Consumer Fraud

Supreme Court rules Labor Department must clarify whether service advisers are exempt from overtime requirements

money Supreme Court rules Labor Department must clarify whether service advisers are exempt from overtime requirements This week, the U.S. Supreme Court ruled 6-2 that the Department of Labor must better explain its interpretation of an overtime law prior to a ruling regarding which employees at auto-dealerships are exempt from overtime pay. The case, Encino Motorcars LLC v Navarro, was brought to the court’s attention by service advisers at a Mercedes-Benz dealership in Encino, Calif., attempting to earn overtime pay.

“This lack of reasoned explication for a regulation that is inconsistent with the department’s longstanding earlier position results in a rule that cannot carry the force of the law and so the regulations does not receive Chevron deference,” Justice Antony Kennedy stated while delivering the opinion of the court.

A Chevron deference means that the court must rely on a certain agency’s interpretation of a law. However, in this case, the overtime law has changed and must be better explained by the Labor Department in order to receive Chevron deference. As a result, the case has now been sent back to the lower courts to determine which employees are exempt under the 1996 Fair Labor Standards Act (FLSA).

The dealership’s current and former service advisers argued that they are not exempt from receiving overtime pay because of a new 2011 interpretation of the 1996 law saying, “any salesman, partsman or mechanic primarily engaged in selling or servicing automobiles” are exempt from the overtime compensation requirement.

In the Labor Department’s final rule, the interpretation of the term “salesman” changed to any employee who sells vehicles. The issue is that the Labor Department provided little to no explanation as to why it changed its practice of treating service advisers as exempt to the overtime compensation requirement.

Source: The Hill