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Supreme Court returns service adviser FLSA case to Ninth Circuit

The current vacancy on the United States Supreme Court has apparently affected the outcome of another case. The Court agreed to review the decision of the Ninth Circuit Court of Appeals in Encino Motorcars, LLC v. Navarro, a case in which "service advisors" who worked for a Los Angeles car dealership claimed they were entitled to paid overtime because they were not supervisory employees. After granting certiorari, the Court declined to decide the central issue and instead sent the case back to the Ninth Circuit for further proceedings.

The case began when employees known as service advisors working at a car dealership sued to obtain unpaid overtime. The service advisers provided advice to customers regarding repairs and maintenance to their cars, but they were not engaged in selling automobile or in making repairs. The dealership had relied on an exemption in the Fair Labor Standards Act that stated that "salesmen, partsmen, and mechanics" were not entitled to overtime pay. The trial court relied on the statutory exemption and dismissed the case. The Ninth Circuit reversed, but it did not decide the main issue of whether the statutory language applied to service advisors. Instead, the appellate court relied on a Department of Labor regulation stating that the exemption did not apply to service advisors.

The Supreme Court held that the Ninth Circuit erred in relying on the DOL regulation because the regulation was adopted without any discussion by the agency of reasons for its adoption. This procedural defect robbed the regulation of its "reasonableness," a necessary predicate for deference by the courts. The case is once again before the Ninth Circuit, which has been directed to determine whether service advisors fall within the FLSA's exemption for "salesmen, partsmen and mechanics."

The right to receive overtime compensation is guaranteed for all non-supervisory workers under the FLSA. Any employee who is not receiving paid overtime for hours worked in excess of 40 per week may wish to consult an attorney who specializes in wage and hour violation cases. Such a consultation can provide a useful analysis of the facts of the case in light of applicable laws and an estimate of the likelihood of recovering lost wages, punitive damages and attorneys' fees.

Source: National Law Review, "Supreme Court Rejects Deference to DOL Regulation on FLSA Exemption Due to Failure to Provide Reasoned Explanation for Change," Jeffrey Brecher, June 22, 2016

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