Last year in its Encino Motorcars decision, the U.S. Supreme Court rejected the Ninth Circuit Court of Appeals’ reliance on a Department of Labor (DOL) interpretation finding that automobile dealership service advisors do not fall under the industry exemption from the overtime provisions of the Fair Labor Standards Act. The Supreme Court directed the Ninth Circuit to interpret the statutory exemption on its own, without special deference to DOL’s opinion on the issue.
Last Monday, the Ninth Circuit reaffirmed its view that service advisors fall outside the dealership exemption. In Navarro v. Encino Motorcars, the court analyzed the industry exemption, which was last amended by Congress in 1974. Ignoring DOL’s frequent reversals on service advisors’ exempt status under this law, the Ninth Circuit used a plain language reading of the law to conclude that its scope excludes service advisors.
Service advisors meet with customers to determine repair and servicing needs, provide cost estimates, and act as a liaison between the customer and the mechanics who perform the service work. The Ninth Circuit said that this job does not involve automobile sales, and therefore does not qualify for the sales exemption. Service advisors were never discussed by Congress when the exemption was implemented, and the law’s legislative history does not support the dealership’s expansive reading.
This decision squarely contradicts the conclusions of the Fourth And Fifth Circuits that service advisors fall under the industry exemption. Unless the Supreme Court again decides to review this issue, the ability of automobile dealerships to claim the industry exemption depends on where they are located.