In a 5–4 decision, the Supreme Court held that service advisors are exempt from the Fair Labor Standards Act (or FLSA for short) overtime pay requirement. Here’s what that means for your dealership.
Repeat after me: service advisors are salespeople. The person who helps a customer set up an appointment with an automotive technician is really no different than the person who helps a customer purchase a vehicle.
Okay, okay. You and I both know that’s not exactly true. Although it’s not a bad idea to consider their commonalities, service advisors and salespeople generally have different skill sets, face different demands, and work with different teams. However, dealerships can now rest assured that both jobs have at least one fundamental facet in common: exemption from overtime pay.
In a 5–4 decision handed down earlier this month, the Supreme Court held that service advisors are exempt from the Fair Labor Standards Act’s overtime pay requirement. The ruling, which ends a years-long legal battle and eliminates a significant pain point for dealers, centers on a surprisingly simple premise—namely, that service advisors are, well, basically salespeople. Our friends at Fisher Phillips explain:
“In today’s ruling, the Supreme Court rejected the 9th Circuit’s 2016 decision and affirmed the long-standing decisions of several other courts across the country that had determined that service advisors are exempt from the FLSA’s overtime requirements. The majority opinion, drafted by Justice Clarence Thomas, determined that services advisors fall under the exemption even though they do not personally go under the vehicle’s hood. Instead, the Court agreed that exempt status was justified because service advisors are primarily engaged in servicing automobiles vis-à-vis their sales of those services.
The Court rested its decision on the plain language of the statute, which it explained, ‘has long been understood to cover services advisors.’ The Court concluded that Congress’ inclusion of specific language in the statute meant that a salesman who primarily engages in servicing automobiles is exempt, and service advisors fall within that description.”
In other words, the same law that applies to people who sell cars and service cars also applies to anyone who sells service work on a car. That may sound like an obvious conclusion, but remember, this is automotive compliance we’re talking about: there are about three regulations bearing on every business decision, and few straightforward assumptions go unlitigated.
While this victory doesn’t change the nature of the automotive business, it does clarify one area of contention and confusion. And according to the attorneys at Fisher Phillips, its impact may be larger than the immediate return to “standard practice” at dealerships:
“The Supreme Court also handed employers across all industries a potentially significant victory by rejecting the oft-invoked principle that FLSA exemptions should be interpreted narrowly. Noting that the FLSA’s text provides no suggestion that it should be construed in such a restrictive manner, the Court announced the “narrow-construction principle relied on the flawed premise that the FLSA ‘pursues’ its remedial purposes at ‘all costs’.” Thus, the Court made clear that a court’s role in reading FLSA exemptions is not to give them a “narrow” reading but a fair one.
This rejection of the “narrow reading” of FLSA exemptions should soon affect a whole host of FLSA exemption cases. The rejection of the anti-exemption canon means that the judicial thumb should now be off the scale when employers fairly assert that employees are overtime exempt under the FLSA.”
Whatever department they work in—sales, services, sales of services—your employees are your dealership’s greatest asset. Learn what it takes to keep them happy and engaged at work (and no, it’s not all about the money).