Encino Motorcars vs. Navarro Case: Supreme Court Rules Service Advisers are Exempt from Overtime

Supreme Court

Encino Motorcars vs. Navarro Case: Supreme Court Rules Service Advisers are Exempt from OvertimeOn Monday the supreme court ruled that service advisers are salesmen and therefore exempt from overtime requirements. Car dealerships are not required by federal law to pay overtime to the service advisors, service greeters or service repair employees. The high court rule can affect more than 18,000 dealerships nationwide and more than 100,000 service advisers.

This decision comes years after the case was first introduced. It was brought to the supreme court after the Department of Labor changed its interpretation of the Fair Labor Standards Act in 2011. For the three decades up to then, the department operated under the view that service advisers didn’t have to be paid overtime. From that time the court has ruled on the case twice. In the previous ruling, the U.S. Court of Appeals for the 9th Circuit ruled that service advisers were entitled to overtime. But in 2016, following the death of Justice Antonin Scalia, an eight-member Supreme Court sidestepped the overtime question and told the appeals court to take another look at the case. After a second look, the appeals court once again ruled in favor of the service advisers. Justice Clarence Thomas wrote in a majority opinion that the “ordinary meaning of ‘salesman’ is someone who sells goods or services” and that service advisers “do precisely that.” This obviously stands opposite to the argument on behalf of the service provider’s claim that they were not covered in the definition.

Wes Lutz, Chairman of the National Automobile Dealers Association, released a statement in response to the Supreme Courts ruling of the Encino Motorcars, LLC v Navarro. He says, “NADA is extremely pleased with the Court’s decision that dealership service advisors clearly fall within the salesmen, partsmen, and mechanics overtime pay exemption under the federal Fair Labor Standards Act. This decision upholds more than 40 years of consistent interpretation by the courts and the executive branch, and will allow the auto retail industry to continue structuring employment relationships that are efficient and beneficial to dealerships, their employees, and their customers.”

For more backstory on this case, please visit our post “Service Advisors’ Overtime Pay Dispute Heads to the Supreme Court for the Second Time“.