Overtime Exemptions Redefined

For decades it has been a given that exemptions from the overtime provisions of the Fair Labor Standards Act were to be narrowly construed in order to maximize the protection granted by the law. There are about two dozen overtime exemptions under that law. Frequently, exemptions under the FLSA are interpreted by the US DOL either by regulations or interpretive bulletins issued to field enforcement offices.

In April 2018 a long and torturous litigation over the applicability of the overtime exemption to service advisors in car dealerships was finally resolved by the US Supreme Court. This was the second time the US Supreme Court was involved in this case.

Less important than the actual ruling on service advisors – the court declared them exempt from overtime – is the Court's ruling on the future interpretation of the Fair Labor Standards Act overtime exemptions. It ruled that there was no basis in the law itself to narrowly construe exemptions. Exemptions from overtime are to be granted the same legal status as the law itself since there was no indication in the law that the exemptions should be narrowly construed.

WHY THIS IS IMPORTANT… This ruling from the highest court in the land overturns about 80 years of case law on the subject of FLSA overtime exemptions. Because many state laws refer to the FLSA for exemptions and other items, this ruling will also indirectly affect interpretation of state law on overtime exemptions. To the extent any state's law relies on the federal law's language on who is exempt from overtime, this new ruling potentially revises the definition of exemption under state law as well as the federal law. Employers should stay aware of developments on this subject because this new ruling means there will be developments.