The Second Circuit, in Munoz-Gonzalez v. D.L.C. Limousine Service, Inc., 904 F.3d 208 (2d. Cir. 2018), became the first circuit court to publish an opinion applying a “fair” rather than “narrow” reading to exemptions to the Fair Labor Standard Act’s overtime wage requirements. On that reading, the court held that “chauffeurs” employed by a “luxury car service” fell under the Act’s “taxi-cab exemption,” raising the question of whether other car services will also be held exempt from FLSA overtime requirement. The decision offers a glimpse of how other courts may apply a “fair-reading” analysis in in the wake of Supreme Court’s opinion in Encino Motorcars, LLC v. Navarro, 138 S. Ct. 1134, 1140 (2018).
Background
The FLSA, the federal wage-and-hour statute enacted in 1938, requires that employers pay specified minimum and overtime wages, 29 U.S.C. § 206, 207. Section 13 of the Act, a point of frequent litigation, exempts thirty-eight categories of employees from the Act’s overtime wage requirements. Included in section 13 is the so-called “taxicab exemption,” which applies to “any driver employed by an employer engaged in the business of operating taxicabs.” 29 U.S.C. § 213(b)(17). Prior to Munoz-Gonzalez , the Second Circuit had, like all federal courts, traditionally interpreted FLSA exemptions narrowly in light of the Act’s remedial purpose, placing the burden on employers to prove that an exemption applied. See, e.g., Dejesus v. HF Mgmt. Servs., LLC, 726 F.3d 85, 91 n.7 (2d Cir. 2013).
Munoz-Gonzalez involved claims for unpaid overtime wages by twenty former driver-employees seeking to represent a class of former employees against D.L.C. Limousine Service, Inc., a self-described “luxury car service.” 904 F.3d at 211. D.L.C. sought summary judgment in district court, arguing the
drivers fell under the taxicab exemption and had no statutory right to overtime pay. Munoz-Gonzalez v. D.L.C. Limousine Serv., Inc., No. 15-CV-9368, 2017 WL 2973980, at *3 (S.D.N.Y. July 12, 2017). The district court (Judge Oetken) granted the motion, focusing on criteria listed in the Department of Labor’s Field Operations Handbook to find the drivers exempt because they did not drive along “fixed routes” and primarily served “local needs.” Id. at *4. The drivers appealed, seeking a narrower reading from the Second Circuit.
In April 2018, while the drivers’ appeal was pending, the Supreme Court issued its decision in Encino Motorcars, LLC v. Navaro, addressing a separate exemption for employees who sell or service automobiles. That decision “reject[ed]” the “[t]he narrow-construction principle” previously employed by all lower courts, finding that reading relied “on the flawed premise that the FLSA pursues its remedial purpose at all costs.” Encino Motorcars, LLC v. Navarro, 138 S.Ct. 1134, 1142, (2018) (quotation marks omitted). Reasoning that exemptions under the FLSA are “as much a part of the FLSA’s purpose as the overtime-pay requirement,” the Supreme Court broadly stated that courts “have no license to give the exemption anything but a fair reading.” Id. This holding marked a significant change – one that, according to Justice Sotomayor’s dissent, upset “more than half a century of” Supreme Court precedent. Id. at 1148 n.7. Previously, the Court had held exemptions “are to be narrowly construed against the...
