Not quite two years ago, the Supreme Court decided the case of Encino Motorcars, LLC v. Navarro, 138 S. Ct. 1134 (2018), a case we blogged here. The case itself involved the issue of whether service consultants at auto dealers were exempt from overtime under the FLSA. While the Supreme Court held that they were, the case had far broader implications because the Supreme Court rejected the view that the FLSA's exemptions were to be construed narrowly, but, instead, were integral parts of the statute that should be given a "fair reading." We noted at the time that this view likely undercut many of the arguments relied upon by plaintiffs' counsel and some courts regarding potentially exempt work.
A recent case from the Second Circuit reflects just how that view can in practice defeat wage and hour class claims. In Isett v. Aetna Life Insurance Co., Case No. 18-3271-cv (Jan. 14, 2020), the plaintiff was a registered nurse who worked as a nurse consultant for a health insurance carrier, responsible for reviewing appeals regarding health benefit claims. She sought to assert claims on behalf of a class of similarly situated nurses, contending that she was misclassified as exempt and entitled to overtime.
One interesting facet of the case was that it focused primarily on the FLSA's professional exemption, which isn't often the topic of class litigation. A related issue is that there is little dispute that registered nurses typically are exempt as professionals, 29 C.F.R. § 541.301(a). What the plaintiff was claiming was that the job she and others like her performed itself was not exempt. As the court put it, "we address the applicability of the FLSA's professional exemption to an employee who acts in a manner consistent with the central characteristics of the profession at issue but does so outside of that profession's traditional employment setting."
Applying the principles from the Navarro case, the Second Circuit, in a carefully reasoned opinion, concluded that she was, indeed, performing exempt work. Essentially, while the plaintiff was not actually treating patients, she was in fact using her education and nursing skills to review medical records and claims. She worked from home with minimal oversight. Although claim denials required further physician involvement, she could approve claims without further review.
The Isett case is a strong indicator that the admonition in Navarro that the FLSA's exemptions were to be construed narrowly is taking hold. Whether in collective action litigation or otherwise, employers will now have a less uneven playing field in establishing statutory exemptions.
The bottom line: The Supreme Court's instructions in Navarro that courts should construe the FLSA exceptions neutrally are making a difference in collective actions regarding claimed misclassification.
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