Dealerships and the New Overtime Rule: Are Your Pay Practices - - PowerPoint PPT Presentation

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Presented by: Tillman Coffey Matthew R. Simpson Phone: (404) 231-1400 Email: tcoffey@fisherphillips.com msimpson@fisherphillips.com

Dealerships and the New “Overtime Rule”: Are Your Pay Practices Compliant?

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Introduction

• The Fair Labor Standards Act (“FLSA”) governs how most

employers must pay their employees.

• Employers must also check state laws.
• Arizona, Alaska, California, Colorado, Connecticut, Hawaii, Illinois,

Kentucky, Massachusetts, Minnesota, Missouri, Montana, Nevada, New Jersey, New York, North Dakota, and Vermont

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FLSA Requirements

• Minimum wage
• Overtime premium pay of 1.5 times the regular rate for all

hours worked over 40 in a workweek

• Certain recordkeeping requirements
• Child labor restrictions

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Minimum Wage

• Federal minimum wage is $7.25 per hour for all hours worked.
• Some dealership employees may be nonexempt from

minimum wage and recordkeeping but exempt from overtime.

• Potential problems:
• Deductions for cash shortages, damage to property, uniforms, etc.
• Off the clock work
• Training

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Overtime

• Overtime premium pay of 1.5 times the regular rate for all

hours worked over 40 in a workweek.

• Regular rate includes all forms of compensation based on

quality or quantity of work performance.

• Bonuses
• Commissions
• Spiffs
• Potential problems:
• Failure to pay overtime on bonuses and commissions
• Misclassification

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Timekeeping

• Dealership must keep accurate records of all hours worked.
• This includes all time the employer knows or has reason to know

the employee worked.

• Finance managers, salespersons, parts counterpersons, service

advisors, and mechanics must all keep accurate time records.

• Potential problems:
• Missed breaks or meal periods
• Training/meetings
• Late/early/remote work

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What Are “Exemptions”?

• Exempt = not subject to one or more wage-hour requirements
• Some apply to overtime requirements, some apply to

minimum wage and overtime requirements

• Default rule: everyone is non-exempt unless the employer can

prove otherwise

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Dealership Exemptions

Minimum Wage/Overtime Overtime Only Executive Salesman Administrative Partsman Professional Mechanic Commission-Paid Motor Carrier

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“Overtime Rule” Change

• DOL increased the minimum salary requirement to satisfy the

“white collar” exemptions to $684 per week ($35,568 per year)

• Commissions and incentive bonuses may be used as a credit

for up to 10% of the minimum salary requirement

• Does not affect the exempt status of or pay requirements

for salesmen, partsmen, mechanics, commission-paid, or motor carrier employees

• Effective January 1, 2020

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Executive Exemption

• The employee is in charge of a department or sub-

department; and

• The employee supervises the work of two or more full-time

employees; and

• The employee is paid a salary of at least $684 per workweek.

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Administrative Exemption

• The employee’s primary duty is non-manual office work

directly related to management policies or general business

• perations; and
• The employee exercises discretion and independent judgment
• n matters of significance; and
• The employee is paid a salary of at least $684 per workweek.

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Professional Exemption

• The employee’s work requires advanced knowledge,

invention, imagination or talent; and

• The employee exercises discretion and independent judgment
• n matters of significance; and
• The employee is paid a salary of at least $684 per workweek.

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Salesman Exemption

• The employee is employed at an automotive dealership; and
• The employee’s primary duty is to sell cars or trucks to

customers.

• This exemption is not affected by the DOL “Overtime

Rule” change!

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Partsman Exemption

• The employee is employed at an automotive dealership; and
• The employee’s primary duty is stocking, issuing,

requisitioning, or selling parts.

• This exemption is not affected by the DOL “Overtime

Rule” change!

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Mechanic Exemption

• The employee is employed at an automotive dealership; and
• The employee’s primary duty is performing mechanical or

body repair work on a car or truck.

• This exemption is not affected by the DOL “Overtime

Rule” change!

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Commission-Paid Exemption

• The employee is employed at a “retail” establishment; and
• The employee receives the majority of compensation in the

form of “commissions;” and

• The employee receives at least time and one-half the federal

minimum wage for all hours worked.

• This exemption is not affected by the DOL “Overtime

Rule” change!

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Motor Carrier Exemption

• The employee is employed by a motor carrier; and
• The employee works on or drives a vehicle that weighs 10,000
• lbs. or more; and
• The employee performs safety-affecting duties for the

vehicle’s operation in interstate commerce.

• This exemption is not affected by the DOL “Overtime

Rule” change!

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“Overtime Rule” Change (Again)

• DOL increased the minimum salary requirement to satisfy the

“white collar” exemptions to $684 per week ($35,568 per year)

• Commissions and incentive bonuses may be used as a credit

for up to 10% of the minimum salary requirement

• Does not affect the exempt status of or pay requirements

for salesmen, partsmen, mechanics, commission-paid, or motor carrier employees

• Effective January 1, 2020

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FLSA Compliance

• U.S. Department of Labor (“DOL”) Audits and Investigations
• Employees can file complaints that initiate DOL investigations
• DOL can independently initiate investigations
• Civil Litigation
• Class and collective action lawsuits allow entire groups of employees

to join a single lawsuit

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FLSA Penalties

• Back Wages
• Liquidated (Double) Damages
• Attorneys’ Fees and Costs
• Civil Monetary Penalties

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Other Wage and Hour Issues

• Breach of contract and wage theft claims for reducing

commissionable gross profit through lots fees, packs, and

• ther charges
• Unlawful deductions for damage to customer or dealership

property

• Inaccurate timekeeping records and failure to pay minimum

wage to salespersons and technicians

• Equal pay claims for service, parts, and body shop employees

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What Should You Do?

• Wage-Hour Audits
• Pay Plan Review
• Update Employee Handbook
• Utilize Arbitration Agreements
• Manager Training

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Stay Tuned

More Human Resource offerings from GADA and Fisher Phillips on the way

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Final Questions

Presented by: Tillman Coffey Matthew R. Simpson Phone: (404) 231-1400 Email: tcoffey@fisherphillips.com msimpson@fisherphillips.com

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Thank You

Presented by: Tillman Coffey Matthew R. Simpson Phone: (404) 231-1400 Email: tcoffey@fisherphillips.com msimpson@fisherphillips.com