Encino Motorcars v. Navarro

On June 20, 2016, Bancroft achieved a unanimous victory before the Supreme Court in Encino Motorcars v. Navarro.  This case concerned whether “service advisors” at automobile dealerships were entitled to mandatory overtime pay under the federal Fair Labor Standards Act (FLSA).  The FLSA exempts from the overtime rules any “salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles.”  For nearly 40 years, every court to consider the issue had found service advisors exempt because they are “salesmen … engaged in servicing automobiles.”  Yet the Ninth Circuit held in the decision below that service advisors were not eligible for the exemption because the statutory text was ambiguous and the Department of Labor had promulgated a rule holding that service advisors were not exempt.

The Supreme Court unanimously vacated and remanded the Ninth Circuit’s decision in an opinion written by Justice Kennedy.  The Court agreed with Bancroft that the Department of Labor’s position should be entitled to no deference because it departed from the agency’s prior positions without giving any consideration to the weighty reliance interests at stake.  As the Court explained, “dealerships and service advisors negotiated and structured their compensation plans” in light of an unbroken line of precedent holding that service advisors were exempt.  Yet the Department of Labor “gave almost no reasons at all” for why it was abandoning its longstanding policy in this area.  The Court thus vacated the Ninth Circuit’s decision and held that the lower courts should interpret the statute without giving “controlling weight” to DOL’s position.

Paul D. Clement argued the case for Petitioner Encino Motorcars and Jeffrey M. Harris assisted with the briefing.