Encino Motorcars, LLC v. Navarro
Encino Motorcars, LLC v. Navarro
Opinion
The Fair Labor Standards Act (FLSA),
I
A
Enacted in 1938, the FLSA requires employers to pay overtime to covered employees who work more than 40 hours in a week.
Congress initially exempted all employees at car dealerships from the overtime-pay requirement. See Fair Labor Standards Amendments of 1961, § 9,
This language has long been understood to cover service advisors. Although the Department of Labor initially interpreted it to exclude them, 35 Fed.Reg. 5896 (1970) (codified at
In 2011, however, the Department reversed course. It issued a rule that interpreted "salesman" to exclude service advisors. 76 Fed.Reg. 18832, 18859 (2011) (codified at
B
Petitioner Encino Motorcars, LLC, is a Mercedes-Benz dealership in California. Respondents are current and former service advisors for petitioner. Service advisors "interact with customers and sell them services for their vehicles."
Encino Motorcars,
*1139
LLC v. Navarro,
579 U.S. ----, ----,
In 2012, respondents sued petitioner for backpay. Relying on the Department's 2011 regulation, respondents alleged that petitioner had violated the FLSA by failing to pay them overtime. Petitioner moved to dismiss, arguing that service advisors are exempt under § 213(b)(10)(A). The District Court agreed with petitioner and dismissed the complaint, but the Court of Appeals for the Ninth Circuit reversed. Finding the text ambiguous and the legislative history "inconclusive," the Ninth Circuit deferred to the Department's 2011 rule under
Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc.,
We granted certiorari and vacated the Ninth Circuit's judgment. We explained that courts cannot defer to the 2011 rule because it is procedurally defective. See
Encino I,
579 U.S., at ---- - ----,
C
On remand, the Ninth Circuit again held that the exemption does not include service advisors. The Court of Appeals agreed that a service advisor is a " 'salesman' " in a "generic sense,"
The Ninth Circuit began by noting that the Department's 1966-1967 Occupational Outlook Handbook listed 12 job titles in the table of contents that could be found at a car dealership, including "automobile mechanics," "automobile parts countermen," "automobile salesmen," and "automobile service advisors."
We granted certiorari, 582 U.S. ----,
II
The FLSA exempts from its overtime-pay requirement "any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements, if he is employed by a nonmanufacturing establishment primarily engaged in the business of selling such vehicles or implements to ultimate purchasers." § 213(b)(10)(A). The parties agree that petitioner is a "nonmanufacturing establishment primarily engaged in the business of selling [automobiles] to ultimate purchasers." The parties also agree that a service advisor is not a "partsman" or "mechanic," and that a service advisor is not "primarily engaged ... in selling automobiles." The question, then, is whether service advisors are "salesm[e]n ... primarily engaged in ... servicing automobiles." We conclude that they are. Under the best reading of the text, service advisors are "salesm[e]n," and they are "primarily engaged in ... servicing automobiles." The distributive canon, the practice of construing FLSA exemptions narrowly, and the legislative history do not persuade us otherwise.
A
A service advisor is obviously a "salesman." The term "salesman" is not defined in the statute, so "we give the term its ordinary meaning."
Taniguchi v. Kan Pacific Saipan, Ltd.,
B
Service advisors are also "primarily engaged in ... servicing automobiles." § 213(b)(10)(A). The word "servicing" in this context can mean either "the action of maintaining or repairing a motor vehicle" or "[t]he action of providing a service." 15 Oxford English Dictionary, at 39; see also Random House Dictionary of the English Language, at 1304 ("to make fit for use; repair; restore to condition for service"). Service advisors satisfy both definitions. Service advisors are integral to the servicing process. They "mee[t] customers; liste[n] to their concerns about their cars; sugges [t] repair and maintenance services; sel[l] new accessories or replacement parts; recor[d] service orders; follo[w] up with customers as the services are performed (for instance, if new problems are discovered); and explai[n] the repair and maintenance work when customers return for their vehicles." Encino I, supra, at ----, 136 S.Ct., at 2122. If you ask the average customer who services his car, the primary, and perhaps only, person he is likely to identify is his service advisor.
True, service advisors do not spend most of their time physically repairing automobiles. But the statutory language is not so constrained. All agree that partsmen, for example, are "primarily engaged in ... servicing automobiles." Brief for Petitioner 40; Brief for Respondents 41-44. But partsmen, like service advisors, *1141 do not spend most of their time under the hood. Instead, they "obtain the vehicle parts ... and provide those parts to the mechanics." Encino I, supra, at ----, 136 S.Ct., at 2122 ; see also 1 Dept. of Labor, Dictionary of Occupational Titles 33 (3d ed. 1965) (defining "partsman" as someone who "[p]urchases, stores, and issues spare parts for automotive and industrial equipment"). In other words, the phrase "primarily engaged in ... servicing automobiles" must include some individuals who do not physically repair automobiles themselves but who are integrally involved in the servicing process. That description applies to partsmen and service advisors alike.
