Supreme Court Rules Against Employer in Case Involving “White Collar” Overtime Exemption

March 3, 2023

By NADA Regulatory Affairs

The U.S. Supreme Court recently ruled that even employees earning more than $1,000 per day or $200,000 per year are not exempt from the federal overtime premium of one-half times their regular rate of pay if they aren't paid a sufficient salary. The decision should serve as a reminder to review dealership compliance with the federal and state wage and hour laws (state laws in this area may be different and take precedent).

One set of federal overtime exemptions applies to "white collar" employees, including executive, administrative, professional, and highly compensated employees, who meet certain job duty tests and are paid salaries of not less than $684 per week or $35,568 per year. Note that it's their actual job duties and not their titles that count toward exempt status.

The Supreme Court case involved a "highly-compensated" employee who was paid a guaranteed daily rate that was significantly higher than the federal "white collar" rule's $684 weekly salary threshold. DOL's rules require that "highly compensated" employees:

  • Customarily and regularly perform one or more of the exempt duties or responsibilities of an executive, administrative or professional employee, and
  • Be paid a total annual compensation of at least $107,432, including a salary or guarantee of at least $684 per week or $35,568 per year.

The 6-3 decision held that the DOL's overtime exemption rules didn't apply because the worker, though highly compensated, did not receive the required minimum salary.

Bottom Line: If and until DOL's rules change, dealerships who pay employees a guaranteed hourly, daily, or shift rate totaling at least $107,432, must also ensure that at least part of that compensation meet the minimum weekly or annual salary discussed above. Note that an employer that misclassifies employees as overtime exempt could be found liable for unpaid overtime premiums, liquidated damages, attorneys' fees and court costs.

For more information on the federal wage and hour laws generally, and the overtime exemptions in particular, see NADA's Driven Guide on Federal Wage and Hour, Child Labor, and Wage Discrimination Compliance. Questions may be directed