As you have read in our blog over the years, the misclassification of employees as exempt is one of the primary claims in wage and hour litigation. Misclassification claims can arise in many forms, including the classification of a certain job in a particular industry. Mortgage loan officers anyone? Today’s post is focused on the world of car dealerships – specifically the job of service advisors.
The FLSA explicitly exempts “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles.” The primary duty for service advisors is to sell vehicle servicing work to customers. As a result, many dealerships have long treated these employees as “salesman,” exempt from the FLSA overtime provisions. The Department of Labor (DOL) and the courts had previously conflicted on this issue. The Fourth and Fifth Circuits previously held that service advisors were exempt from the overtime provisions of the FLSA. Then, in 2011, the DOL changed its (previously) long-standing enforcement position and would no longer consider service advisers exempt from overtime under the “salesman’ exemption, concluding that the exemption was limited “to salesmen who sell vehicles and partsmen and mechanics who service vehicles.”
Not a lot has happened since until March of this year. In March, in the Ninth Circuit’s decision, in Navarro et al. v. Encino Motorcars, LLC, the Court held that the dealership’s service advisors were non-exempt employees under the Fair Labor Standards Act . The Court, deferring to the DOL’s guidance, held that because the service advisors neither sold nor serviced vehicles, they were not exempt from the overtime provisions of the FLSA. This decision is in direct conflict with the prior decisions out of the Fourth and Fifth Circuits. Encino Motorcars has appealed the case to the Supreme Court to address this Circuit split and make a final determination as to whether service advisors are exempt from the FLSA overtime requirements.
In its petition to the Supreme Court, the dealership argues that the service advisors are “salesmen primarily engaged in servicing automobiles.” Additionally, the dealership argues, among other things, that the DOL’s interpretation is unreasonable, and undeserving of deference, because it “injects a glaring textual anomaly over the status of ‘partsmen,’ who the statute treats as exempt even though they are not personally involved in either selling or servicing automobiles.”
The employees’ response to the dealership’s petition is due December 4, 2015. We will continue to follow this case and keep you up-to-date on the Supreme Court’s decision.
