In 2011, the Department of Labor (DOL) attempted to roll back a decades-long statutory overtime exemption for dealership service advisors, despite no changes in the law or factual circumstances that might justify such a change. In response, Congress attached a limitation rider to the fiscal year (FY) 2012 appropriations bill barring DOL from enforcing this change in regulation. Service advisors are exempt from the law governing overtime based on Federal court cases, DOL’s previous interpretations dating back to 1978, and Congress’ most recent action on this matter.
In 1966, Congress exempted “any salesman, partsmen, and mechanics” employed by dealerships (29 USC §213) from the Fair Labor Standards Act. At the time, DOL narrowly interpreted the statute to exclude service advisors, the front line employee-salespersons in the service department. In 1973, the Fifth Circuit rendered the first in an uncontroverted series of federal court decisions reversing DOL’s interpretation and ruling that service advisors fall within the statutory overtime exemption. In 1978, DOL issued a new opinion and enforcement language that clarified that service advisors are exempt from overtime as “salesmen.”
In 2008, DOL issued a proposed rule to formally codify the position it had held for more than 30 years, reflecting the consistent line of federal decisions on the exempt status of service advisors. But in 2011, DOL – without any advance warning – issued a notice indicating that it would not make the proposed codification and that it intended instead to reverse its position, rejecting years of administrative and judicial precedent. By doing so, DOL also would reject its 1978 opinion letter and its three-decade-old enforcement policy, forcing dealers to make potentially disruptive compensation and staffing changes.
Several recent federal court decisions, including a January 2013 U.S. District Court for the Central District of California opinion, have continued to uphold the “service advisor” exemption, and in doing so, have specifically found DOL’s 2011 reversal to be “unreasonable.”Key Points
In December 2011, Congress passed an omnibus spending bill that included a provision to prevent DOL from enforcing its 2011 rule change (Division F of P.L. 112-74). On March 21, 2013, Congress renewed the limitation until September 30, 2013.
• Congress should continue to support the long and consistent line of federal court decisions and three decades of DOL interpretations indicating that dealership service advisors are exempt from overtime rules by extending the DOL limitation rider for the remainder of FY 2013.
• Service advisors are well-paid positions, and no concerns have been raised to support rolling back the overtime exemption.
• Extending the DOL rider for the rest of fiscal year 2013 or otherwise preserving the long-standing “service advisor” exemption would be consistent with the Administration’s stated goal of simplifying and streamlining burdensome and inconsistent agency rules.
As part of the fiscal year 2013 Continuing Resolution, Congress extended the DOL limitation rider until September 30, 2013. NADA urges Congress to extend the DOL limitation rider for fiscal year 2014, or to act otherwise to preserve the “service advisor” overtime exemption.