Appeals court rules again that service advisors are not exempt

The 9th Circuit Court of Appeals seems hell-bent on setting legal precedent. Going again a 50-year-old law, myriads of regulatory precedent and even a number of rulings made in recent years by other courts, the 9th Circuit once again ruled that service advisors are not salesmen under existing law and are not exempt from overtime. The ruling will once again change the way that dealerships pay their service advisors, at least in the states under the court’s jurisdiction.

A group of Mercedes-Benz service advisors in 2012 sued their dealership, but a district court dismissed the claims in 2013. On appeal, the 9th Circuit reversed the lower court’s ruling, largely citing a regulation written by the Department of Labor in 2011. The case was appealed yet again to the Supreme Court, which agreed with the lower court and vacated the 9th Circuit’s decision. But rather than reconcile the 9th’s differences with other courts (notably the 4th and 5th Circuits and the Supreme Court of Montana), the high court sent the case back to the 9th for review without using the DOL’s regulations.

This time, the 9th Circuit found yet another way to reinterpret the law and rule against the dealerships. This time, the 9th said that the language in the original 1966 law indicated that Congress never intended to exempt service advisors. To prove the point, they used passages from subcommittee hearings that agreed with that position.

The case may yet again find its way to the Supreme Court, especially because major differences exist between appellate courts. Until then, dealerships in states affected by the ruling (Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington) should consult with their counsel to ensure that they are correctly compensating their employees.

(Sources: and

Let us know! Do you expect this case to reach the Supreme Court? If so, which opinion do you expect to prevail?

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