Hunton Employment & Labor Perspectives

A single paragraph in an otherwise routine opinion could have reverberations in FLSA exemption cases for years to come.

Earlier this week, in a 5-4 decision, the Supreme Court held in Encino Motorcars LLC v. Navarro et al. that auto service advisors are exempt under the FLSA’s overtime pay requirement.  While the case resolved a circuit split for a discrete exemption, the Court’s decision has broad implications for all employers.

In examining the exemption, the Court rejected the longstanding principle that FLSA exemptions should be “narrowly construed.”  The Court stated that the narrow construction principle “relies on the flawed premise that the FLSA ‘pursues’ its remedial purpose ‘at all costs.’”

Instead, the Court held that FLSA exemptions should be given a “fair reading.”  The Court’s rationale was based on the fact that the FLSA gives no “textual indication” that exemptions should be narrowly construed.

Justice Ginsburg’s dissent noted that the majority’s decision “unsettles more than half a century of our precedent.”

The Court’s “fair reading” analysis will undoubtedly be beneficial for employers arguing for a broader interpretation of other FLSA exemptions.