On Monday, April 2, 2018, the Supreme Court of the United States ruled that car dealerships do not have to pay service advisers overtime under federal law. In a 5-4 decision, the Supreme Court held that service advisors, like auto salespersons, partspersons, and mechanics, are exempt from the Fair Labor Standards Act’s overtime requirements.
The case, which reached the Supreme Court for a second time, involved a lawsuit brought by current and former service advisors from a Mercedes-Benz dealership in Encino, California, who claimed they were entitled to overtime pay under the FLSA. The dealership asserted that the service advisors were not entitled to overtime pay under 29 U.S.C. § 213(b)(10)(A), which exempts “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements.” The District Court agreed and dismissed the lawsuit.
The Court of Appeals for the Ninth Circuit reversed the District Court. It found the statute ambiguous and the legislative history inconclusive and relied on a 2011 Department of Labor rule that interpreted the term “salesman” not to include service advisors. In finding the 2011 rule defective, the Supreme Court vacated the Ninth Circuit’s decision. On remand, the Ninth Circuit again held that the service advisors were not exempt from overtime pay under the law.
Writing for the majority, Justice Clarence Thomas stated that the “ordinary meaning of ‘salesman’ plainly includes service advisors” as they “sell [customers] services for their vehicle.” Thomas further wrote that service advisors are also “primarily engaged in . . . servicing automobiles.” He added that service advisors are “integral to the servicing process” as they “mee[t] customers; liste[n] to their concerns about their cars; sugges[t] repair and maintenance services; sel[l] new accessories or replacement parts; recor[d] service orders; follo[w] up with customers as the services are performed . . . and explai[n] the repair and maintenance work when customers return for their vehicles.” Chief Justice John Roberts and Justices Anthony Kennedy, Samuel Alito, and Neil Gorsuch joined in the majority opinion.
In a dissenting opinion, Ruth Bader Ginsburg wrote that service advisors “neither sell automobiles nor service vehicles” and, therefore, should not be exempt from overtime under the FLSA. Justices Stephen Breyer, Sonia Sotomayor, and Elena Kagan joined the dissent.
This is a huge victory for car dealerships across the country that employ more than 100,000 service advisors.