuit’s principle rationale for finding the exemption inapplicable was a recent change by the DOL in its interpretation of the exemption to exclude service advisors. The Ninth Circuit held that because the DOL is the agency charged with interpretation of the FLSA, its interpretation of an ambiguous statute is entitled to deference.
The dealership then petitioned the U.S. Supreme Court for certiorari review. Given the widespread impact of this decision on the industry, which has depended on the exemption for decades, the petition was supported by amici curiae (friends of the court) National Automobile Dealers Association (NADA), California New Car Dealers Association (CNCDA), and automobile dealers associations in each of the other states in the Ninth Circuit, who filed a brief urging the Supreme Court to review the case. On January 15, 2016, the Supreme Court agreed to review the Ninth Circuit’s decision. The Supreme Court’s grant of certiorari likely signals its skepticism of the Ninth Circuit’s decision, particularly given the long history of industry reliance on the exemption. Stay tuned.
Felicia Reid of Hirschfeld Kraemer represents amici NADA, CNCDA and the other dealer associations in the Supreme Court proceedings.