Interpretation of FLSA in employers’ favor

 

It’ll now be a little easier to figure out whether certain employees are exempt from OT, thanks to a recent Supreme Court decision that changes the way companies can interpret the Fair Labor Standards Act (FSLA).

 

More good news: the decision will likely give employers better footing in legal disputes about overtime pay.

 

Exempt or not?

 

The case, Encino Motorcars, LLC v Navarro, involves a group of service advisors at a car dealership who sued for unpaid overtime, claiming they were wrongly classified as exempt employees.

 

Per a subsection of the FLSA, “any salesman, partsman or mechanic primarily engaged in selling or service automobiles” is classified as exempt.

 

A 2011 Dept. of Labor (DOL) reg specifically excluded service advisors from this exemption. Because of this, service advisors in Encino argued that they should be paid overtime.

 

The case first made its way to the Supreme Court in 2016 after the U.S. Court of Appeals for the Ninth Circuit reversed a district court’s decision to dismiss it.

 

The Ninth Circuit then found in favor of the advisors based on the 2011 DOL reg, but the Supreme Court threw out the decision, saying the reg was invalid and asking the appeals court to only focus on the FLSA’s original text.

 

In response, the Ninth Circuit took a narrow view of the law as written, based on existing legal precedent, and decided in the service advisors’ favor again.

 

Another appeal put the case back in front of the Supreme Court, and it reversed this decision, rejecting the use of a narrow interpretation of the law. Instead, the court said it favors a “fair” interpretation of the FLSA, using the plain, ordinary meanings of its words to decide how it applies.

 

Bottom line

 

What this means for companies: Now it should be easier to prove employees are exempt from overtime, because employers can take a broader view of the FLSA’s text.

 

And since there’s a bit more wiggle room with interpreting exemptions, it should also make compliance with the law’s guidelines a little easier.

 

Cite: bit.ly/exempt553