I believe most would agree, the Department of Labor’s (DOL) interpretative guidance typically provides useful insight to employers navigating often tricky wage and hour laws. This was not the case with the DOL’s decades-old guidance regarding whether an employer was a “retail or service establishment” and could claim an overtime exemption for certain employees paid on commission under Section 7(i) of the Fair Labor Standards Act (FLSA). In its interpretative guidance, the DOL created lists of industries that were either not recognized as retail establishments, or could possibly be recognized as retail establishments. In an action that should be mostly applauded by employers, the DOL recently issued a final rule withdrawing these particularly unhelpful “industry lists” and will instead evaluate every industry according to its regulations.

Continue Reading DOL Withdraws Industry Lists from its Retail or Service Establishment Exemption Interpretative Rule

Oh the weather outside is frightful …

No, seriously, it’s actually dangerous here in Chicago. Since much of the city seems to be on lock-down today as we all try not to freeze to death, this seems like a good time to review the rules relating to employee pay during weather-related shut-downs.

For non-exempt employees,

On September 28, 2017, the U.S. Supreme Court agreed to hear a case in which the Court will be asked to decide whether the FLSA’s overtime exemption covering “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles.” The case is Encino Motorcars v. Navarro, No. 16-1362.

If this sounds like déjà

Over the summer, the U.S. Supreme Court punted on the question of whether “Service Advisers” or “Service Writers” at auto dealerships fall within the Fair Labor Standards Act’s exemption for “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles.” For those outside of the auto industry, these are the people who greet you when you pull into the service department and communicate with you about what work your car might need. Since the question of whether service advisers count as “salesmen” may not be definitively resolved for some time yet, many auto dealers find themselves looking for other overtime exemptions that may apply to these positions.

The Section 7(i) Exemption

The “white collar” exemptions for executive, administrative, and professional employees don’t fit because service advisers don’t perform the sorts of job duties that fall under those exemptions, and many of them are paid mostly on commission rather than on a salary basis. There is, however, another exemption that may apply to at least some service advisers. Section 7(i) of the FLSA creates an exemption that applies when all three of the following conditions are met:

  1. The employee must be employed by a retail or service establishment.
  2. The employee’s regular rate of pay must exceed one and one half times the minimum wage for every hour worked in a workweek in which any overtime hours are worked.
  3. More than half of the employee’s total earnings in a “representative period” must consist of “commissions.”


Continue Reading What Is The Section 7(i) Exemption And Does It Apply To Auto Dealer Service Advisers?

Yesterday, the United States Supreme Court issued its long-awaited decision in the Encino Motorcars, LLC v. Navarro case, that many hoped would resolve the issue as to whether Service Advisors at auto dealerships are exempt from the overtime provisions of the Fair Labor Standards Act (FLSA).  As we reported back in January 2016, the Supreme Court agreed to hear a petition filed by an auto dealership, Encino Motorcars, challenging a Ninth Circuit decision holding that Service Advisors were not exempt from overtime pay requirements.  Encino asked that the Court “restore uniformity” in legal precedent and hold that Service Advisors are exempt from the FLSA’s overtime pay requirements.  Auto dealers were hoping that the Supreme Court would bring certainty to this issue and follow prior decisions from the Fourth and Fifth Circuits holding that Service Advisors are salespeople exempt from overtime, instead of following the Ninth Circuit’s contrary decision.  Although the Supreme Court ultimately vacated the Ninth Circuit’s decision, the Court’s opinion leaves the issue open to further consideration.
Continue Reading The Supreme Court Shoots Down DOL Regulations, But Declines To Rule Whether Service Advisors are Exempt From Overtime Pay Requirements

Thank you to those who attended today’s webinar, “New DOL Overtime Exemption Rules – What You Really Need to Know Now.”  We hope that everyone enjoyed the presentation and learned information that will assist in getting your organization ready for compliance. A recording of the webinar is available here.

For those unable

Bloomberg BNA is reporting (subscription required) that according to a “source familiar with the situation,” the DOL’s new overtime exemption rules will take effect on December 1. The new minimum salary for exempt executive, administrative and professional employees will be $913 per week or $47,476 per year. That’s still more than double the current $455

As employers try to figure out how to cope with the coming increase in the minimum salary for the executive, administrative and professional employees, some find themselves with job classifications where the salary scale straddles the new line between exempt and non-exempt. Can employers in this situation categorize employees whose compensation falls below the line as non-exempt, while treating those with the same job title but with higher salaries as exempt?

In theory, sure. But it could get complicated.


Continue Reading Can We Have Both Exempt and Non-Exempt Employees With The Same Job Title?