Supreme Court Agrees to Reconsider Automotive Dealership Service Advisors’ Exempt Status under FLSA

The retail automotive dealerships enjoy a special exemption for overtime under Section 13(b)(10)(A) of the FLSA. DOL has taken different stands over the years, with regard to the exempt status of automobile dealership service advisors, and the like that are not specifically listed in the statute. These include finance and insurance sales, paint and body shop employees, and service advisors.

The statute provides an overtime exemption for “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements….” 29 U.S. Code § 213 (b)(10)(A).

The service advisors are regarded as the liaisons between customers and mechanics. They provide for services like estimates, arrange for loaner cars and resolve problems with repairs or delays in repairs.

The DOL through its opinion letter indicated that the service advisors are not qualified to meet the exemption under section 13(b)(10)(A), to which the Federal courts have disagreed to. [See Opinion Letters – Fair Labor Standards Act, FLSA2008-10NA, June 9, 2008][1]

However, in Navarro v. Encino Motorcars, LLC, 780 F.3d 1267 (2015), the Ninth Circuit held that the service advisors, who evaluated car repair needs and solicited supplemental repair services, were not exempt from the FLSA overtime requirements because they did not sell cars, stock parts, or perform mechanical work on cars.

This January 15th, the U.S. Supreme Court agreed to consider whether customer service workers at auto dealerships are exempt from the overtime protections in federal labor law in order to resolve the circuit court split and provide guidance on the scope of the automotive industry overtime exemption. Encino Motorcars, LLC v. Navarro, No. 15-415, 2016 U.S. LEXIS 635.

Even though the decision could limit its application to service advisors, a broad reading of the statutory exemption could propel the dealerships to extend the exemption status to other related occupations.

The exemptions under Section 13(b)(10)(A) only applies to overtime and not to the minimum wage. The dealerships would be required to maintain accurate records of hours worked to assure that minimum wages are paid until the service advisors do not fall within another FLSA exemption.





[1] See Opinion Letter






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