C
The Ninth Circuit concluded that service advisors are not covered because the exemption simply does not apply to "salesm[e]n ... primarily engaged in ... servicing automobiles." The Ninth Circuit invoked the distributive canon to reach this conclusion. Using that canon, it matched "salesman" with "selling" and "partsma[n] [and] mechanic" with "servicing." We reject this reasoning.
The text of the exemption covers "any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements." § 213(b)(10)(A). The exemption uses the word "or" to connect all of its nouns and gerunds, and "or" is "almost always disjunctive."
United States v. Woods,
Unsurprisingly, statutory context can overcome the ordinary, disjunctive meaning of "or." The distributive canon, for example, recognizes that sometimes "[w]here a sentence contains several antecedents and several consequents," courts should "read them distributively and apply the words to the subjects which, by context, they seem most properly to relate." 2A N. Singer & S. Singer, Sutherland Statutes and Statutory Construction § 47:26, p. 448 (rev. 7th ed. 2014).
But here, context favors the ordinary disjunctive meaning of "or" for at least three reasons. First, the distributive canon has the most force when the statute allows for one-to-one matching. But here, the distributive canon would mix and match some of three nouns-"salesman, partsman, or mechanic"-with one of two gerunds-"selling or servicing." § 213(b)(10)(A). We doubt that a legislative drafter would leave it to the reader to figure out the precise combinations. Second, the distributive canon has the most force when an ordinary, disjunctive reading is linguistically impossible. Cf.,
e.g.,
Huidekoper's Lessee v. Douglass,
D
The Ninth Circuit also invoked the principle that exemptions to the FLSA should be construed narrowly.
E
Finally, the Ninth Circuit relied on two extraneous sources to support its interpretation: the Department's 1966-1967 Occupational Outlook Handbook and the FLSA's legislative history. We find neither persuasive.
1
The Ninth Circuit first relied on the Department's 1966-1967 Occupational Outlook Handbook. It identified 12 jobs from the Handbook's table of contents that it thought could be found at automobile dealerships. See
The Ninth Circuit cited nothing, however, suggesting that the exemption was meant to align with the job titles listed in the Handbook. To the contrary, the exemption applies to "any salesman ... primarily engaged in selling or servicing automobiles." It is not limited, like the term in the Handbook, to "automobile salesmen." And the ordinary meaning of "salesman" plainly includes service advisors.
2
The Ninth Circuit also relied on legislative history to support its interpretation. See id ., at 936-939. Specifically, it noted that the legislative history discusses "automobile salesmen, partsmen, and mechanics" but never discusses service advisors. Id ., at 939. Although the Ninth Circuit had previously found that same legislative history "inconclusive,"
*1143
Encino,
The Ninth Circuit was right the first time. As we have explained, the best reading of the statute is that service advisors are exempt. Even for those Members of this Court who consider legislative history, silence in the legislative history, "no matter how 'clanging,' " cannot defeat the better reading of the text and statutory context.
Sedima, S.P.R.L. v. Imrex Co.,
* * *
In sum, we conclude that service advisors are exempt from the overtime-pay requirement of the FLSA because they are "salesm[e]n ... primarily engaged in ... servicing automobiles." § 213(b)(10)(A). Accordingly, we reverse the judgment of the Court of Appeals and remand the case for further proceedings consistent with this opinion.
It is so ordered.
Justice GINSBURG, with whom Justice BREYER, Justice SOTOMAYOR, and Justice KAGAN join, dissenting.
Diverse categories of employees staff automobile dealerships. Of employees so engaged, Congress explicitly exempted from the Fair Labor Standards Act hours requirements only three occupations: salesmen, partsmen, and mechanics. The Court today approves the exemption of a fourth occupation: automobile service advisors. In accord with the judgment of the Court of Appeals for the Ninth Circuit, I would not enlarge the exemption to include service advisors or other occupations outside Congress' enumeration.
Respondents are service advisors at a Mercedes-Benz automobile dealership in the Los Angeles area. They work regular hours, 7 a.m. to 6 p.m., at least five days per week, on the dealership premises. App. 54. Their weekly minimum is 55 hours. Maximum hours, for workers covered by the Fair Labor Standards Act (FLSA or Act), are 40 per week.
