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SCOTUS Rules Dealer Service Advisors Ineligible for Overtime Pay

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June 21, 2016—The Supreme Court of the United States ruled 6-2 Monday that dealership service advisers are not eligible for overtime pay after vacating a 2015 ruling by the 9th U.S. Court of Appeals.

The case stems from a 2012 suit, Navarro et al v. Encino Motorcars LLC, where service advisors had sued the company alleging they deserved overtime pay. The lower courts ruled in favor of the dealership, but the ruling was overturned in the 9th U.S. Circuit Court of Appeals. The U.S. Supreme Court then reversed that decision. 

The 9th Circuit Court of Appeals made its decision saying that service advisors did not meet the exemption from overtime pay under the Fair Labor Standards Act for “any salesman, partsman or mechanic primarily engaged in selling or servicing automobiles.” 

That decision came from the Department of Labor’s final rule in 2011 interpreting the term “salesman” as an employee who sells vehicles, not repair and maintenance services. 

The U.S. Supreme Court said that since the 2011 ruling did not explain its reasoning as to why service advisors were excluded, it is appropriate to interpret service advisors as ineligible for overtime pay. 

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