NADA opposes OT plan for service advisers
In a shift of a long-standing policy, the U.S. Labor Department wants to make most dealership service advisers eligible for overtime pay, a move that the National Automobile Dealers Association says could increase dealerships' costs and record-keeping hassles.
For more than three decades, service advisers have been classified as sales staff, meaning that dealerships weren't required under federal law to pay overtime if the service advisers worked more than 40 hours a week.
But last year the Obama administration's Labor Department changed the policy.
In a notice published in the Federal Register, the department said it viewed service advisers as eligible for federally mandated overtime pay. This interpretation aligned with those of the AFL-CIO and other workers' rights groups.
It's unclear when or if the new policy will take effect.
A provision in the federal funding law for 2012 passed by Congress and signed by President Obama late last year blocks the Labor Department from enforcing the policy change. That law is set to expire at the end of September, but Congress is likely to extend it until it can pass another funding bill
NADA is fighting the change and has backed a legislative provision that would stave it off through September 2013. NADA estimates that about 45,000 service advisers work in the United States.
Bailey Wood, NADA's legislative director, said the Labor Department's change undoes three decades' worth of enforcement policy and at least three federal circuit court decisions that have upheld it.
The change would affect service advisers paid a flat salary or hourly wage, not those paid on commission.
Service advisers who receive at least half their pay in commission and earn 1.5 times the minimum wage can be exempt from the overtime rules.
NADA says most service advisers receive some form of commissioned pay, but it's unclear how many would be eligible for the overtime exemption.
Also, the change could be a managerial headache for dealerships, which would have to alter pay schedules and sort out who qualifies in order to comply, Wood said.
Then, there's the added expense of paying overtime, which could prompt some dealers to cut service adviser hours or staff in response, he said.
That's why NADA is backing the legislative provision to keep service advisers exempt through the 2013 fiscal year.
The provision is tucked into the labor, health and human services departments' funding bill, which was voted out of a House subcommittee in July.
The departments' funding package must go to a full committee for approval before going to the House floor, perhaps this fall or early winter.
Dealership group will adapt
Ron Stoner, group vice president of fixed operations for Lithia Motors Inc., the nation's ninth-largest dealership group, said he's watching the situation in Washington closely.
Most of his company's service advisers are paid on commission, so if the change takes effect, he said it might not have a big impact on the business.
Still, he added: "We'll adapt to what the new rule is."