On Friday, the United States Supreme Court agreed to resolve the current split among the Circuit Courts regarding whether “service advisors” are exempt from overtime under the 213(b)(10) exemption, an exemption applicable to any “salesman, partsman, or mechanic” who is primarily engaged in “selling or servicing automobiles.” Both the Fourth and Fifth Circuits have held service advisors are exempt as a “salesman” engaged in “servicing” automobiles. But in Navarro v. Encino Motorcars, LLC, 780 F.3d 1267 (9th Cir. Cal. 2015) the Ninth Circuit disagreed, finding the exemption inapplicable, and siding with the USDOL’s most current position. The USDOL has not been consistent on the issue, flip-flopping over the years, by first stating in 1970, in its interpretive regulations, that service advisors are not covered by the exemption, but then issuing an opinion letter in 1978 and revising its Field Operations Handbook in 1987 to state they are covered by the exemption. In 2008, the USDOL issued a Notice of Proposed Rulemaking to conform its regulations with the Fourth and Fifth Circuit Court decisions applying the exemption to service advisors, and its prior opinion letter and guidance, but in 2011, the USDOL reversed its position again, declining to make the change and explaining that it had reconsidered the issue and concluded that the exemption did not apply.
While the Navarro case is limited to the narrow question above - are dealership service advisors “salesmen” within the meaning of the exemption - because the answer turns on interpretation of USDOL regulation, and the USDOL’s inconsistent positions over the years, the Court will again be called upon to opine on the degree of deference owed to USDOL interpretations, a ruling with broader ramifications. The Court may also address the propriety of the “narrow construction” principle that some courts, including the Ninth Circuit, have applied to exemptions, which ruling would potentially have even broader impact.
The case has been assigned Supreme Court Case Number 15-415. Watch this space for further developments and broad coverage of appeals decisions impacting wage/hour law.