Encino Motorcars, LLC v. Navarro

136 S.Ct. 2117 (2016)


The Fair Labor Standards Act (FLSA) was enacted in 1938 to protect all covered workers from substandard wages and oppressive working hours. FLSA requires employers to pay overtime compensation to covered employees who work more than 40 hours in a given week. The rate of overtime pay must be “not less than one and one-half times the regular rate” of the employee’s pay. Automobile dealerships not only sell vehicles but also sell repair and maintenance services. Service advisors interact with customers and sell them services for their vehicles. A service  advisor’s duties may include meeting customers; listening to their concerns about their cars; suggesting repair and maintenance services; selling new accessories or replacement parts; recording service orders; following up with customers as the services are performed (for instance, if new problems are discovered); and explaining the repair and maintenance work when customers return for their vehicles. Encino (D) is a Mercedes-Benz automobile dealership, and Navarro (Ps) are or were employed by D as service advisors. They assert that D required them to be at work from 7 a.m. to 6 p.m. at least five days per week and to be available for work matters during breaks and while on vacation. Ps were not paid a fixed salary or an hourly wage for their work; instead, they were paid commissions on the services they sold. Ps sued D alleging a violation of the FLSA. D moved to dismiss, arguing that the FLSA overtime provisions do not apply to respondents because service advisors are covered by the statutory exemption in §213(b)(10)(A). The Court granted D's motion to dismiss. The Court of Appeals reversed in relevant part. It held that service advisors are not covered by the §213(b)(10)(A) exemption based on the Department's 2011 regulation and by applying Chevron deference to that regulation. The Supreme Court granted certiorari.