You may have seen a case from the 9th Circuit Court of Appeals that service writers are not exempt from overtime requirements under the “salesman” exemption available to auto dealers. What does that mean for Virginia dealers?
The 4th Circuit that covers Virginia has taken the opposite position that the “salesman” exemption applies to service writers.
So unless the Supreme Court takes the case on a circuit split and agrees with the 9th Circuit, or the 4th Circuit CA reverses itself in a future case, dealers can continue to use that exemption for service writers in Virginia.
If a dealer wants a more solid basis, there is another provision of the wage and hour law, known as the 7(i) exemption, for employees paid commissions by retail establishments that can provide an exemption for service advisors. This exemption does not appear to be under challenge.
There are three conditions that must be met for an employee to fit under the 7(i) exemption. These are:
- the employee must be employed by a retail or service establishment, and
- the employee’s regular rate of pay must exceed one and one-half times the applicable minimum wage for every hour worked in a workweek in which overtime hours are worked, and
- more than half the employee’s total earnings in a representative period must consist of commissions.
The Department of Labor has noted that unless all three conditions are met, workers must earn overtime premium pay for all hours worked over 40 in a workweek.
While the “salesman” exemption is still the law in Virginia, dealers who wish to continue considering service advisors as exempt can consider reviewing service advisor pay plans to ensure that they fall within the 7(i) exemption.