Limousine service does not have to pay overtime under the FLSA

The Fair Labor Standards Act requires employers to pay their employees one-and-a-half times their rate of pay if they work overtime. But the FLSA also has numerous exceptions. From time to time, the Second Circuit takes on another statutory exception. This time around, it's the taxicab exception. The Court rules that a chauffeured car service did not have to pay overtime because it qualifies as "an employer engaged in the business of operating taxicabs."

The case is Munoz-Gonzalez v. DLC Limousine Service, Inc., decided on September 19. The Second Circuit has never interpreted the taxicab exception before, so it starts with the language of the statute in determining its scope. What is a "taxicab" under the FLSA? The statute does not define it, so the Court looks to the dictionary, Webster's New International Dictionary, the unabridged second edition from 1934, issued around the time of the FLSA. (Which makes me wonder if labor lawyers should invest in the same dictionaries the courts use in interpreting statutes). That dictionary says a taxicab is “[a] passenger‐carrying vehicle, usually a motor vehicle designed to seat five or seven persons, with or without a taximeter, maintained for hire on public thoroughfares or at public stations or stands, but not operated on a schedule.”

More broadly, the FLSA exempts employees throughout the transportation industry, which was already regulated by other statutes.

Here is the problem for plaintiffs (and other employees who want their overtime). While "our Circuit has traditionally construed FLSA exemptions narrowly and against the employers asserting them," that framework changed in 2018, when the Supreme Court issued Encino Motorcars v. Navarro, which rejected that method of statutory interpretation for the first time by a 5-4 vote. So by this point in the ruling, you know the plaintiffs are going to lose this case, and they do. As the Second Circuit (Livingston, Chin and Failla [D.J.]) writes:

we conclude that there is no genuine dispute that DLC’s drivers qualify for the taxicab exemption. First, DLC’s fleet consists of chauffeured passenger vehicles, including town cars, SUVs, and luxury vans. Second, DLC’s cars are available for hire by individual members of the general public. Third, DLC’s cars take passengers wherever they want to go and “do not cover fixed routes or adhere to fixed schedules” or fixed termini. Accordingly, DLC’s drivers qualify for the taxicab exemption.

The Encino effect is trickling down to the lower federal courts, requiring judges to reevaluate how they interpret the FLSA and its exceptions. The taxicab exception under the FLSA is the victim of that framework, but it will not be the last.