Justice weigh overtime pay for auto service advisers at dealerships

Justice weigh overtime pay for auto service advisers at dealerships
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The Supreme Court grappled Wednesday with whether service advisers at car dealerships should be exempt from overtime pay under federal labor laws.

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At issue in this case is whether these employees, who greet car owners, evaluate complaints and suggest repairs and services, are exempt from earning overtime under the Fair Labor Standards Act. Encino Motorcars, a Mercedes-Benz dealership in Encino, Calif., claims they are, just like sales personnel, mechanics and employees who handle parts.

Justice Stephen Breyer wanted to know why service advisers aren’t treated like secretaries or other traditional employees.

“I mean, apparently Congress thought that the mechanics themselves were special because they go out into agricultural areas or something in the middle of the night and fix a tractor, so they work irregular hours,” he said. “But these people don't work irregular hours and they're not paid on commission.” 

Encino’s attorney, Paul Clement, said service advisers are paid at least partially in commission, which is shared with other dealership employees.

“So as a practical matter, it makes an awful lot of sense to exempt all of these people from the overtime rules,” he said. “They're all paid well. They're all paid above the minimum wage, which is – the exemption doesn't apply to anyways – and they all have a reason to work about 46 hours a week instead of 40 hours a week.”

The Ninth Circuit Court of Appeals, however, upheld a 2011 interpretation from the Department of Labor that separated service advisers from the other dealership employees.

Justice Samuel Alito wanted to know why employees who handle parts are included if service advisers aren’t.

Stephanos Bibas, arguing on behalf of the service advisers that sued Encino Motorcars, said part handlers are expressly named in the statute and serve as the mechanic’s right-hand man or woman.

But Alito wanted to know why employees who handle parts are covered when they are not engaging in any manual labor.

“You have to explain why the line is drawn between that activity and the activity of the employees who are at issue here,” he said.

Though service advisers are not repairing vehicles, Bibas said they are still an integral part of the process.