On Monday, April 2, 2018, the Supreme Court of the United States ruled that car dealerships do not have to pay service advisors overtime under federal law. In a 5-4 decision, the Supreme Court held that service advisors, like auto salespersons, partspersons, and mechanics, are exempt from the Fair Labor Standards Act’s overtime requirements.

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On March 5, 2018, the California Supreme Court changed the test for factoring flat sum bonuses into the overtime rate in Alvarado v. Dart Container Corporation of California, ordering a calculation that will increase the costs of overtime for employers who pay such bonuses.  Under the federal formula, an employer must divide an employee’s total weekly pay (including non-discretionary bonuses) by the total number of hours the employee worked in a week to get the regular rate; the employer then must pay time-and-a-half that rate for all overtime hours. But under the Alvarado court’s formula, the employer must divide the total weekly pay by only “the number of nonovertime hours the employee [actually] worked during the pay period.” That smaller divisor will lead to higher overtime rates.

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Earlier this month, the Wage and Hour Division of the Department of Labor reissued 17 opinion letters from the Bush administration.  The letters provide employers important guidance on a wide-range of issues under the Fair Labor Standards Act.

The reinstatement marks the first publication of opinion letters since the DOL announced last June that it

On August 31, a Texas federal court struck down the Obama-era Department of Labor rule that significantly increased the salary threshold for the white collar exemptions to overtime pay. The court temporarily enjoined the rule in November 2016, and this latest ruling makes that decision final (save for an unlikely appeal).

The court ruled that

Overtime claims continue to dominate class action filings and cause significant exposure for companies in all industries.  In July alone, plaintiffs filed more than 200 class action complaints alleging overtime violations in federal courts across the country (not counting the number also filed in state court).  And because courts calculate back wages at time-and-a-half the regular rate, plus liquidated damages and other penalties, overtime mistakes can cause significant damage to a company’s bottom line.

This post kicks off a series for Steptoe’s Labor & Employment blog on the top five overtime pay violations alleged in class action complaints. The first in the series focuses on one of the most common (and most expensive) kinds of overtime blunders: misclassification of employees as exempt.


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