Encino Motorcars v. Navarro

The Fair Labor Standards Act (FLSA) required employers to pay overtime wages for any hours worked in excess of 40 hours in a given week. The FLSA provided an exemption for “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles.” The U.S. Department of Labor (department) had long interpreted the law to qualify automobile service advisors under the exemption. The industry came to rely on this interpretation. However, in 2011, the department promulgated a regulation stating that service advisors did not qualify for the exemption. Encino Motorcars, LLC (Encino) (defendant) was a car dealership. Encino employed service advisors who worked with customers on issues they were having with their cars, suggested maintenance, and sold new parts and accessories. Encino did not pay its service advisors overtime. Navarro and other service advisors who worked for Encino (the service advisors) (plaintiffs) sued Encino in the United States District Court for the Central District of California for violating the FLSA’s overtime provision. The district court granted Encino’s motion to dismiss on the ground that the service advisors were covered under the FLSA’s exemption for automobile salesmen, partsmen, and mechanics. The United States Court of Appeals for the Ninth Circuit reversed, granting Chevron deference to the department’s 2011 regulation. The United States Supreme Court vacated the opinion on the ground the department did not provide enough reasoning for the 2011 regulation change to warrant Chevron deference. On remand, the Ninth Circuit held that even without Chevron deference, the exemption did not include the service advisors. The United States Supreme Court granted certiorari.