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U.S. Supreme Court Rules Automobile Dealership Service Advisors Not Entitled to Overtime-Pay under FLSA

April 9, 2018

On April 2, 2018, in Encino Motorcars, LLC v. Hector Navarro, et al., the U.S. Supreme Court held that automobile dealership “service advisors” are exempt from the Fair Labor Standards Act (FLSA) overtime-pay requirement under 29 U.S.C. § 207(a), which requires that an employer pay overtime to covered employees who work more than 40 hours in a week.  The exemption at issue applies to “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements…” § 213(b)(10)(A).  Petitioner Encino Motorcars, LLC was a Mercedes-Benz dealership in California. Respondents were current and former service advisors for the petitioner.

According to the 5-4 majority decision, delivered by Justice Clarence Thomas, “service advisors” are employees at car dealerships who consult with customers about their servicing needs and sell them servicing solutions. There was no dispute in the case that “service advisors” are not partsmen or mechanics. However, the court ruled a service advisor is a “salesman,” meaning someone who sells goods or services. The court further held that “servicing automobiles” includes individuals who do not physically repair automobiles themselves but are integral to the servicing process. Therefore, the court concluded that service advisors are exempt from the overtime-pay requirement of the FLSA, because they are salesmen primarily engaged in servicing automobiles.

In reaching this decision, the Supreme Court also ruled that exemptions to the FLSA should not be construed narrowly, but rather given a “fair reading.”

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