Conservative Justices Rule in FLSA Case

 

By:  Claudia D. Orr

 

When I saw that the US Supreme Court had ruled that service advisors at automobile dealerships were exempt employees under the Fair Labor Standards Act (“FLSA”), I have to admit I was not very excited.  That would be a narrow ruling, and I don’t represent any car dealerships.

But, there is something important in the decision – the five conservative justices of the court (Justices Thomas, Roberts, Kennedy, Alito and Gorsuch) expressly rejected the idea that the FLSA exemptions are to be narrowly construed.  This is a big change from how the FLSA has been applied by the Department of Labor. The other four justices (Justices Ginsberg, Breyer, Sotomayor, and Kagan) sharply dissented.

An exempt employee is not entitled to overtime pay and, in a few limited professions, the employee is also exempt from minimum wage requirements. The case, Encino Motorcars, LLC v Navarro, ___ S. Ct. ___ (2018), will be helpful to employers when they defend the exempt status of an employee.  This case may also provide insight into the high court’s rulings in future employment cases.

However, employers located in Michigan, Ohio, Kentucky and Tennessee are also subject to the rulings of the federal Sixth Circuit Court of Appeals which requires employers to bear a “heightened” burden of proof, more than a preponderance (or a mere tipping of the scales of justice), when proving an employee is an exempt employee. So, while the exemption itself is no longer to be narrowly construed, the burden of proof still remains high for employers in the Sixth Circuit.

Position descriptions should be reviewed every few years because duties change and positions morph. For example, a manager who was previously classified as exempt under the executive exemption may now only manage one full time employee and is no longer eligible for the exemption.  Some positions are easily assigned the status of exempt or non-exempt, but some are more difficult.  Those positions should always be reviewed with experienced employment counsel, such as the author.

This article was written by Claudia D. Orr, who is Secretary of the Board of Detroit SHRM, a member of the Legal Affairs Committee, and an experienced labor/employment attorney at the Detroit office of Plunkett Cooney (a full service law firm and resource partner of Detroit SHRM).  She can be reached at corr@plunkettcooney.com or at (313) 983-4863. For further information go to: http://www.plunkettcooney.com/people-105.html.

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article. April 2018.