There is an exception to the FLSA for a "salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles" at a covered dealership. Title 29 U. S. C. §213(b)(10)(A). The DOL issued a regulation that defined “salesman” to mean “an employee who is employed for the purpose of and is primarily engaged in making sales or obtaining orders or contracts for sale of the vehicles . . . which the establishment is primarily engaged in selling” (29 CFR §779.372(c)(1)), which excluded service advisors. Several courts, rejected the DOL's exclusion. The DOL went back and forth as to whether service advisors could be exempt under 29 U. S. C. §213(b)(10)(A), finally issued a 2011 regulation switching its position again.
Because the DOL regulation is “procedurally defective”—that is, where the DOL erred by failing to follow the correct procedures in issuing the regulation and failed to provide even a minimal level of analysis, its decision is arbitrary and capricious and so cannot carry the force of law, particularly in in light of the Department’s change in position and the significant reliance interests involved. The industry had relied since 1978 on the Department’s position that service advisors are exempt from the FLSA’s overtime pay requirements, and had negotiated and structured compensation plans against this background understanding. Thus, the Supreme Court held that the law must be construed without placing controlling weight on the DOL's 2011 regulation.