The Fair Labor Standards Act (FLSA) protects the right of most employees to receive overtime pay whenever they work more than 40 hours per week. Congress also “exempts” several types of workers from the FLSA's overtime rules. For example, in 1961 Congress decided to exempt anyone who worked for an automobile dealership. A few years later, Congress limited the exemption to only cover those employees who worked as a “salesman, partsman, or mechanic primarily engaged in selling or servicing” vehicles.
How do You Define a “Salesman”?
The U.S. Supreme Court recently agreed to consider, for the second time, a case that focuses on the definition of “salesman” as defined by the FLSA exemption. The plaintiffs in this lawsuit work as “service advisors,” who are auto dealership employees that meet with customers and serve as liaisons between them and the partsmen and maintenance workers. For instance, a service advisor may suggest a car owner purchase certain maintenance services, or follow-up during the repair process to inform the owner if any new problems are discovered with a vehicle.
In 1970 the U.S. Department of Labor, which enforces the FLSA, adopted a regulation that said service advisors were not “salesmen” for purposes of the overtime exemption. A number of federal courts rejected that interpretation, and following further congressional amendments to the FLSA, the Department said in 1978 that it would “no longer deny the overtime exemption” for service advisors.
By 2008, the Bush administration had decided to codify the principle that service advisors were exempt salesmen in a formal regulation. In 2011 the Obama administration reversed that decision and instead adopted a rule that the exemption for “salesmen” only covered employees who sell “automobiles, trucks, or farm implements.” This means that service advisors were entitled to overtime.
The plaintiffs in the present case sued their employer, a California car dealership, alleging they were wrongfully denied overtime under the 2011 regulation. The U.S. Ninth Circuit Court of Appeals, disagreeing with a trial court's earlier ruling, “deferred” to the Department’s regulation and held that service advisors were not exempt under the FLSA.
In June of 2016, the Supreme Court ordered the Ninth Circuit to reconsider the application of the FLSA exemption “without placing controlling weight on the Department's 2011 regulation.” The Court said the Department failed to provide a “reasoned explanation” for abruptly reversing its position. The agency's interpretation was therefore not entitled to deference by the courts.
After reviewing the FLSA on its own, the Ninth Circuit again held this past January that “Congress did not intend for the exemption to encompass service advisors.” Once again, the auto dealership appealed to the Supreme Court. On September 28, the justices agreed to review this latest Ninth Circuit ruling. The Supreme Court is expected to hear oral arguments and issue a decision sometime next year.
Do You Need Help With a Wage or Overtime Dispute?
If the Supreme Court sides with the auto dealership again–and there is a good a chance it will–that would be terrible news for thousands of employees in New York and throughout the country who work as service advisors. Overtime pay is an important legal right. If you believe that your employer has wrongfully denied you overtime pay or other wages and benefits and you need advice from a qualified New York employment law attorney, contact the Law Offices of Mahir S. Nisar today.