Fixed Ops Journal - May 2016 - (Page 48)

FIXED OPS JOURNAL Service advisers and the Supreme Court? " "As a practical matter, it makes an awful lot of sense to exempt all of these people from the overtime rules." PAUL CLEMENT, dealership attorney ■ Yep. And the justices got schooled in Service Department 101 ERIC FREEDMAN I t's rare for a dealership dispute to reach the U.S. Supreme Court, and even rarer for the high court to get a lesson on how service departments operate. But that's exactly what happened when the justices confronted the case of salaried service advisers at Mercedes-Benz of Encino, near Los Angeles, who claim that federal law entitles them to overtime pay. Dealerships are complicated, Philadelphia lawyer Stephanos Bibas told the court. "There are at least 20 categories of employees in the service department. There are dozens of kinds of employees in the sales department, in parts, in used cars, in leasing." He represents the service advisers. The legal question facing the Supreme Court is straightforward: Do the overtime requirements of the Fair Labor Standards Act cover salaried service advisers, or do they fall into an exemption for "any salesman, partsman or mechanic primarily engaged in selling or servicing automobiles"? So think of the April 20 oral arguments in the case as an hourlong Service Department 101 course for the eight justices - there's one vacancy - not merely an intellectual battle over how to interpret the labor law. Lesson 1 What do service advisers do? That depends on whom you ask. As dealership lawyer Paul Clement of Washington told the court, they're "salespeople principally engaged in the servicing of automobiles. And it seems clear to me that service advisers, as their name suggests, are principally engaged in the servicing of automobiles. Roberts: Who looks at the fan belt? PAGE 48 MAY 2016 "Here's the reason that all the people on the service team - the partsmen, the mechanic and the service advisers - really need this exemption," Clement continued. "Because most customers who need service themselves work pretty regular hours, sort of 9 to 5, Monday through Friday. So the busy times are what they call the morning rush and the afternoon discharge for the day. And then also on Saturday - over 90 percent of automobile dealerships' service departments are open on Saturdays. "As a practical matter, it makes an awful lot of sense to exempt all of these people from the overtime rules. They're all paid well and they all have a reason to work, like, about 50, 46 hours a week instead of 40 hours a week," he said. But Bibas, the service advisers' attorney, offered a different take: "Service advisers don't sell cars. Nor do they service cars, which requires automotive manual labor. They merely write up paperwork. "The service adviser is a customer-facing role. He's advising the customer, not advising the mechanic. Goes up to the customer, has a clipboard, records whatever symptoms the customer says: 'It's making a squealing noise' or 'It's not driving well.' He's not going under the hood. He's not taking parts apart. He's not rendering a final diagnosis on which the work will be based. He relays that information back," Bibas said. Chief Justice John Roberts asked, "If there's a squealing sound and it might be the fan belt, you're saying he's not going to open the hood and look at the fan belt?" Bibas responded, "He's not going to be measuring the tension on the fan belt, touching the fan belt, doing any of that. That's back in the shop bay." Lesson 2 What training do service advisers get? "I have a very practical question," Justice Sonia Sotomayor told Clement, the dealership's lawyer. "Are these sales advisers specially trained in some way? Do they go to mechanic school?" Clement answered, "I haven't read anything that's directly on point. My strong suspicion, though, is that there are these kind of academies that are put together, including by the National Automobile Dealers Association. And they would get some training in some diagnostic." Sotomayor continued, "Because, to be candid with you, it scares me to think that every time I take my car to a dealer that a nonmechanic is telling me what's wrong with it." And Clement respond- Kennedy: ed, "There are real costs to Experts at the dealership if the origi- repeat trips nal diagnostic is wrong and they end up ordering the wrong part." That prompted Justice Anthony Kennedy to quip, "And some of us here are experts in having to go to auto agencies and coming back." There was laughter in the courtroom. Lesson 3 How do dealerships compensate service advisers? Asked by Justice Ruth Bader Ginsburg what percent of service advisers are on commission rather than salary, Clement said, "I don't have a specific statistical breakdown, but I'm reliably informed that it's a significant number. But there are significant numbers of individuals who are primarily compensated for salary, and they like it that way." That led Justice Stephen Breyer to wonder about the rationale for denying overtime to salaried service advisers. "Do they work regular hours?" he asked. "I take it if they work regular hours and if they aren't paid on commission, why wouldn't SEE SUPREME, PAGE 49

Table of Contents for the Digital Edition of Fixed Ops Journal - May 2016

Fixed Ops Journal - May 2016
Editor’s Letter
Service Counter
Legal Lane
Profit Builder
‘Grease monkey’?
Photo story
Richard Truett
High light
Service satisfaction
90-second oil change
Financing fixes
Supreme Court
Tech trends
Top 50
5 Minutes With
Shop Talk
Fixed in Time

Fixed Ops Journal - May 2016