The question presented: Are service advisors exempt from receipt of overtime compensation under
I
In 1961, Congress exempted all automobile-dealership employees from the Act's overtime-pay requirements. See
*1144
Fair Labor Standards Amendments of 1961, § 9,
"Where Congress explicitly enumerates certain exceptions ..., additional exceptions are not to be implied, in the absence of evidence of a contrary legislative intent."
TRW Inc. v. Andrews,
II
Had the § 213(b)(10)(A) exemption covered "any salesman or mechanic primarily engaged in selling or servicing automobiles," there could be no argument that service advisors fit within it. Only "salesmen" primarily engaged in "selling" automobiles and "mechanics" primarily engaged in "servicing" them would fall outside the Act's coverage. Service advisors, defined as "
salesmen
primarily engaged in the
selling of services,
"
Encino Motorcars, LLC v. Navarro,
579 U.S. ----, ----,
Petitioner stakes its case on Congress' addition of the "partsman" job to the exemption. See Reply Brief 6-10. That inclusion, petitioner urges, has a vacuum effect: It draws into the exemption job categories other than the three for which Congress provided, in particular, service advisors. Because partsmen, like service advisors, neither "sell" nor "service" automobiles in the conventional sense, petitioner reasons, Congress must have intended the word "service" to mean something broader than repair and maintenance.
To begin with, petitioner's premise is flawed. Unlike service advisors, partsmen " 'get their hands dirty' by 'working as a mechanic's right-hand man or woman.' " Encino Motorcars, 579 U.S., at ----, n. 1, 136 S.Ct., at 2127, n. 1 (GINSBURG, J., concurring) (quoting Brief for Respondents in No. 15-415, p. 11; alterations omitted); see supra, at 1143 - 1144 (describing duties of partsmen). As the Solicitor General put it last time this case was before the Court, a mechanic "might be able to obtain the parts to complete a repair without the real-time assistance of a partsman by his side." Brief for United States as Amicus Curiae in No. 15-415, p. 23. But dividing the "key [repair] tasks ... between two individuals" only "reinforces" "that both the mechanic and the partsman are ... involved in repairing ('servicing') the vehicle." Ibid. Service advisors, in contrast, " sell ... services [to customers] for their vehicles," Encino Motorcars, 579 U.S., at ----, 136 S.Ct., at 2121 (emphasis added)-services that are later performed by mechanics and partsmen.
Adding partsmen to the exemption, moreover, would be an exceptionally odd way for Congress to have indicated that "servicing" should be given a meaning deviating from its ordinary usage. There is a more straightforward explanation for Congress' inclusion of partsmen alongside salesmen and mechanics: Common features of the three enumerated jobs make them unsuitable for overtime pay.
Both salesmen and mechanics work irregular hours, including nights and weekends, not uncommonly offsite, rendering time worked not easily tracked. 3 As noted in the 1966 Senate floor debate, salesmen "go out at unusual hours, trying to earn commissions." 112 Cong. Rec. 20504 *1146 (1966) (remarks of Sen. Bayh). See also ibid. (remarks of Sen. Yarborough) ("[T]he salesman ... [can] sell an Oldsmobile, a Pontiac, or a Buick all day long and all night. He is not under any overtime."). Mechanics' work may involve similar "difficult[ies] [in] keeping regular hours." Ibid. For example, mechanics may be required to "answe[r] calls in ... rural areas," ibid., or to "go out on the field where there is a harvesting of sugarbeets," id., at 20505 (remarks of Sen. Clark). 4 And, like salesmen, mechanics may be "subject to substantial seasonal variations in business." Id., at 20502 (remarks of Sen. Hruska).
Congress added "partsman" to the exemption because it believed that job, too, entailed irregular hours. See ibid. This is "especially true," several Senators emphasized, "in the farm equipment business where farmers, during planting, cultivating and harvesting seasons, may call on their dealers for parts at any time during the day or evening and on weekends." Ibid. (remarks of Sen. Bayh). See also id., at 20503 (remarks of Sen. Mansfield). In Senator Bayh's experience, for instance, a mechanic who "could not find [a] necessary part" after hours might "call the partsman, get him out of bed, and get him to come down to the store." Id., at 20504. See also id., at 20503 (remarks of Sen. Hruska) ("Are we going to say to the farmer who needs a part ... on Sunday: You cannot get a spark plug ... because the partsman is not exempt, but you can have machinery repaired by a mechanic who is exempt [?]"). Although some Senators opposed adding partsmen to the exemption because, as they understood the job's demands, partsmen did not work irregular hours, e.g., id., at 20505 (remarks of Sen. Clark), the crux of the debate underscores the exemption's rationale.
