9th Circuit Court: Car Dealership Service Advisers Are Not Exempt

Earlier this year, the 9th U.S. Circuit Court of Appeals ruled that service advisers at automotive dealerships, unlike salespeople and mechanics, are not exempt from overtime wages. A panel of three judges found, after extensive review of the Fair Labor Standards Act (FLSA), that Congress never intended to exempt this group of employees.

This lawsuit began in 2012 when service advisers at Encino Motorcars LLC, a California Mercedes Benz dealership, claimed their employer violated the FLSA by not paying them overtime compensation.

In January 2013, a district court dismissed the employees’ claim, a decision that was then appealed in March 2015 by the 9th Circuit, who cited Department of Labor (DOL) regulations that the only workers who sell cars are salespeople and who service cars are the mechanics.

The Supreme Court ordered the 9th Circuit to reconsider the matter without taking into account the DOL rules. The decision was then made in January of this year that the 9th Circuit’s original ruling still stands, stating that Congress never intended the FLSA to exempt service advisers from overtime pay.

“The extensive legislative record – tens of thousands of pages spanning a decade and a half – contains hardly a mention of service advisers, and the few references that exist display no concern about overtime compensation for service advisers,” the 9th Circuit’s opinion stated.

Rulings by the 9th Circuit Court apply to Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington. As a result of this case, car dealerships located in these states should pay particular attention to how their service advisers are classified.