Overtime Exemption for Auto Dealership 'Service Advisors' Back on the Table

Author: Michael Cardman, XpertHR Legal Editor

June 27, 2016

Auto dealership "service advisors," who are responsible for evaluating vehicles and suggesting repairs to their owners, may once again qualify for an exemption from the overtime requirements of the Fair Labor Standards Act (FLSA).

In 2011, the US Department of Labor (DOL) abandoned "its decades-old practice of treating service advisors as exempt" under the FLSA by issuing a regulation that excluded them from an FLSA overtime exemption for salesmen, partsmen or mechanics primarily engaged in selling or servicing automobiles.

On June 20, the Supreme Court ruled in Encino Motorcars, LLC v. Navarro that courts do not have to follow the DOL's regulation because it "was issued without the reasoned explanation that was required in light of the [DOL's] change in position and the significant reliance interests involved."

The Supreme Court did not decide whether the particular service advisors at issue in the case qualified for the overtime exemption; instead, it sent the case back down to the 9th Circuit Court of Appeals to reconsider its 2015 ruling that the service advisors were not overtime-exempt without regard to the 2011 regulation.

In a dissenting opinion, Justice Clarence Thomas disagreed with the Court's decision to "punt" on the issue of whether the service advisors in question were exempt. The service advisors should be exempt, and the 9th Circuit's 2015 ruling should have been reversed, he wrote.