For nearly 35 years, automobile dealers relied on the U.S. Department of Labor’s position that service advisors fell within the Fair Labor Standards Act’s exemption from overtime for “salesmen, partsmen, or mechanics primarily engaged in selling or servicing automobiles.” In 2011, the DOL “upended” this interpretation by issuing regulations specifying that the exemption did not apply to “sales personnel” unless they sell vehicles. Thus, service advisors were deemed non-exempt.
In June 2016, in Encino Motorcars, LLC v. Navarro, No. 15-415, 2016 WL 3369424 (2016), the Supreme Court held that the 2011 regulation was not entitled to deference because it was issued without the requisite reasoned explanation for a change. The Court did not decide whether service advisors are, or are not, exempt. The U.S. Supreme Court remanded the case to the U.S. Court of Appeals for the Ninth Circuit (which had decided the case below) with instructions that the appellate court not give any deference to the DOL’s regulations. In other words, the appellate court should review the duties of the position (the sale of repair and maintenance services) and decide if the duties fell within the statutory exemption.