HR Policy Association

Supreme Court Rejects Narrow Interpretation of Overtime Exemptions

Published on: April 6, 2018

Authors: D. Mark Wilson

Topics: Employment Law

A U.S. Supreme Court decision on the overtime exemption for car service advisors could have much broader implications for other occupations under the Fair Labor Standards Act.  In a 5 to 4 decision in Encino Motorcars, LLC v. Navarro, the high court explicitly rejected the longstanding legal principle that the exemptions to the FLSA should be narrowly construed.  Writing for the majority, Justice Clarence Thomas wrote: "Because the FLSA gives no 'textual indication' that its exemptions should be construed narrowly, there is no reason to give [them] anything other than a fair (rather than a 'narrow') interpretation."  The majority opinion also noted:
The narrow construction principle relies on the flawed premise that the FLSA "pursues" its remedial purpose "at all costs" . . . But the FLSA has over two dozen exemptions. . . .Those exemptions are as much a part of the FLSA's purpose as the overtime-pay requirement. . . . We thus have no license to give the exemption anything but a fair reading.
Ideally, pursuant to this ruling, employers would be able to show that their reading of a FLSA exemption is consistent with the statutory and regulatory text rather than showing that there is little or no doubt about the matter.  However, lower courts may be tempted to resist this development, while some state courts may begin to construe state-law exemptions differently from their FLSA counterparts, even when the wording of the exemptions is identical.  Nevertheless, 80 years after the enactment of the 1938 law, this decision represents significant progress in the effort to reform its arcane provisions.