Dealer-Specific Overtime Wage Act Exemption Added to Budget Bill

Fair Labor Standards Act exemption for dealership employees included in Virginia budget amendment

August 5, 2021

Relief from new state overtime regulations is on the way for automobile dealers thanks to a strong advocacy push by your team at the Virginia Automobile Dealers Association.

State legislators gathering this week passed a measure late last night to provide our industry — and only our industry — some key exemptions from Virginia’s new wage and hour law that went into effect a month ago.

As you are aware, that new Virginia Overtime Wage Act statute allows workers to bring state litigation for overtime claims in state court for alleged violations of federal labor law. One of the problems with the new Virginia law was that it didn’t include longstanding provisions that exist in federal law specifically exempting our mechanics, sales, service and parts personnel from having to be paid overtime.

That led to potentially higher costs for our dealers who have long been following federal wage and hour laws, and it led to the hassle of reconfiguring pay plans and employee hours.

VADA did not let it happen. Thanks to our strong lobbying efforts, tucked into the approved updated budget bill is a measure VADA fought for that specifically exempts those sales, parts, and service employees from the new state law’s overtime requirements.

You can’t understate what a major victory this is for dealers.

After the state overtime law was passed earlier this year in a hurry amid pandemic restrictions that limited public input on new bills, I along with association staff met with state elected officials to ensure our industry’s concerns were heard. We worked towards a resolution, and VADA also undertook an aggressive push to educate dealers about the new law.  Working with our partners at SESCO Management Consultants, we provided dealers with written materials and a podcast to ensure they could comply with the new law.

Other industries sought to include their exemptions, but we’re the only ones who had our exemption restored. Even though this is a big win, it’s a still temporary one that provides our industry-specific exemptions only until July 1, 2022. VADA will keep working on your behalf to make sure this change is made permanent in next year’s General Assembly so automobile dealer exemptions long enshrined in federal law are recognized by Virginia law.

For any pay provided to your sales, mechanics, parts and service personnel for work done between July 1 and the date these state law exemptions are enacted in the next week or two, your shop could still potentially be subject to an overtime pay claim under the state overtime law. VADA believes those employees fall under another overtime federal exemption for retail establishments, but that exemption required some onerous accounting work to comply. The enactment of the state budget and the provisions we fought for to clarify those sales, parts, mechanics, and service personnel are specifically exempted from the state law’s overtime requirements for the next year means dealers can return to their reliance on the longstanding federal exemptions.

We’re thankful to Governor Northam as well as to Del. Luke Torian, Del Charniele Herring, Del. Paul Krizek, Del. Mark Sickles, and the governor’s Chief of Staff Clarke Mercer for their efforts in responding to our concerns and helping move our industry forward.

Don Hall
President and CEO
Virginia Automobile Dealers Association

This episode demonstrates why it is so critical to support our Political Action Committee, so we can continue working with legislators who understand and value our industry. I invite you to give to the PAC, so we can secure more wins like this one.