Client Alert — U.S. Supreme Court Sends Service Advisor Overtime Case Back to Lower Court

June 20, 2016

In April 2016, the United States Supreme Court heard an appeal from several service advisors claiming they should have been paid overtime. The question before the Court was whether the following federal statute that provides an exemption to the overtime requirement encompasses service advisors: "any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements, if he is employed by a nonmanufacturing establishment primarily engaged in the business of selling such vehicles or implements to ultimate purchasers."

The Court did not answer that question because it determined the lower courts erred when they afforded deference to a 2011 Department of Labor (DOL) regulation that service advisors did not meet the requirements to be exempt under the statute. The Court determined that, because the 2011 DOL regulation did not provide adequate reason and basis for changing DOL’s position on the issue, the lower courts erred in relying on the regulation instead of interpreting the federal statute as it reads. The Ninth Circuit Court of Appeals will now decide whether service advisors are exempt from the overtime requirement – without deferring to how DOL has interpreted the statute. Based on the Court’s decision, DOL’s position that service advisors must be paid overtime does not change.