That rationale has no application here. Unlike salesmen, partsmen, and mechanics, service advisors "wor[k] ordinary, fixed schedules on-site." Brief for Respondents 47 (citing Handbook, at 316). Respondents, for instance, work
regular
11-hour shifts, at all times of the year, for a weekly minimum of 55 hours. See App. 54. Service advisors thus do not implicate the concerns underlying the § 213(b)(10)(A) exemption. Indeed, they are precisely the type of workers Congress intended the FLSA to shield "from the evil of overwork,"
Barrentine v. Arkansas-Best Freight System, Inc.,
I note, furthermore, that limiting the exemption to the three delineated jobs-salesman, partsman, and mechanic-does not leave the phrase "primarily engaged in selling or servicing," § 213(b)(10)(A), without utility. Congress included that language to ensure that only employees who actually perform the tasks commonly associated with the enumerated positions would be covered. Otherwise, for example, a worker who acts as a "salesman" in name only could lose the FLSA's protections merely because of the formal title listed on the employer's payroll records. See
Bowers v. Fred Haas Toyota World,
III
Petitioner contends that "affirming the decision below would disrupt decades of settled expectations" while exposing "employers to substantial retroactive liability." Brief for Petitioner 51. "[M]any dealerships," petitioner urges, "have offered compensation packages based primarily on sales commissions," in reliance on court decisions and agency guidance ranking service advisors as exempt. Id., at 51-52. Respondents here, for instance, are compensated on a "pure commission basis." App. 55. Awarding retroactive overtime pay to employees who were "focused on earning commissions," not "working a set number of hours," petitioner argues, would yield an "unjustified windfal[l]." Brief for Petitioner 53.
Petitioner's concerns are doubly overstated. As the Court previously acknowledged, see
Encino Motorcars,
579 U.S., at 1138, 136 S.Ct., at 2126-2127, the FLSA provides an affirmative defense that explicitly protects regulated parties from retroactive liability for actions taken in good-faith reliance on superseded agency guidance. See
Congress, moreover, has spoken directly to the treatment of commission -based workers. The FLSA exempts from its overtime directives any employee of a "retail or service establishment" who receives more than half of his or her pay on commission, so long as the employee's "regular rate of pay" is more than 1 ½ times the minimum wage. § 207(i). Thus, even without the § 213(b)(10)(A) exemption, many service advisors compensated on commission would remain ineligible for overtime remuneration. 5
In crafting the commission-pay exemption, Congress struck a deliberate balance: It exempted
higher
paid commissioned employees, perhaps in recognition of their potentially irregular hours, see
Mechmet v. Four Seasons Hotels, Ltd.,
This Court once recognized that the "particularity" of FLSA exemptions "preclude[s] their enlargement by implication."
Addison v. Holly Hill Fruit Products,
*1148
Inc.,
The exemption further extended to all employees of establishments selling "trucks" and "farm implements." Fair Labor Standards Amendments of 1961, § 9,
Service advisors do not maintain or repair motor vehicles even if, as the Court concludes, they are "integral to the servicing process."
Ante,
at 1136. The Ninth Circuit provided an apt analogy: "[A] receptionist-scheduler at a dental office fields calls from patients, matching their needs (
e.g.,
a broken tooth or jaw pain) with the appropriate provider, appointment time, and length of anticipated service. That work is integral to a patient's obtaining dental services, but we would not say that the receptionist-scheduler is 'primarily engaged in' cleaning teeth or installing crowns."
In addition to practical difficulties in calculating hours, a core purpose of overtime may not be served when employees' hours regularly fluctuate. Enacted in the midst of the Great Depression, the FLSA overtime rules encourage employers to hire more individuals who work 40-hour weeks, rather than maintaining a staff of fewer employees who consistently work longer hours. See
Overnight Motor Transp. Co. v. Missel,
Recall that the exemption extends to salesmen, mechanics, and partsmen at dealerships selling farm implements and trucks, not just automobiles. See supra, at 1144, n. 1.
The current FLSA minimum wage, for example, is $7.25 per hour. See
Congress struck a similar balance in
This Court has long held that FLSA "exemptions are to be narrowly construed against the employers seeking to assert them and their application limited to those [cases] plainly and unmistakably within their terms and spirit."
Arnold v. Ben Kanowsky, Inc.,
Reference
- Full Case Name
- ENCINO MOTORCARS, LLC, Petitioner v. Hector NAVARRO, Et Al.
- Cited By
- 418 cases
- Status
- Published