April 24, 2018—Early in April, the Supreme Court ruled that service advisors at dealerships are exempt from federal overtime compensation requirements. In many news releases and summaries of the ruling, it was unclear if independent repair shops would also be impacted by the ruling.
Jeffrey Brecher, principal at the Jackson Lewis office in Melville, N.Y., and head of its wage and hour practice group, says that this specific Supreme Court case exclusively targets dealerships, and independent repair shops are not subject to the ruling.
Section 213(b)(10)(A) of the ruling states that service advisors are exempt from overtime payments, if they are employed by an establishment that’s primarily engaged in the business of selling vehicles to customers.
“We refer to it sometimes as the automobile dealership exemption, because it only applies to dealerships that are engaged to selling vehicles,” Brecher says.
In regards to service advisors and overtime issues, Brecher says there is one exemption repair shop owners should be aware of, and that’s Section 7i of the Fair Labor Standards Act“Under that section, if you work for a retail or service establishment, and you earn at least 1.5 times minimum wage, and you earn at least 50 percent of your compensation in the form of commissions, you could be exempt from receiving specific overtime,” Brecher says.
Since this specific law, and many laws relating to overtime can differ by state, Brecher also says that repair shops should look to see whether their state law adopts section 7i.
“The Federal Law establishes the floor with respect to compliance,” Brecher says. “The state can, in most instances, provide laws with greater protection with respect to the minimum wage or overtime.”
To find out whether your shop is affected by these specific state laws, check with a local attorney or HR professional.
