Exempt or Not? Service Advisors

By Andy Volin

The Fair Labor Standards Act (“FLSA”) requires payment of a minimum hourly wage and overtime, unless an employee fits within one of many exemptions. In some parts of the United States, courts had ruled that automobile service advisors – the people at the dealership who you speak with about your car’s repair needs – were exempt. This conclusion was based on a reading of the statutory text in the FLSA, the accompanying regulations, and even Department of Labor opinion letters and its field handbook. This week, however, the Ninth Circuit, which has jurisdiction over California, Arizona, and other western states, looked at this issue for the first time and reached the opposite conclusion. Navarro v. Encino Motorcars LLC, No. 13-55323 (9th Cir. Mar. 24, 2015).

According to the Ninth Circuit, service advisors do not fit within the exemption. That court read the exemption narrowly, and limited it to automobile dealership employees who sell cars, work in parts, or work as mechanics – in effect, all the major positions other than service advisors. The Ninth Circuit reasoned that because the exemption analysis could go either way, it should respect the current judgment of the DOL, which now narrowly interprets this exemption.