U.S. circuit courts split on overtime pay for service advisors
Until recently, federal courts have consistently ruled that auto service advisors are exempt from the Fair Labor Standards Act (FLSA) and therefore do not need to be paid overtime. Now a federal appeals court has ruled the opposite way and said that service advisors are not exempt from overtime requirements. An earlier decision by the U.S. Court of Appeals for the Fourth Circuit, that covers Maryland and Virginia, means that dealers there still do not need to pay overtime. But the conflicting opinion from the U.S. Court of Appeals for the Ninth Circuit throws open the question nationally.
Some background: the FLSA states that any salesman, parts man, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements is exempt if employed by a nonmanufacturing establishment primarily engaged in the business of selling such vehicles or implements to ultimate purchasers. Federal courts going back to the 1970s have interpreted this to mean that service advisors do not have to be paid overtime.
On March 24, 2015, the Ninth Circuit became the first federal appellate court to take the opposite stance. In Navarro v. Encino Motorcars, LLC, 780 F.3d 1267 (9th Cir. 2015), the court considered a 2011 Labor Department regulation that it determined upended the service advisor exemption under FLSA.
As noted above, the Ninth Circuit decision which covers California and the Western states — should not directly impact dealers in Maryland and Virginia. But when federal appellate courts are at odds, as is the case with service advisors and FLSA, there is a distinct possibility that the Supreme Court will take up the matter.
Quite obviously, dealers will be hearing more about this in the days ahead. Stay tuned.
For an analysis of this development, see the article by Baltimore labor lawyer Darren Weiss, Offit/Kurman in titled Federal court concludes auto service advisors are non-exempt employees, by clicking here.
Download Bulletin PDF