Does the FLSA Apply to Auto Dealership Employees?
Yes. The Fair Labor Standards Act (FLSA) applies to most auto dealership employees, though certain roles—like salespeople, mechanics, and service writers—may be exempt from overtime pay depending on their job duties.
FLSA Coverage Requirements for Auto Dealerships
There are two types of coverage for automobile dealerships and their employees under the FLSA:
- Enterprise coverage applies to all employees of new or used automobile dealerships with at least $500,000 per year in gross sales. If enterprise coverage exists, then FLSA protections apply to all employees—unless they qualify for an exemption.
- Individual coverage applies to any employee whose work regularly involves interstate commerce, even if the employer’s annual sales are below $500,000.
Common FLSA Exemptions at Auto Dealerships
Most basic hourly positions at auto dealerships are covered by the FLSA, but there are key exceptions. One dealership-specific exemption covers salespeople, partsmen, and mechanics. This exemption applies only to overtime pay—not minimum wage.
Dealership employees may be exempt from overtime pay if they fall into one of the following categories:
- Salespeople: Spend over 50% of their time making sales or obtaining contracts for vehicle sales. Incidental duties like collections or deliveries count toward this threshold.
- Partsmen: Spend more than 50% of their time requisitioning, stocking, or dispensing auto parts.
- Mechanics: Spend over 50% of their time doing mechanical repair work (not including washing, painting, tire changing, etc.).
This exemption does not apply to minimum wage obligations.
Additional FLSA Exemptions That May Apply
Commission-Based Employees: Employees may be exempt from overtime if:
- They work for a retail or service establishment.
- Their regular pay exceeds 1.5 times the minimum wage.
- Over 50% of their earnings are commissions.
White Collar Exemptions: Employees in executive, administrative, professional, computer, or outside sales roles who meet salary thresholds may be exempt from both minimum wage and overtime rules.
Speak with a Colorado Employment Lawyer If you work for an auto dealership and have questions about your rights under the FLSA or other wage and hour issues, contact a Colorado labor and employment lawyer at Baird Quinn LLC. For more information, visit our contact page or learn more about our FLSA employment lawyers.
FAQ: Auto Dealership Employee Rights Under the FLSA
Are dealership service writers and mechanics exempt from overtime under the FLSA?
Yes, but only if they meet specific requirements. Service writers, partsmen, and mechanics are generally exempt from federal overtime pay if they spend more than 50% of their time performing qualifying duties, such as mechanical repairs or writing service orders for a non-manufacturing dealership.
Does the FLSA cover salespeople at car dealerships?
Salespeople are generally exempt from overtime pay under the FLSA if their primary duty (over 50% of their time) is selling vehicles or obtaining contracts for vehicle sales. However, they are still fully protected by minimum wage laws.
Are auto dealership employees entitled to minimum wage?
Absolutely. Even if a dealership employee—such as a commissioned salesperson or a mechanic—is legally exempt from overtime pay, the employer is still required by law to pay them at least the applicable minimum wage for every single hour worked.
What if I am paid commission at a car dealership?
Commission-based dealership employees may qualify for the retail commission exemption from overtime pay. However, this only applies if your regular rate of pay exceeds 1.5 times the minimum wage and more than half of your total earnings come directly from commissions.
How can I tell if I am misclassified as a dealership employee?
If you are denied overtime pay or are not making at least minimum wage, you might be misclassified. Job titles do not determine your exemption status—your actual daily duties do. You should consult with a Colorado employment lawyer to review your specific pay structure and job responsibilities.