I have blogged on this topic before and I look forward with great interest as to what the ultimate decision will be. Evidently, during the oral argument before it, the US Supreme Court seemed split as to whether Service Advisers at Encino Motorcars were exempt from overtime under the Fair Labor Standards Act. The Justices seemed to be at odds with the issue of exemption for these employees. The case is entitled Encino Motorcars LLC v. Hector Navarro et al.
The Court has before it the March 2015 Ninth Circuit decision finding that the Advisers are not exempt under FLSA. The Ninth Circuit had concluded that the service advisers should not be exempt from overtime because the USDOL regulations only exempted salespeople and mechanics. The attorney for the Company argued that the service advisers were salespeople and were engaged in servicing cars. The lawyer stated that "under the plain and literal terms of the [FLSA] statutory overtime exemption, these individuals are exempt because the statute exempts any salesperson, mechanic or partsman who are primarily engaged in selling or servicing an automobile, a truck or a farm implement."
The so-called liberal justices (e.g. Ruth Bader Ginsberg and Stephen Breyer) took strong issue with the Company's lawyer, indicating their view that the service advisers were non-exempt. Justice Breyer asked "if we're only talking about those people who sell service and are not on commission, what basis is there for giving them an exception?" The attorney responded that it "would be very disruptive" to remove service advisers from the overall service team — which also includes the partsman and the mechanics.
The attorney arguing for the employees countered by contending that service advisers neither sold nor serviced cars, but, rather, only did "paperwork." The Chief Justice reacted to that, positing the example of someone bringing in a car making "a funny noise," the service adviser listening to the noise and sending it to a mechanic in the pipeline of the servicing process. Justice Breyer also was concerned that the DOL did not adequately address its shifting interpretation after decades of supporting a different interpretation.
The Takeaway
We will see what happens here. I think the argument that the Service Advisers do sell is a good one. I know, when I go in to have my car serviced, the Service Adviser is always trying to sell me more stuff and tell me what else my car needs. That is the epitome of selling.
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