9th Circuit decision: Car dealership service advisors are nonexempt employees — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
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9th Circuit decision: Car dealership service advisors are nonexempt employees

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in Human Resources,Overtime Labor Laws

The 9th Circuit Court of Appeals had ruled that so-called automobile service advisors are nonexempt under the Fair Labor Standards Act.

Recent case: Hector and several other employees worked as service advisors for Encino Motorcars, a Southern California new and used Mercedes Benz dealership.

Their job was to greet Mercedes Benz owners who brought their cars in for service, determine what kind of work the cars needed, convince owners to purchase additional services and prepare estimates based on the discussion.

The service advisors were paid strictly on commission.

Hector and his co-workers sued, alleging they should have earned an hourly wage and been eligible for overtime.

The dealership said they were exempt under a section of the Fair Labor Standards Act (FLSA) that covers “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles.”

The Department of Labor has long taken the position that service advisors are nonexempt under that provision because they don’t directly sell cars or parts, nor do they actually repair cars.

The 9th Circuit admitted that this was one of two possible interpretations, but said the Department of Labor’s interpretation was reasonable and would stand. (Navarro, et al., v. Encino Motorcars, No. 13-55323, 9th Cir., 2015)

Final note: This case may not have direct impact on your operations, but there’s still a lesson to be learned: Challenging the DOL’s interpretation of the FLSA virtually guarantees a long legal battle that will be hard to win.

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