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Supreme Court reverses Obama overtime rule

April 6, 2018


The National Federation of Independent Business (NFIB) commends the Supreme Court of the United States’ decision in Encino Motorcars LLC v. Navarro, which held that the U.S. Department of Labor exceeded its authority under the Fair Labor Standards Act (FLSA) when it reversed a longstanding regulatory interpretation relied upon by employers for decades.

“Small business owners rely heavily on a stable and consistent regulatory environment as they grow their businesses,” said Karen Harned, Executive Director of the NFIB Small Business Legal Center. “The Supreme Court’s decision is welcome news for small businesses who cannot afford increased overtime costs mandated by the Department of Labor, or the time and resources needed to fight costly wage and hour lawsuits.”

NFIB filed an amicus brief in this case and argued that the Supreme Court of the United States should repudiate the idea that courts automatically construe overtime exemptions against the employer and defer to agency statutory interpretations favoring employee eligibility for overtime. In a 6-2 ruling, the Supreme Court found that the Department of Labor exceeded its authority by too narrowly construing an overtime exemption in Encino Motorcars v. Navarro. In 2011, the Department of Labor issued a decision, contrary to the Department of Labor’s previous position, that “service advisors” working for an automobile dealership were nonexempt and entitled to overtime under the FLSA.

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