NADA-Backed Court Decisions Benefit Dealers

MCLEAN, Va. (May 24, 2005) - In decisions that will benefit new car and light truck dealers, the U.S. Ninth Court of Appeals has ruled that Finance & Insurance (F&I) employees at dealerships are exempt from overtime pay under the Fair Standards Labor Act (FSLA).

The National Automobile Dealers Association (NADA) filed amicus briefs on behalf of dealers in the cases, which overturn three Oregon and Washington district court decisions.  In a nearly unprecedented move, the Department of Labor (DOL) also filed amicus briefs on the dealers' behalf.

“This decision is a major victory for dealers,” said NADA Chairman Jack Kain. “The court clearly heard our views and issued an opinion that protects dealers from hundreds of millions of dollars in potential liability.”

The Ninth Circuit opinion involved three cases, Gieg v. DRR, Inc., Wickersham v. Haselwood Buick-Pontiac Co., and Chaloupka v. SLT/TAG, Inc., which considered whether F&I managers, compensated almost entirely through commission, were exempt from the FLSA's overtime pay requirements.

The court adopted DOL's long-standing view of Section 7(i)'s application to F&I employees who have a regular rate of pay of more than 1.5 times minimum wage, earn more than 50 percent of their income from commissions, and are employed by dealerships earning 75 percent of gross revenues from retail sales.