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Car Dealer Allegedly Misclassified Its Service Advisers to Avoid Paying Overtime

The federal Fair Labor Standards Act (FLSA) provides multiple protections to workers in order to prevent their employers from taking advantage of them. Some of these protections include setting the federal minimum wage, defining overtime as any time spent working after eight hours a day or forty hours a week, and requiring employers to pay all their hourly workers one and one-half times their normal hourly rate for all overtime worked.

The FLSA does allow certain employees to be held exempt from the premium overtime compensation, but it is very specific about the types of employees and job responsibilities that can be considered exempt from overtime compensation.

Among the types of employees the FLSA allows to be exempted from overtime are salespeople, partsmen, and mechanics, but only as long as their main responsibilities involve selling automobiles or providing service on automobiles.

According to a recent class action lawsuit against Encino Motorcars LLC, the car dealerships allegedly misclassified its service advisors as exempt from overtime. The responsibilities of the service advisors included greeting customers and talking with them about the work their vehicles needed, while always attempting to sell the car owners additional services.

The service advisors were paid on commission based on the extra services they sold to customers. Because of the sales nature of their job, Encino argues the service advisors qualified for the overtime exemption.

The class of service advisors filed the wage and hour lawsuit against Encino back in September of 2012, alleging they were not eligible for the overtime exemption due to the fact that they did not actually sell any vehicles or perform repairs on them.

The lawsuit was initially dismissed, but the Ninth Circuit Court revived it and ruled in favor of the class of plaintiffs. The appellate court reasoned that the U.S. Department of Labor (DOL) excludes only salespeople and mechanics from receiving the premium overtime exemption, and the service advisors don’t fit into either category.

The DOL can make recommendations for labor practices, but it is not a governing body and does not create legislation. Courts can use the DOL’s standards when making a ruling, but they are not required to do so.

Encino argued that its service advisors are clearly exempt from overtime compensation under the federal FLSA, and that the Ninth Circuit Court’s ruling directly contradicted prior rulings made by the Fourth and Fifth Circuit Courts, which did not refer to the DOL when making their rulings.

Encino appealed the Ninth Circuit Court’s ruling and asked the U.S. Supreme Court to hear the case in order to provide uniformity to labor law enforcement. The workers argued against the Supreme Court hearing the case, saying the matter does not warrant national concern and that a ruling by the Supreme Court is not likely to have much effect beyond this one case. Encino countered that, if the Ninth Circuit Court’s ruling does not go overturned, it could negatively affect dealerships all over the country who will have to deal with the uncertainty of whether their courts might rule that their service advisors should be classified as exempt from overtime.

The Chicago class action attorneys at the Chicago Overtime Law Center have three decades of experience fighting to help employees who are victims of wage, overtime and tip theft by their employers. We have a team of Chicago unpaid overtime lawyers who concentrate on prosecuting state and nationwide class action lawsuits. Our attorneys work out of Chicago and Oak Brook offices and pursue claims for workers all over the Chicago area including Volo and Lindenhurst and Old Mill Creek. We protect unpaid workers who haven’t received overtime throughout the Chicago area including in DuPage, Kendall, Lake, McHenry, Kane and Cook Counties.

Our Lake Villa and Wauconda overtime lawyers are intimately familiar with the issues that arise during wage claim litigation, and we know the laws that govern overtime cases well. Many employers mis-classify employees as being exempt from overtime laws and pay workers salaries instead of hourly wages in order to avoid paying them overtime. Some employers mistakenly classify employees as exempt and others intentionally do so in order to circumvent the law. In either case, workers do not receive the wages they should, and a lawsuit may be the only way to recover their earned wages.

The Chicago Overtime Law Center is based in Chicago, and represents clients throughout the country who have unpaid overtime and other employment right claims.