## Facts

- Encino Motorcars, LLC operated a Mercedes-Benz dealership and employed “service advisors.”
- Service advisors met customers, identified service needs, recommended and sold repair and maintenance services, sold accessories or parts, prepared service orders, followed repairs, and explained completed work.
- The Fair Labor Standards Act (FLSA) generally requires overtime pay for work over 40 hours per week.
- Encino did not pay overtime to service advisors; the service advisors sued seeking unpaid overtime.
- The FLSA exempts from overtime “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles” at certain dealerships. 29 U.S.C. § 213(b)(10)(A).
- The Department of Labor historically treated service advisors as covered by the exemption, but a 2011 regulation stated they were not exempt because they did not personally service automobiles.
- The district court dismissed the overtime claims based on the exemption; the Ninth Circuit reversed, initially deferring to the 2011 regulation.
- The Supreme Court vacated and remanded in 2016 after concluding the 2011 regulation was not entitled to deference because it lacked an adequate explanation for changing longstanding policy.
- On remand, the Ninth Circuit again held service advisors were not exempt; the Supreme Court granted review.

## Issues

1. Whether automobile dealership service advisors are exempt from FLSA overtime as “salesm[e]n … primarily engaged in … servicing automobiles” under 29 U.S.C. § 213(b)(10)(A).
2. Whether FLSA exemptions should be interpreted narrowly against employers or given a fair reading.

## Decision

- The Supreme Court reversed the Ninth Circuit and remanded.
- Service advisors qualify as “salesm[e]n” because they sell services to customers.
- Service advisors are “primarily engaged in … servicing automobiles” because their sales and coordination work is integral to the vehicle servicing process, even if they do not perform repairs.
- The Court rejected the canon that FLSA exemptions must be narrowly construed, requiring instead a fair interpretation of the statutory text.

## Legal Principles

- FLSA exemptions are to be given a fair reading, not presumptively construed narrowly against employers.
- Under § 213(b)(10)(A), employees who sell services that are integral to the servicing of automobiles at a dealership can fall within “salesman … primarily engaged in … servicing automobiles,” even without performing mechanical work.
- Statutory interpretation of FLSA exemptions turns on the best reading of the text in context, not job titles or a requirement that the same employee physically perform maintenance or repair.

## Conclusion

Service advisors at qualifying automobile dealerships are exempt from FLSA overtime under 29 U.S.C. § 213(b)(10)(A) because they are salesmen primarily engaged in servicing automobiles, and courts must interpret FLSA exemptions with a fair reading rather than a narrow-construction rule.


Encino Motorcars, LLC v. Navarro, 138 S. Ct. 1134 (2018)