U.S. Supreme Court Weighs in on Overtime for Dealership Service Advisors
The U.S. Supreme Court recently ruled that car dealership service advisors, whose jobs included selling repair and maintenance services, aren’t eligible to receive overtime. According to the Court, they’re covered by the provision in the Fair Labor Standards Act (FLSA) that exempts any salesman, parts man, or mechanic primarily engaged in selling or servicing automobiles from eligibility for overtime pay. This issue has been litigated many times over the years, including last year by the U.S. Court of Appeals for the Ninth Circuit, which reached the opposite conclusion.
The Facts of the Case
Encino Motorcars, the defendant, sold and serviced new and used Mercedes-Benz automobiles. The defendant employed the plaintiffs as “service advisors.” The dealership service advisors greeted vehicle owners as they arrived in the service area of the dealership. They listened to customers’ concerns about their vehicles, evaluated the repair and maintenance needs of the cars, suggested services to be performed, recommended other services beyond those that would remedy the customers’ concerns, wrote up estimates, and often followed up with the customers while the repair work was underway to suggest additional repairs and maintenance.
The service advisors claimed that Encino Motorcars violated the FLSA by not paying them overtime wages.
How the Appellate Court Ruled
In 2017, the U.S. Court of Appeals for the Ninth Circuit ruled that the dealership service advisors were eligible to receive overtime. It said that the phrase “primarily engaged in selling… automobiles” only includes those who are actually and primarily occupied in selling cars. In addition, the phrase “primarily engaged in… servicing automobiles” only includes those who are actually and primarily occupied in the repair and maintenance of cars. The court ruled that the job responsibilities of a service advisor weren’t included in either definition, and therefore, a service advisor should be eligible to receive overtime.
How the Supreme Court Ruled
The Supreme Court reversed the Ninth Circuit’s ruling. It stated that a service advisor is “obviously a salesman.” The term “salesman” isn’t defined in the law. The High Court added that the ordinary meaning of “salesman” is someone who sells goods or services. It concluded that service advisors do precisely that — they sell services for customers’ vehicles.
The service advisors met the “primarily engaged in… servicing automobiles” requirement in the law, according to the Court. It referenced the Oxford English dictionary, which states that the word “servicing” in this context can mean either “the action of maintaining or repairing a motor vehicle” or “the action of providing a service.”
The High Court stated that the service advisors satisfied both definitions. They were integral to the servicing process. They met customers; listened to their concerns about their cars; suggested repair and maintenance services; sold new accessories or replacement parts; recorded service orders; followed up with customers as the services were performed (for example, if problems were discovered); and explained the repairs and maintenance work when customers came back for their vehicles. (Encino Motorcars, LLC, v. Navarro, U.S. Sup. Ct., Dkt. No. 16-1362)