Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117

The FLSA requires overtime pay for hours over 40/week but §213(b)(10)(A) exempts “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles…” employed by a retail dealer.
DOL issued a 1970 interpretive regulation defining “salesman” to mean those who sell vehicles and expressly excluded service advisors (who sell repair/maintenance services) from the exemption.
Courts and a 1978 DOL opinion letter moved DOL practice to treat service advisors as exempt; the Field Operations Handbook (1987) confirmed that position and industry relied on it.
DOL initiated rulemaking in 2008 proposing to treat service advisors as exempt, but in 2011 issued a final rule reverting to the 1970 view (service advisors not exempt) without substantial explanation.
Service advisors employed by Encino sued for unpaid overtime; district court dismissed on the ground service advisors are exempt; Ninth Circuit reversed by deferring to DOL’s 2011 rule under Chevron.
The Supreme Court granted certiorari to determine whether courts must defer to DOL’s 2011 regulation and whether the statute covers service advisors.

Issue	Navarro (employees)	Encino (dealership) / DOL	Held
Whether courts must afford Chevron deference to DOL’s 2011 regulation	DOL failed to provide reasoned explanation for reversing longstanding position; rule is arbitrary and capricious so no Chevron	The 2011 rule was a valid exercise of DOL’s regulatory authority and deserves Chevron deference	No Chevron deference: 2011 rule lacked required reasoned explanation for change given decades of reliance; vacated and remanded
Whether §213(b)(10)(A) exempts service advisors from FLSA overtime	Service advisors are not exempt; exemption covers sales of vehicles, not sale of services	Service advisors are salesmen primarily engaged in selling/servicing automobiles and thus exempt	Not decided on the merits — remanded to the Ninth Circuit to interpret the statute without placing controlling weight on the 2011 regulation

Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (establishes two-step deference framework)
United States v. Mead Corp., 533 U.S. 218 (procedural form of rulemaking affects Chevron deference)
Motor Vehicle Mfrs. Assn. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (agency must provide reasoned explanation; arbitrary and capricious standard)
FCC v. Fox Television Stations, Inc., 556 U.S. 502 (agency changing position must acknowledge change and provide reasons)
National Cable & Telecommunications Assn. v. Brand X Internet Servs., 545 U.S. 967 (unexplained inconsistency can make an interpretation arbitrary)
Bowman Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. 281 (minimal explanation requirement: path reasonably discernible)
Auer v. Robbins, 519 U.S. 452 (deference to agency interpretation of its own regulations — discussed as background)
Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158 (procedural challenges to rulemaking and deference discussion)
Barrentine v. Arkansas-Best Freight System, Inc., 450 U.S. 728 (context on FLSA’s remedial purpose)