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Encino Motorcars v. Navarro

Facts

Petitioner Encino Motorcars, LLC, a Mercedes-Benz dealership in California, employed service advisors who interacted with customers, sold them services for their vehicles, and were integral to the servicing process. In 2012, the service advisors sued for backpay, claiming they were entitled to overtime pay under the FLSA. The District Court ruled in favor of Encino Motorcars, but the Ninth Circuit reversed, deferring to a 2011 Department of Labor regulation that excluded service advisors from the exemption.

Petitioner Encino Motorcars, LLC, is a Mercedes-Benz dealership in California. Respondents are current and former service advisors for petitioner. Service advisors 'interact with customers and sell them services for their vehicles.'

Issue

Whether automobile service advisors are exempt from the FLSA's overtime-pay requirement under 29 U.S.C. 213(b)(10)(A).

Whether this exemption applies to service advisorsemployees at car dealerships who consult with customers about their servicing needs and sell them servicing solutions.

Rule

The FLSA exempts from the overtime-pay requirement 'any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles' at a covered dealership.

The FLSA exempts from the overtime-pay requirement 'any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles' at a covered dealership.

Analysis

The Supreme Court analyzed the statutory language and determined that service advisors qualify as 'salesmen' under the FLSA because they sell services to customers. The Court emphasized that the term 'servicing' can encompass both the act of maintaining vehicles and providing services, which service advisors do by suggesting and selling repair services. The Court rejected the Ninth Circuit's interpretation that limited the exemption to those who physically repair vehicles.

Under the best reading of the text, service advisors are 'salesm[e]n,' and they are 'primarily engaged in . . . servicing automobiles.' The distributive canon, the practice of construing FLSA exemptions narrowly, and the legislative history do not persuade us otherwise.

Conclusion

The Supreme Court reversed the Ninth Circuit's decision, holding that service advisors are exempt from the FLSA's overtime requirement as they are primarily engaged in servicing automobiles.

We granted certiorari and vacated the Ninth Circuits judgment. We explained that courts cannot defer to the 2011 rule because it is procedurally defective.

Who won?

Encino Motorcars, LLC prevailed in the case because the Supreme Court found that service advisors are exempt from the FLSA's overtime requirement, aligning with the statutory interpretation that includes those engaged in servicing.

Encino Motorcars, LLC prevailed because the Supreme Court found that service advisors are exempt from the FLSA's overtime requirement.

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