This morning, in a curious
decision, a divided Supreme Court rejected a 2011 FLSA regulation on a
relatively narrow overtime pay exemption at 29 U.S.C. §213(b)(10)(A) for car
dealership service advisors – those employees who meet with you when your car
is making a strange noise and sell repair services to you at an extraordinary
price. Eninco
Motorcars LLC v. Navarro, No. 15-415
(U.S. 6-20-16).
The statute covered “any salesman, parts-man,
or mechanic primarily engaged in selling or servicing automobiles” at a
covered dealership. Even though no formal regulation had ever been
enacted by the DOL on this provision, its initial 1970 interpretation at 29
C.F.R. §779.372(c) – that service
advisors (who do not sell cars or service cars) were non-exempt – was rejected by
the federal courts. In 1978, an opinion letter conceded that services advisors
could be exempt. In 1987, the W&H Field Operations Manual
stated that DOL would no longer challenge the service advisor exemptions.
In
2008 – 21 years after the statute was passed, the DOL began formal
notice-and-comment rulemaking and indicated that it would formally adopt the
judicial interpretation of § 213(b)(10)(A).
However, with almost no explanation, the regulation ultimately adopted
in 2011 took the same position as in 1970 – that service advisors were
non-exempt because they did not sell cars. 29 C.F.R. §779.372(c)(1). The Supreme Court ruled
that this 2011 regulation was not entitled to any judicial deference because the DOL
failed to explain why it was changing a long-standing interpretation upon which
numerous employers and employees had relied.
Accordingly, the case was remanded to the Court of Appeals to revisit
the case, interpreting only the statute and not the regulation. The dissent agreed that the regulation was
procedurally deficient and would have reached the final question and
interpreted the statute.
