Exemption issues are very tricky and very fact sensitive.  Given that, courts in different jurisdictions can come down differently on the same issue and then the US Supreme Court is called upon to resolve this difference in the federal Circuit (i.e. appellate) courts.  With the job category known as “service advisers” in auto dealers, this premise may be tested.  This is because the National Automobile Dealers Association has petitioned to the Court to decide whether these employees, who talk to dealers’ customers about vehicle repairs, are exempt.  The case is entitled Encino Motorcars LLC v. Navarro.

Auto dealership row of cars
Copyright: happyalex / 123RF Stock Photo

The theory of the petitioner in its certiorari submission is based on the statutory language of the Fair Labor Standards Act exemption for salespeople and a “solid wall of judicial authority.”  The petitioner notes that, other than the Ninth Circuit (covering western States) many other Circuit Courts of Appeal have ruled that this exemption included the service advisers.

The association in its brief urged that “the Ninth Circuit’s decision rejecting the applicability of the exemption to these well-compensated employees is an outlier, threatening to disrupt what has until now been a settled, widely accepted compensation practice in the nation’s car and truck dealerships.”  In March, the Ninth Circuit ruled that the service advisers were non-exempt because they not sell cars to people nor did they work on the cars, as to make them exempt mechanics.  Two other Circuits, the Fourth and the Fifth Circuits, would not adopt those exemption interpretations.  Thus, there was a split in the Circuits requiring resolution by the highest court.

The Association urged that “certiorari is clearly warranted to resolve the circuit split on this issue and to clarify the scope of this key exemption for the nation’s car and truck dealerships.”

The Takeaway

The only possible exemption is the administrative. That is also the hardest to prove.  It is up in the air, to me, whether the service adviser work could be argued to be connected to general business operations, that is, operations outside of the mainstream of “production” for the business.

I think the service advisers are in that main stream of production.  Even if they are performing activities directly related to general business operations, a second, more daunting obstacle remains; I question whether the employer can prevail on the “discretion and independent judgment” prong, where many of these cases go south for a defendant.