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Supreme Court Adopts Broader View of FLSA Exemptions

On April 2, 2018, U.S. Supreme Court in Encino Motorcars, LLC v. Hector Navarro, et al, 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).

In the 5-4 majority decision, the Court held, “service advisors” are employees at car dealerships who consult with customers about their servicing needs and sell them servicing solutions.  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.

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