A recent decision by the U.S. Supreme Court may limit the number of people eligible to receive overtime pay.
In early April, the Supreme Court issued an opinion involving the Fair Labor Standards Act. The FLSA is a federal law that requires employers to pay employees time and a half for all hours worked over 40 in a week. Only employees who are exempt from the FLSA are permitted to work overtime without receiving extra pay.
Court abandons long-held interpretations of overtime rules
While the principle behind the FLSA is simple, deciding who is eligible for overtime pay can be complex. There are numerous exemptions under the FLSA, including for employees who work in managerial, administrative, and professional positions.
When an employer and employee have a dispute over whether the employee is eligible for overtime pay, courts examine the employee’s specific job duties and analyze them to determine whether or not the employee falls under one or more of the FLSA’s exemptions. For the past 50 years, courts have interpreted the exemptions narrowly, meaning that the courts have tended to find that employees are entitled to overtime in cases where the employees’ eligibility is ambiguous.
However, on April 2, 2018, the Supreme Court ignored decades of precedent and, in a 5-4 opinion, held that the FLSA should not be interpreted narrowly. Although the details of the case, Encino Motorcars, LLC v. Navarro, 138 S. Ct. 1134 (2018), are somewhat complex and involve the definition of what it means to work in sales, the Court’s opinion has widespread implications. As Justice Ruth Bader Ginsburg wrote in her dissent, “The court rejects this longstanding principle as applied to the FLSA, without even acknowledging that it unsettles more than half a century of our precedent.”
Eligible for OT?
The bottom line is that the Supreme Court’s decision could impact both individual and class-action lawsuits by employees seeking to be paid overtime, and will likely make it more difficult for some employees to successfully argue that they are entitled to overtime pay. Both employers and employees will have to re-examine the FLSA in light of this opinion, with help from an experienced employment lawyer.