The U.S. Supreme Court’s conclusion Monday that the U.S. Department of Labor failed to properly explain the reasons behind its rule that car dealership service advisers should qualify for overtime may lead courts to take a closer look at other controversial regulations proposed by the agency that veer from its previous positions, attorneys say.
The justices voted 6-2 to vacate the Ninth Circuit’s March 2015 decision that had been challenged by California car dealership Encino Motorcars LLC that service advisers — workers at car dealerships who talk with customers about the work to be done on their vehicles — should be eligible to receive overtime compensation.
On a smaller level, however, the high court’s ruling means auto dealers like Encino Motorcars were denied a conclusive answer as to whether service advisers qualify for overtime and will now be in for an uncertain period while they wait for the Ninth Circuit to rule on the issue.
During that period, auto dealers will have to conduct tricky balancing tests to determine how to pay service advisers while the issue of their overtime exemption status continues to work its way through the courts, according to Hugh F. Murray of McCarter & English LLP.
“Those that don’t pay overtime will run the risk that a court will say they should have,” he said.
Paying service advisers overtime in the short term is safer and carries less legal risk, Murray said. But he added that a particular dealer’s competitors could choose to increase their short-term profitability by not paying service advisers overtime, although that approach comes with greater legal risk.
If employers choose not to pay service advisers overtime, Murray said it would behoove them to at least make sure those employees’ overtime hours are limited, saying employers “shouldn’t want to bank on the idea that they are exempt and have that potential liability hanging out there.”