Taking Care of HR Business
        A blog from the attorneys of Verrill

        Supreme Court to Review “Service Advisors” Entitlement to Overtime

        by Tawny L. Alvarez on January 19, 2016

        On Friday, the United States Supreme Court granted certiorari in a case where it will determine “whether ‘service advisors’ at car dealerships are exempt . . . from the FLSA’s overtime pay requirements.” Up for review is the Ninth Circuit’s decision in Encino Motorcars, LLC v. Navarro, No. 13-55323 (9th Cir. Mar. 24, 2015), in which the Ninth Circuit found that Mercedes Benz “service advisors” did not personally service automobiles and therefore were not subject to the overtime exemption. The “service advisors” instead, “meet and greet Mercedes Benz owners as they enter the service area of the dealership and then . . . evaluate the service and/or repair needs of the vehicle owner in light of complaints given them by these vehicle owners.” The plaintiff employees were paid on a commission basis only, receiving neither hourly wages or a salary.

        The FLSA overtime pay provision in question provides that overtime for employees who work over forty (40) hours in a workweek, does not apply to: “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 Ninth Circuit noted, “It is not clear from the text of the statute whether Congress intended broadly to exempt any salesman who is involved in the servicing of cars or, more narrowly, only those salesmen who are selling the cars themselves.” Instead, the court relied upon a 2011 Labor Department regulation that noted that service advisors do not fall within the exemption because they are not personally servicing automobiles. That regulation defined salesman as “an employee who is employed for the purpose of and is primarily engaged in making sales or obtaining orders or contracts for sale of the automobiles, trucks, or farm implements that the establishment is primarily engaged in selling,” while a partsman is “any employee employed for the purpose of and primarily engaged in requisitioning, stocking, and dispensing parts,” and a mechanic is defined as “any employee primarily engaged in doing mechanical work (such as get ready mechanics, automotive, truck, or farm implement mechanics, used car reconditioning mechanics, and wrecker mechanics) in the servicing of an automobile, truck or farm implement for its use and operation as such.” 29 C.F.R. § 779.372(c). In concluding that “service advisors” were not covered by this exemption, the Ninth Circuit acknowledged that the holding conflicted with rulings in “the Fourth and Fifth Circuits, several district courts, and the Supreme Court of Montana,” all of which have held that service advisors are exempt employees. Other courts have refused to defer to the Department of Labor’s “counter-textual interpretation” of the FLSA exemption which limits salesmen to only those who sell cars and not those who sell (or up sell) services.

        For our vehicle dealership clients and friends who are currently categorizing all sales associates (in both the service center and the dealership) as exempt employees, the Supreme Court’s decision to grant certiorari on this issue could potentially affect overtime requirements as to a significant portion of your service sales force. Verrill Dana’s Labor and Employment Practice Group will keep clients advised when the Court rules on this issue.

        Taking Care of HR Business

        Human resource professionals, supervisors, and company executives are constantly confronted with a changing legal landscape. Verrill’s Taking Care of HR Business blog is designed to keep you informed about the latest and most significant legal developments that affect employers.

        Key Contacts

        Subscribe

        Looking for more great content? Subscribe for regular legal updates and information delivered right to your inbox.

        Firm Highlights

        Press Releases

        97 Verrill Attorneys Recognized by Best Lawyers® 2027, Including Four Named Lawyers of the Year

        AUGUSTA, Maine, BANGOR, Maine, BOSTON, Mass., PORTLAND, Maine, and WESTPORT, Conn., (August 20, 2026) – Verrill is proud to announce that 97...
        Alerts and Newsletters

        SEC’s Proposed “Reg Crypto”: What Founders Need to Know

        Startup founders and emerging-growth companies have a number of options for raising capital under the federal securities laws, including Regulation D...
        Blog

        After 45 Years, the IRS Speaks on DCAP Nondiscrimination Testing – And It’s Good News

        Employers that provide a Dependent Care Assistance Program will be pleased to learn that for the first time in 45 years, the IRS has issued guidance...
        Media Mentions

        Robert Keach Discusses Bankruptcy Auction Strategy in Law360

        Verrill attorney Robert Keach spoke with Law360 article examining the complex bankruptcy auction process that resulted in the sale of 23 summer...
        Media Mentions

        Martha Gaythwaite Featured in Portland Press Herald Coverage of Sig Sauer Trial Victory

        Verrill attorney Martha Gaythwaite was highlighted in media coverage of a federal trial in Bangor involving firearm manufacturer Sig Sauer. As...
        Media Mentions

        Law360 Quotes Robert Keach on Senate Bill Affecting Small Business Restructurings

        Verrill attorney Robert Keach was recently quoted in a Law360 article discussing federal legislation that would permanently restore the $7.5 million...
        Alerts and Newsletters

        SAFEs and Preferred Stock – Key Deal Terms Every Founder Should Know

        SAFEs Before negotiating a term sheet for preferred stock, many early-stage companies, particularly at the seed stage, first raise capital through...
        Press Releases

        Verrill Welcomes Business Restructuring and Insolvency Attorney Nimra Tariq

        BOSTON, Massachusetts – Verrill is pleased to announce that Nimra Tariq has joined the firm’s Business Restructuring and Insolvency Group as an...
        Media Mentions

        Robert Keach Provides Commentary on First Brands Restructuring in Law360

        Verrill attorney Robert Keach was quoted in the Law360 article, "First Brands' Ch. 11 Plan Revives Angst Over Admin Claims," discussing First Brands...
        Press Releases

        Verrill Welcomes Construction Attorney Cassie Dufon

        PORTLAND, Maine – Verrill is pleased to welcome Cassie Dufon to the firm’s Construction Group as an Associate, resident in the firm’s Portland...
        Press Releases

        Verrill’s Wide-Ranging Private Wealth Law Practice Recognized in 2026 Chambers and Partners High Net Worth Guide

        BANGOR and PORTLAND, Maine and BOSTON, Mass. – Verrill attorneys Kenneth P. Brier, Anya F. Endsley, Kurt E. Klebe, Mary McQuillen, Nathaniel S....
        Blog

        Update on Status of Maine Packaging EPR

        In December 2024, Verrill published a blog post, Unwrapping Maine's Gift to the Environment: A New Packaging Stewardship Program Set to Launch in...