Ninth Circuit: Car Dealership Service Advisors Not Exempt from FLSA

APPLIES TO

All Employers with AK, AZ, CA, GU, HI,
ID, MT, NV, OR, WA Employees

EFFECTIVE

January 9, 2017

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We previously reported on Navarro v. Encino Motorcars, LLC, wherein a group of service advisors at an auto dealership alleged that they did not receive owed overtime compensation. At that time, the Ninth Circuit decided to defer to the U.S. Department of Labor’s interpretation of the Fair Labor Standards Act (“FLSA”); the U.S. Supreme Court reversed this decision and remanded the case to the Ninth Circuit to determine how the FLSA statutes apply to auto dealership service advisors.

On January 9, 2017, the Court of Appeals for the Ninth Circuit stated that service advisors are not exempt under the FLSA.  Specifically, service advisors do not qualify for the FLSA exemption for “salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles,” because service advisors are not primarily engaged in selling or servicing cars.

This decision creates a split among circuit courts, with the Fourth and Fifth Circuit having previously stated that such service advisor roles do qualify as exempt under the FLSA.   It is unknown at this time if the U.S. Supreme Court will revisit the case to resolve the circuit court split.

Action Items

  1. Review FLSA classifications for employees in service advisor roles and revise as necessary.
  2. Communicate transition in classification to affected employees, and provide training on required wage and hour procedures, such as time reporting, meal and rest periods, and overtime compensation.
  3. Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.

© 2017 ManagEase, Incorporated.

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