The Building Tradesman Newspaper

Friday, May 04, 2018

Supreme Court narrows OT pay eligibility

By The Building Tradesman

By Mark Gruenberg
PAI Staff Writer

WASHINGTON (PAI)--A new Supreme Court ruling against a small group of workers – auto dealership service advisors – potentially blows a big hole in the ability of all workers nationwide to become eligible to get overtime pay, a top union attorney warns.

That’s because the April 17 opinion in Encino Motorcars v Navarro gives the Labor Department wide latitude to decide which classes of workers are ineligible to get time-and-a-half pay when they toil for more than 40 hours a week, adds Andrew Strom, associate general counsel for the Service Employees Union, writing in Harvard Law School’s On Labor blog. 

The case started several years ago at a Mercedes-Benz dealership in Encino, Calif., when the advisors – who counsel customers on what repairs their vehicles need and even occasionally make small fixes – sued for overtime pay. They worked a minimum of 55 hours weekly, from 7 am to 6 pm, Monday through Friday, and often more. 

They argued that among more than 20 occupations in auto dealership service departments, only three – “salesmen, partsmen and mechanics” – were specifically listed in the Fair Labor Standards Act as exempt from overtime pay. 

In the 5-4 ruling, the five-justice GOP-named court majority said the FLSA doesn’t cover the service advisors either. Siding with auto dealer, and the Chamber of Commerce, Justice Clarence Thomas called the advisers salesmen. That means they’re exempt from overtime. 

“Encino Motorcars will not only embolden employers in wage and hour cases," Strom said, "but the Chamber of Commerce will undoubtedly use it to argue more broadly against the liberal construction of other” laws “to make it harder for workers to prevail in court. Even for the Chamber, it isn’t easy to enact legislation, but it appears the Chamber can now get the Supreme Court to effectively rewrite existing laws.”

The 80-year-old FLSA, the basic overtime and minimum wage law, was amended in 1966 to cover most auto dealer workers. Before that it covered virtually none, the court explained. “The 9th Circuit” Court of Appeals, which had ruled for the service advisors, “also invoked the principle that exemptions to the FLSA should be construed narrowly,” Thomas said. “We reject this principle as a useful guidepost.” 

Those exemptions from overtime pay eligibility are one of the two key issues courts and the GOP-run Congress are wrestling with in the current brouhaha over who’s eligible for overtime, and who isn’t. The pay limit for which workers are automatically eligible is the other. 

Justice Ruth Bader Ginsburg, too, warned the majority could let DOL loose to exempt the other auto dealership workers. “By expansively reading the exemption to encompass all salesmen, partsmen and mechanics ‘integral to the servicing process,’ the court (majority) risks restoring what Congress intended” in 1966 “to terminate: The blanket exemption of all dealership employees from overtime pay,” she wrote. 

Strom warned of wider consequences. In 1945,1959 and 1960 the justices said that because the Fair Labor Standards Act is supposed to ensure a worker gets a fair day’s pay for a fair day’s work, exemptions from overtime should be narrow. “The five-person (court) majority reached out to do a favor for the Chamber of Commerce, changing the rules for interpreting all exemptions to the FLSA -- something that could have a big impact,” Strom warned.