SCOTUS Rejects Narrow Construction FLSA Overtime Exemption

FLSA Overtime Exemption

The Fair Labor Standards Act (FLSA) requires employers to pay overtime compensation to covered employees, but provides numerous categories of workers an overtime exemption. On April 2, 2018, the Supreme Court of the United States (SCOTUS) rejected the longstanding principle that these FLSA exemptions must be construed narrowly, holding that service advisors at a California automobile dealership are exempt from the overtime requirements under the FLSA.

Background

As we covered in previous posts about overtime exemptions, at issue in Encino Motorcars, LLC v. Navarro was the “exempt” classification of service advisors at a car dealership. The service advisors premised their argument for overtime on a 2011 Department of Labor rule that expressly excluded service advisors from the definition of “salesman.”  The specific section of the FLSA is section 213(b), which exempts “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles ….” Service advisors sell, but they sell mechanic service rather than cars, and they are not mechanics themselves. The advisors argued that they fall into a gap in 213(b): they are not “salesm[e]n … primarily engaged in selling … automobiles,” and they are not “partsmen, or mechanic[s] primarily engaged in … servicing automobiles.” In response, the dealer argued that service advisors are plainly “salesm[e]n … primarily engaged in … servicing automobiles ….”

The district court found that the FLSA overtime exemption applied to service advisors. The Ninth Circuit reversed, deferring completely to the 2011 DOL rule.  The Supreme Court rejected this conclusion, holding that the regulation was procedurally defective and courts should not defer to it or rely upon it.  The Supreme Court remanded the case to the Ninth Circuit for reconsideration. The Ninth Circuit again found that service advisors were entitled to overtime because they do not fall within the exemption.

SCOTUS Opinion  FLSA overtime exemption

In its second look at this particular exemption in recent years, the Supreme Court again reversed, basing its conclusion on what it called a “best reading” of the statute’s text. The Court held 5-4 with its opinion reading, “We reject this principle as a useful guidepost for interpreting the FLSA…. Because the FLSA gives no ‘textual indication’ that its exemptions should be construed narrowly, ‘there is no reason to give [them] anything other than a fair (rather than a “narrow”) interpretation.’”

Justice Clarence Thomas’ opinion noted that the FLSA contains “over two dozen” exemptions, that the exemptions “are as much a part of the FLSA’s purpose as the overtime-pay requirement,” and that “[w]e have no license to give the exemption[s] anything but a fair reading.” The Court further held that the exemption was not limited to sales employees primarily engaged in selling automobiles and ultimately held that service advisors were exempt because they are “salesm[e]n . . . primarily engaged in . . . servicing automobiles.”

In dissent, Justice Ginsburg, along with Justices Breyer, Sotomayor, and Kagan, sought to emphasize how the majority’s holding was a stark departure from precedent. Underscoring the importance of the Court’s holding regarding the interpretation of FLSA exemptions, Justice Ginsburg wrote that the Court was overruling “half a century” of precedent by rejecting the narrow construction principle.

Conclusion

The Court’s decision is significant as it abandons the longstanding principle that FLSA exemptions are to be construed narrowly in favor of non-exempt status. Generally speaking, courts will now need to place exemptions on the same statutory and interpretive footing as the substantive overtime requirements in the statute. For example, the more common FLSA exemptions, such as the executive, administrative and professional employee exemptions may now be subject to the broader “fair reading” standard in cases that come before the High Court. 

The lawyers at Kingsley & Kingsley will continue to monitor SCOTUS opinions on FLSA exemptions. In the meantime, should you have questions about California’s wage and hour laws, don’t hesitate to contact one of our leading California employment lawyers.

Call and speak to an experienced California lawyer toll-free at (888) 500-8469.

Kingsley & Kingsley
16133 Ventura Boulevard, Suite 1200
Encino, California 91436
Phone: 888-500-8469
Local: 818-990-8300 (Los Angeles Co.)

 

eeoc violation | Unpaid wage issues

California Employment Law

California Employment Law – Representation In Wage, Hour And Overtime Pay Disputes

California Employment Law | Unpaid wage issuesAs an employee, you are entitled to all of your earned compensation under California Employment Law requirements. This includes not only your hourly or salary wages but also overtime, commission, bonuses, off-the-clock work, and vacation time that is unused upon termination of employment. We understand California Employment Law and we understand how important wage and hour issues are to our clients. How you are being paid and treated on the job affect your happiness at work and your ability to provide for yourself and your family. We are committed to zealously advocating for you until we achieve results.

