A recent Supreme Court decision could save certain small businesses money.
The Supreme Court just put the hammer down on a Department of Labor overtime decision.
The nation’s highest court bulldozed through the Department of Labor’s interpretation of its overtime rule in the case Encino Motorcars, LLC v. Navarro, notching a win for business owners against the burdensome rule.
After the Department of Labor updated the Fair Labor Standards Act in 2011 to expand overtime pay to service advisers at car dealerships, workers at the Encino business sued the dealership, seeking their overtime pay.
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But in a 6-2 decision, the court ruled that the Department of Labor did not provide adequate justification for its revised interpretation of its overtime rule.
Instead of determining what the correct interpretation of the rule is, the Supreme Court simply vacated the lower court’s initial ruling and sent the case back for further evaluation. Some pundits see this decision as a compromise between the liberal and conservative justices on the court.
“The opinions bear the now-common signs of a centrist compromise,” SCOTUSblog reported. Even though the decision didn’t change the overtime rule, business advocates are applauding the court’s action.
“Federal agencies cannot whimsically flip-flop when interpreting federal law,” said Karen Harned, executive director of the NFIB Small Business Legal Center. “Small businesses build their businesses on the expectation that they can rely on long-standing regulatory practices.”
Moving forward, business owners might have more leeway with overtime pay if the lower court decides on a narrower interpretation of the rule.
“The upshot appears to be that the Labor Department and other agencies will likely need to work harder to justify changes to long-held agency interpretations,” Politico reported.
However, the court’s decision does leave room for the Department of Labor to revise its rules in the future, with a caveat.
“The court specifically acknowledged the DOL is entitled to change its mind, so long as it explains itself,” Mark Batten, a partner at Proskauer Rose in Boston, told Bloomberg BNA.
