SCOTUS Vacates Auto Service Advisers Unpaid Overtime Class Action Lawsuit Ruling

The U.S. Supreme Court has vacated the Ninth Circuit’s decision in an unpaid overtime class action lawsuit, Encino Motorcars LLC v. Navarro, ruling that service advisers do not fall into the same category as dealership salespeople, mechanics and parts department workers, who are explicitly exempted from overtime pay requirements under the Fair Labor Standards Act.

Last March, in the unpaid overtime class action lawsuit, the Ninth Circuit decided that auto dealership service advisors did not qualify for the automatic overtime pay exemption under the Fair Labor Standard’s Act (FLSA).

This decision was based in part on a 2011 Department of Labor (DOL) regulation, which interpreted the term “salesman” (used in the exemption) to mean only an employee who sells vehicles (and not service advisors).

But this regulation changed a decades old practice of applying a broader definition for “salesman,” without providing any supporting reasoning for doing so.

“The exemption applies not just to those primarily engaged in selling, but also to those primarily engaged in servicing,” Encino’s brief said. “Basic rules of grammar reinforce that result by dictating that each element in a disjunctive list be given meaning when it is sensible to do so.”

Justice Kennedy delivered the opinion of the Court, in which Chief Justice Roberts and Justices Ginsburg, Breyer, Sotomayor, and Kagan joined. Justice Ginsburg filed a concurring opinion, in which Justice Sotomayor joined. Justice Thomas filed a dissenting opinion, in which Justice Alito joined.

“Requiring dealerships to adapt to the department’s new position could necessitate systemic, significant changes to the dealerships’ compensation arrangements,” Justice Kennedy wrote. “In light of this background, the department needed a more reasoned explanation for its decision to depart from its existing enforcement policy.”

In vacating the Ninth Circuit’s decision on the unpaid overtime class action lawsuit, SCOTUS provided guidance regarding how the automatic exemption should be interpreted – stating that regulations not supported by adequate reasoning (such as the 2011 DOL regulation) are procedurally defective and not deserving of deference.

“The unavoidable conclusion is that the 2011 regulation was issued without the reasoned explanation that was required in light of the [DOL’s] change in position and the significant reliance interests involved,” Justice Kennedy wrote. “Because the decision below relied on Chevron deference to this regulation, it is appropriate to remand for the Court of Appeals to interpret the statute in the first instance.”

Now it is up to the Ninth Circuit to interpret the meaning of the automatic overtime pay exemption, and decide if it requires paying overtime to service advisors.

California Overtime Rules

Employees working for employers that operate their businesses in the State of California are entitled to workers’ rights, especially with regard to matters concerning the state’s labor laws.

The Fair Labor Standards Act (FLSA) and several California state laws govern the rights of employees to fair wages and safe working conditions. Employers who cut corners and disregard these rights can be held legally accountable by employees and may face stiff penalties.

Under California overtime rules, overtime pay is based on hourly wages, salaries, shift differentials, non-discretionary bonuses and commissions. Failure to include those when determining overtime pay is an overtime rules violation.

In California, most workers are entitled to overtime for all work past eight hours in a day or 40 hours in a week, or for work performed on a seventh consecutive day.

If you feel that your employer has violated state or federal employment laws, you may qualify for damages that may be awarded in a possible unpaid overtime class action lawsuit or civil action lawsuit.

The Auto Service Advisers Unpaid Overtime Class Action Lawsuit is Encino Motorcars LLC v. Hector Navarro et al., Case No. 15-415, in the Supreme Court of the United States.

Join a Free California Overtime, Wage & Hour Class Action Lawsuit Investigation

If you were forced to work off the clock or without overtime pay in California within the past 2 to 3 years, you have rights – and you don’t have to take on the company alone.

Get a Free Case Evaluation Now