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.”


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