Encino Motorcars, LLC v. Navarro

On June 20, 2016, the U.S. Supreme Court decided Encino Motorcars, LLC v. Navarro. Hector Navarro, a service advisor at an Encino Motorcars dealership, brought a collective action alleging the company violated the Fair Labor Standards Act by failing to pay overtime. The dealership argued that service advisors fell within the FLSA's exemption under Section 213(b)(10)(A) for "any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles" at a covered establishment. The Ninth Circuit held the exemption did not apply, requiring that a "salesman" must actually sell cars. The Supreme Court, in a 6-2 decision, vacated that judgment, ruling the Ninth Circuit had impermissibly imported an extra-textual requirement. It held that service advisors could potentially qualify for the exemption and remanded the case for further proceedings under a proper reading of the statute.

The Supreme Court vacated the Ninth Circuit's judgment and remanded the case. It held that the Ninth Circuit erred by imposing a requirement that a "salesman" must directly sell automobiles, a condition not found in the statutory text. The Court ruled that service advisors could be exempt if their duties met the statute's terms, and instructed the lower courts to interpret the exemption without adding unwarranted limitations.

Whether service advisors at automobile dealerships fall within the overtime pay exemption of Section 213(b)(10)(A) of the Fair Labor Standards Act, particularly the interpretation of the terms "salesman" and "primarily engaged in selling or servicing automobiles."

The 2016 decision signaled a broader, text-focused interpretation of FLSA exemptions, causing significant ripple effects in the automotive retail industry. It cast doubt on previous lower-court rulings denying overtime to service advisors and left the ultimate classification unresolved, leading to continued litigation. The ruling set the stage for the definitive 2018 Supreme Court decision in Encino Motorcars, LLC v. Navarro, which finally held that service advisors are exempt from overtime pay. The case also influenced the judicial approach to statutory construction in employment law.