Except for minors, there are no laws on the books that limit the number of hours an employee can work. With an industry that often works long hours during high-volume seasons, overtime is a subject that will continue to pop up in your business. Determining which employees are owed overtime and which are exempt can be difficult, even for lawyers.
Just last year, dealership service advisors took a high-performing dealership to the Supreme Court for the second time over a debate on overtime pay. For the second time in less than a decade, the high court ruled that service advisors are exempt from overtime pay because they are salaried employees. But with such a wide range of duties that could constitute a “service advisor” or similar role, how do you know who qualifies for overtime pay and who doesn’t in your SMART repair business?
According to Fender Bender magazine, “there are specific exemptions for people who deal with parts and technicians, but only if they deal directly with an auto dealer.” Regardless of what the role requirements are for a service advisor at your business, you still want every employee to feel they are being treated fairly for their work, and that their time is appreciated. If that means working overtime and their job duties call for it, they’ll respectfully receive compensation for hard work. As an employer, you may be legally bound to pay overtime, and the penalties for not doing so can be very stiff. For example, in the state of Maryland, if you are sued and lose, you could be responsible to pay back at least three times the rate it would have been if you handled everything correctly in the first place.
As a SMART business owner, you have to examine the way you currently pay your technicians. One way to do this is by looking at the job requirements to help you better determine who qualifies for overtime pay and who is exempt from it. You might even be wondering what constitutes one of your techs working overtime?
There are some basic overtime rules that every business owner should know:
- Federal law states that any employee working past the 8 hours a day, for five days a week, is overtime. This is because the 40-hour maximum would be exceeded. However, there are lots of state-specific rules and exemptions.
- As a SMART repair owner, you need to decide if your employees need to be working more than 40 hours per week. There are advantages and disadvantages to both. Instituting a no-overtime rule can keep you out of trouble, but it also caps your productivity at 40 hours per employee per week.
- If an employee is paid on a flat rate, but it’s based on sales, “they could qualify under the commissioned sales exemption…” (FenderBender)
- Employees who are usually exempt from overtime payment are typically professional and ones who do any administrative or executive work. This is especially so for anyone who is licensed.
- The most misclassified positions in any auto repair shop are typically estimators, service writers, office managers, and subordinate supervisors.
- Pay attention to what the specified duties are for each of your employees. Each state has its requirements that could be stricter than the Fair Labor Standards Act (FSLA).
- If you discover an employee is entitled to overtime pay they haven’t received, it’s essential to correct that right away.
It’s critical that as you run your SMART repair business, you keep a record of who is and isn’t exempt from overtime. That way, you can accurately communicate about the schedule and policy for overtime. What is also equally important is to create a working environment that keeps your team motivated, even if that means putting in extra hours to get the job done.
No matter what, pay attention to what are the duties of your employees, not just the job titles. This will help you determine who is exempt from overtime pay and who isn’t, and allow you to justify and clearly communicate pay policies at your business.