Dive Brief:
- The U.S. Supreme Court dealt the NLRB a setback this week when it ruled 6-2 that the Labor Department fell short of explaining why it suddenly changed decades of policy that categorized "service advisors" at car dealerships as exempt from overtime pay, according to Forbes.
- Those specific employees, who manage car repairs for customers, were without warning granted non-exempt status (making them eligible for overtime), despite the fact that Congress exempted "car-dealer sales, parts and repair employees" from overtime. Justice Anthony Kennedy said in the majority opinion that the Labor Dept. "offered barely any explanation."
- Forbes reports that the justices returned the case back to the lower courts so they can clarify which employees the 1996 Fair Labor Standards Act meant to exempt.
Dive Insight:
John Doran, a partner at the national law firm Sherman & Howard, says that while the Court failed to address the specific issue before it, its focus on the DOL's failure to justify its serious change in policy has ramifications for the DOL, EEOC, NLRB and other agencies that seek to regulate the workplace.
"Employers will, at the very least, be afforded with an agency's meaningful rationale for making a 180-degree change in its statutory interpretation before that change takes on the force of law, and that rationale will be subject to judicial scrutiny," Doran says.
But he adds that the case has ramifications well beyond federal wage and hour law under the Fair Labor Standards Act, because it offers a "stern reminder to federal agencies" that they cannot enact a sea-change in statutory interpretation simply by delivering a new rule, particularly when an industry has relied on the old rule for decades.
But he adds that the case has ramifications well beyond federal wage and hour law under the Fair Labor Standards Act, because it offers a "stern reminder to federal agencies" that they cannot enact a sea-change in statutory interpretation simply by delivering a new rule, particularly when an industry has relied on the old rule for decades.
