On April 2, 2018, when the Supreme Court of the United States ruled automobile dealer service advisors fall within the same general exemptions to the Fair Labor Standards Act (“FLSA”) overtime and minimum wage rules that apply to car salesman and other auto dealer employees, it also made important new law concerning how the FLSA is to be interpreted that may affect employers outside of the automobile sector. In reaching its conclusion that service advisors are exempt employees, the Court rejected a narrow reading of FLSA exemptions to overtime that had been employed by courts since the 1940s. The so-called “narrow construction” rule has been a guidepost for courts for more than half a century and served to limit expansion of the exemptions to the FLSA’s overtime and minimum wage rules. This new case signals a potential change in the ways courts will interpret the FLSA in the future and paves the way for employers to use increasingly expansive interpretations of the available exemptions. Only time will tell what happens next. It is possible a more employee-friendly Congress will amend the FLSA to foreclose the broader reading of FLSA exemptions, but it also possible that we will begin to see a less rigid application of FLSA exemptions take hold.
Savvy employer takeaways: Employers must also comply with state laws that govern exemptions from overtime and minimum wage and this ruling does not necessarily affect the standards used to interpret those laws, so savvy employers will tread carefully and make informed decisions when weighing the risks of characterizing employees as exempt when they do not fit squarely within a well-recognized exemption.