Is Your Dealership in Compliance with the Fair Labor Standards Act?
The Fair Labor Standards Act (FLSA) is the federal law that sets basic minimum wage and overtime pay standards.
The law applies to all employees of new or used auto dealerships with at least $500,000 in gross annual sales. Additionally, an individual employee who regularly engages in interstate commerce (i.e., sells vehicles to persons live, or register the vehicle, outside of Texas), is covered under the FLSA. Generally, the FLSA requires that employers pay one-and-one-half times the regular pay rate for any hours worked in excess of 40 hours per week.
There are several exceptions to the FLSA's requirements that apply to staff members that a dealership might employ, including certain sales personnel, parts employees, mechanics, or managers.
Many dealers are familiar with Section 13(a)(1), the “white collar” exemption from minimum wage and overtime rules for staff whose salary level, salary basis, and duties meet the statutory definition of bona fide executive, administrative, or professional employee. Be very careful with this, as the duties that the employee actually performs are what will determine whether the employee is exempt, not their job title.
Section 13(B)(10)(A) exempts from overtime any salesman, parts employee, or mechanic whose primary duties are selling or servicing automobiles or trucks, if s/he is employed by a nonmanufacturing establishment that is primarily engaged in the business of selling vehicles to purchasers.
TIADA recommends that dealers consult with an attorney for specific guidance on compensation compliance. This post is for informational purposes and should not be relied upon as legal advice.