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Service Advisors Ruled Not Exempt Under Fair Labor Act

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KEYWORDS Litigation
Service Advisor

March 2, 2017—Service advisors, in contrast to technicians, are not exempt under the Fair Labor Standards Act (FLSA), according to the 9th U.S. Circuit Court of Appeals.

Significantly, reports the Society for Human Resource Management, the 9th Circuit's decision stands in direct conflict with the position taken by both the 4th and 5th circuits.

Service advisors at a California Mercedes-Benz location sued the dealership in 2012 and alleged that they had been improperly characterized as exempt employees and should have been paid overtime compensation. The district court disagreed with the plaintiffs and in January 2013 dismissed the plaintiffs' overtime claims.

On appeal, the 9th Circuit in March 2015 reversed the district court's decision regarding the plaintiffs' overtime claims because prior U.S. Department of Labor (DOL) guidance and regulations issued by the DOL in 2011 supported a finding that service advisors are not covered by the exemption for mechanics and salespeople (Navarro v. Encino Motorcars LLC, 780 F.3d 1267 (9th Cir. 2015)). The dealership appealed the 9th Circuit's decision to the U.S. Supreme Court, which agreed to take the case.

Note that rulings by the 9th Circuit apply to Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington. Rulings by the 4th Circuit apply to South Carolina, North Carolina, Virginia, West Virginia and Maryland. Rulings by the 5th Circuit apply to Texas, Louisiana and Mississippi.

 

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