If you suspect that you are being paid unfairly or not receiving the benefits that you deserve, contact us today. We have successfully represented workers throughout California and are eager to help you. Call our Los Angeles Unpaid Wages law office 818-990-8300 or at 888-500-8469.

The firm represents workers in an extensive range of industries and employment settings in all wage and hour issues, including unpaid wages, overtime issues, work breaks, prevailing wage and misclassification. For more than two decades, our attorneys have been focused on wage and employment law disputes, advocating for clients throughout California. We understand the nuances and unique rules of various industries and know how to approach each case successfully.

 

wage and hour law California overtime compensation

Unpaid Wage and Hour Law

Wage And Hour Law – California

wage and hour law California overtime compensationMany California employees are not being justly compensated for their work. Our attorneys are aware that some of the most common issues that arise in wage and hour law disputes involve:

Unpaid wages — Harsh penalties are in place for California employers who fail to pay their workers. This includes paying a worker the balance of wages earned immediately upon being terminated and within 72 hours of the worker leaving the company.

Overtime and misclassification — Workers are either classified as hourly or salaried, depending on their job description, daily responsibilities, and role within the company. Many employers list workers as salaried, paying a lump sum, no matter how much time was served. Salaried workers, however, are not commonly eligible for overtime. If you should be classified as an hourly employee or worker, you could be missing significant compensation for time you work over 40 hours a week or 8 hours per day. In addition, double time could apply over 12 hours per day in some cases.

Reimbursement and vacation time — In addition to the above, there is strict protocol for how employees are to be reimbursed for certain expenses such as cell phone usage, mileage, uniforms, etc. In many cases, this includes vacation time that has been accrued on hours worked and must be paid out if the employee leaves the company.

To learn more about unpaid wage and hour law in California, visit Unpaid Wages.

Recent Media Coverage – Wage and Hour Class Action

Please read about our recent case article at LawyersandSettlements.com
Case: Rein Faces California Wage and Hour Class Action Lawsuit by Gyu-Kaku Restaurant Employees

The following is an excerpt of the article:

Los Angeles, CA: A wage and hour class action lawsuit has been filed against Reins International California Inc, a subsidiary of Reins International, which owns the Gyu-Kaku chain of restaurants. The lawsuit alleges the defendant failed to properly compensate its managers in training. (continue reading)

The case is Justin Kim et al. v. Reins International California Inc et al., in the Eric Kingsley | California Wage and Hour Class ActionSuperior Court of California for the County of Los Angeles. The case number is BC539194.  Justin Kim is represented by Eric B. Kingsley and Liane Katzenstein Ly of Kingsley & Kingsley.

If you believe you have suffered an employment violation, you can take action with the help of experienced employment lawyers. Please don’t hesitate to contact Kingsley & Kingsley if you have any questions; call us toll-free at (888) 500-8469 or click here to contact us via email.

Law360 Article Discusses Our Safelite Case – Overtime Wage

Law360, New York (January 22, 2014, 1:45 PM ET) — The Ninth Circuit on Tuesday vacated a California federal court’s denial of class certification in an overtime wage spat between automobile glass repair company Safelite Group Inc. and a former employee, ruling that the judge had erred in denying the plaintiff’s efforts to conduct precertification discovery.

In an unpublished unanimous opinion, the three-judge panel said that the failure to grant the early discovery request of Joseph Perez amounted to an abuse of discretion by the court, finding that Perez had established that additional information was needed to allege commonality of the class of former workers he sought to represent.

“The district court denied class certification because Perez did not have evidence about other employees with his job title, which shows that discovery is necessary to determine the existence of a class in this case,” the panel said. “Perez is therefore entitled to precertification discovery on remand.”Continue reading

What You Need to Know About California Labor Laws

California Labor Law protects employees working for businesses in the State of California to ensure payment of minimum and overtime wages, meal and rest breaks are given,  proper classifications are made, and record keeping is accurate.   When employers do not abide by these laws they can face major penalties.

Here are the basic violations you should know about:

Minimum Wage and Overtime

california labor lawThe minimum wage for full or part time employees in California is $8 per hour.  Non-exempt employees must be paid one and one-half times their regular hourly rate for hours worked in excess of the daily 8 hours or 40-hour workweek.Continue reading