Auto Dealer Victory: U.S. Supreme Court Rules Service Advisors Are Exempt From Overtime Pay
On April 2, 2018, the United States Supreme Court held that service advisors working at automobile dealerships are exempt from overtime pay under the Fair Labor Standards Act (the "FLSA"). The case involved a Mercedes Benz dealership in Encino, California that was sued by a service advisor for backpay, who alleged that the dealership failed to pay him overtime under the FLSA. The dealership argued that its service advisors are exempt from the FLSA under an exception, or carve-out, applying to "any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements." 29 U.S.C. 213(b)(10)(A).
Reversing the Court of Appeals for the Ninth Circuit, which found service advisors did not fall within the exemption, the Supreme Court held that "[b]ecause service advisors are 'salesmen primarily engaged in servicing automobiles,' they are exempt from the FLSA's overtime pay requirement." The dissent disagreed, writing that because service advisors "neither sell nor repair automobiles," the exemption was inapplicable. The case affects the more than 18,000 nationwide dealerships, together which are estimated to employ more than 100,000 service advisors, and is viewed as a major victory for dealers. [Encino Motorcars, LLC v. Navarro, et al., No. 16-1362].
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