January 17, 2018
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE
Respondents, current and former service advisors for
petitioner Encino Motorcars, LLC, sued petitioner for
backpay, alleging that petitioner violated the Fair Labor
Standards Act (FLSA) by failing to pay them overtime.
Petitioner moved to dismiss, arguing that service advisors
are exempt from the FLSAs overtime-pay requirement under 29
U.S.C. §213(b)(10)(A), which applies to "any
salesman, partsman, or mechanic primarily engaged in selling
or servicing automobiles, trucks, or farm implements."
The District Court agreed and dismissed the suit. The Court
of Appeals for the Ninth Circuit reversed. It found the
statute ambiguous and the legislative history inconclusive,
and it deferred to a 2011 Department of Labor rule that
interpreted "salesman" to exclude service advisors.
This Court vacated the Ninth Circuit's judgment, holding
that courts could not defer to the procedurally defective
2011 rule, Encino Motorcars, LLC v. Navarro, 579
U.S__, __ -__ (Encino I), but not deciding
whether the exemption covers service advisors, id.,
at__. On remand, the Ninth Circuit again held that the
exemption does not include service advisors.
Because service advisors are "salesm[e]n . . . primarily
engaged in . . . servicing automobiles, " they are
exempt from the FLSAs overtime-pay requirement. Pp. 5-11.
(a) A service advisor is obviously a "salesman."
The ordinary meaning of "salesman" is someone who
sells goods or services, and service advisors "sell
[customers] services for their vehicles, " Encino I,
supra, at. P. 6.
(b) Service advisors are also "primarily engaged in . .
. servicing automobiles." "Servicing" can mean
either "the action of maintaining or repairing a motor
vehicle" or "[t]he action of providing a
service." 15 Oxford English Dictionary 39. Service
advisors satisfy both definitions because they 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[i] 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. While service
advisors do not spend most of their time physically repairing
automobiles, neither do partsmen, who the parties agree are
"primarily engaged in . . . servicing automobiles."
(c) The Ninth Circuit invoked the distributive canon-matching
"salesman" with "selling" and
"partsman [and] mechanic" with
"[servicing]"-to conclude that the exemption simply
does not apply to "salesm[e]n . . . primarily engaged in
. . . servicing automobiles." But the word "or,
" which connects all of the exemption's nouns and
gerunds, is "almost always disjunctive." United
States v. Woods, 571 U.S. 31, 45. Using "or"
to join "selling" and "servicing" thus
suggests that the exemption covers a salesman primarily
engaged in either activity.
Statutory context supports this reading. First, the
distributive canon has the most force when one-to-one
matching is present, but here, the statute would require
matching some of three nouns with one of two gerunds. Second,
the distributive canon has the most force when an ordinary,
disjunctive reading is linguistically impossible. But here,
"salesman . . . primarily engaged in . . . servicing
automobiles" is an apt description of a service advisor.
Third, a narrow distributive phrasing is an unnatural fit
here because the entire exemption bespeaks breadth, starting
with "any" and using the disjunctive "or"
three times. Pp. 7-9.
(d) The Ninth Circuit also invoked the principle that
exemptions to the FLSA should be construed narrowly. But the
Court rejects this principle as a guide to interpreting the
FLSA. Because the FLSA gives no textual indication that its
exemptions should be construed narrowly, they should be given
a fair reading. P. 9.
(e) Finally, the Ninth Circuit's reliance on two
extraneous sources to support its interpretation-the
1966-1967 Occupational Outlook Handbook and the FLSA's
legislative history-is unavailing. Pp. 9- 11.
845 F.3d 925, reversed and remanded.
THOMAS, J., delivered the opinion of the Court, in which
ROBERTS, C. J., and KENNEDY, Alito, and GORSUCH, JJ., joined.
Ginsburg, J., filed a dissenting opinion, in which BREYER,
SOTOMAYOR, and KAGAN, JJ., joined.
Fair Labor Standards Act (FLSA), 52 Stat. 1060, as amended,
29 U.S.C. §201 et seq., requires employers to
pay overtime compensation to covered employees. The FLSA
exempts from the overtime-pay requirement "any salesman,
partsman, or mechanic primarily engaged in selling or
servicing automobiles" at a covered dealership.
§213(b)(10)(A). We granted certiorari to decide whether
this exemption applies to service advisors-employees at car
dealerships who consult with customers about their servicing
needs and sell them servicing solutions. We conclude that
service advisors are exempt.
in 1938, the FLSA requires employers to pay overtime to
covered employees who work more than 40 hours in a week. 29
U.S.C. §207(a). But the FLSA exempts many categories of
employees from this requirement. See §213. Employees at
car dealerships have long been among those exempted.
initially exempted all employees at car dealer- ships from
the overtime-pay requirement. See Fair Labor Standards
Amendments of 1961, §9, 75 Stat. 73. Congress then
narrowed that exemption to cover "any salesman,
partsman, or mechanic primarily engaged in selling or
servicing automobiles, trailers, trucks, farm implements, or
aircraft." Fair Labor Standards Amendments of 1966,
§209, 80 Stat. 836. In 1974, Congress enacted the
version of the exemption at issue here. It provides that the
FLSA's overtime-pay requirement does not apply to
"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."
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 29 CFR
§779.372(c)(4) (1971)), the federal courts rejected that
view, see Brennan v. Deel Motors, Inc., 475 F.2d
1095 (CA5 1973); Brennan v. North Bros. Ford, Inc.,
76 CCH LC ¶33, 247 (ED Mich. 1975), aff'd sub
nom. Dunlop v. North Bros. Ford, Inc., 529 F.2d 524 (CA6
1976) (table). After these decisions, the Department issued
an opinion letter in 1978, explaining that service advisors
are exempt in most cases. See Dept. of Labor, Wage & Hour
Div., Opinion Letter No. 1520 (WH-467) (1978), [1978-1981
Transfer Binder] CCH Wages-Hours Administrative Rulings
¶31, 207. From 1978 to 2011, Congress made no changes to
the exemption, despite amending §213 nearly a dozen
times. The Department also continued to acquiesce in the view
that service advisors are exempt. See Dept. of Labor, Wage
& Hour Div., Field Operations Handbook, Insert No. 1757,
24L04(k) (Oct. 20, 1987), online at
https://perma.cc/5GHD-KCJJ (as last visited Mar. 28, 2018).
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 29
CFR §779.372(c)). That regulation prompted this
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, LLC v. Navarro, 579 U.S.__, __ (2016)
(Encino I) (slip op., at 2). 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 ex-plai[n] the
repair and maintenance work when customers return for their
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., 467 U.S. 837
(1984). Encino, 780 F.3d 1267, 1275 (2015).
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__ -__ (slip op., at 8-12).
Specifically, the regulation undermined significant reliance
interests in the automobile industry by changing the
treatment of service advisors without a sufficiently reasoned
explanation. Id., at__ (slip op., at 10). But we did
not decide whether, without administrative deference, the