Professional Service Agreement

DOL – "Service Writers Are Non-Exempt – Overtime Eligible"

April 12, 2011

Since the early 1970's, the automotive and dealership industry has relied on a Wage and Hour Administrator's issued Opinion Letter (1978) stating that Service Advisors and Service Writers are partially non-exempt (overtime only) as covered under the special Automotive 13(b)(10) Exemption.

As such, retail dealerships including automotive, equipment, truck, airplane and others have relied on this special exemption and have paid Service Writers on an hourly, salaried and/or commission basis without overtime for hours worked in excess of 40 hours per week. With this change, Service Writers, Service Advisors and other service salesmen will not be eligible for the special overtime exemption and thus, must be paid overtime for all hours worked in excess of 40 hours per week.

A number of commenters addressed this issue when initially proposed in 2008. The AFL-CIO was one of the commenters stating that the proposal ignored Congressional intent "to carve a narrow exemption for salesmen who worked at automobile dealerships." The union disagreed with the court decisions, stating, "Service Advisors merely coordinate between customers and the Mechanics who actually perform the services." Obviously, the AFL-CIO and other unions have significant "power" in Washington, DC.

Although Service Advisors and Service Writers are not eligible for the special automotive/dealership exemption, there are other special exemptions such as the Retail 7(i) Commission Exemption that can be applied to avoid overtime compensation.

SESCO will also update our automotive/dealership compliance manual which will be available to SESCO clients and members of state associations who have engaged SESCO for a fee of $35.00.

SESCO suggests that automotive and dealership organizations conduct a Wage-Hour audit to address this and other important developments.