Jim -

Here are the listed FLSA overtime exemptions:

Exempt from FLSA overtime coverage:

Certain commissioned employees of retail or service establishments;

Auto, truck, trailer, farm implement, boat or aircraft salespersons employed by non manufacturing establishments primarily engaged in selling these items to ultimate purchasers;

Auto, truck, or farm implement parts clerks and mechanics employed by non manufacturing establishments primarily engaged in selling these items to ultimate purchasers;

Railroad and air carrier employees, taxi drivers, certain employees of motor carriers, seamen on American vessels, and local delivery employees paid on approved trip rate plans;

Announcers, news editors and chief engineers of certain non metropolitan broadcasting stations;

Domestic service workers who reside in their employers’ residences;

Employees of motion picture theaters; and

Farmworkers.

Additional notes:

This is because the act contains an exemption called Section 13(b)(10)(a), which exempts from overtime all “salesmen, parts men, and mechanics” employed by an establishment primarily engaged in selling cars. (Note: Some states with overtime laws also exempt mechanics employed by dealerships, while others do not. This means that in states with no overtime law, where employers need only pay attention to the FLSA, as well as in states with overtime laws that include an exemption analogous to 13(a)(10)(a), mechanics employed by dealerships don’t have to be paid overtime. In states that have overtime laws but do not contain an exemption analogous to 13(b)(10)(a), mechanics employed by dealerships would have to get overtime under the state law. Employers in states that have state overtime laws should consult counsel familiar with such state laws to determine if they can be exempt or not.)

Section 7(i) of the FLSA exempts certain employees paid on a commission basis who are employed by retail establishments, and under USDOL/WH interpretations, as well as case law, the exemption can apply to mechanics.

Section 7(i) exempts employees from overtime if they meet three tests:

1. They work for a retail establishment, and
2. Their regular rate is more than 1.5 times the federal minimum wage, and
3. They are paid, primarily, by commission.

To learn more about each of these requirements, please contact your local Wage Hour division office. Visit www.dol.gov/esa/contacts/whd/america2.htm to contact an office near you.

The USDOL/WH issues to its enforcement personnel a “Field Operations Handbook” (“FOH”), which contains the agency’s interpretations and enforcement positions. FOH 21h04(d) states:

Some auto service garages and car dealers compensate mechanics and painters on the following basis: The painter or mechanic gets so much a “flat rate” hour for the work he or she performs. A “flat rate” hour is not an actual clock hour. The painter or mechanic may work seven, eight or nine hours a day and still receive credit for 10, 11 or 12, etc., flat rate hours depending upon how much work he or she has done. Each job is assigned a certain number of hours for which the customer is charged, regardless of the actual time it takes to perform the job. The employee is given a certain proportion of that charge expressed in terms of so many dollars and cents per “flat rate” hour rather than in terms of a percentage of the charge to the customer. The dealer does not change the employee’s share per flat rate hour if the charge to the customer is changed. In such situations Wage-Hour will not deny that such payments represent “commissions on goods or services” for purposes of Set 7(i) (see IB 778.117 and 779.413(b)). Such employment will qualify for exemption under Sec. 7(i) provided all the other tests of the exemption are met.

L.J. Marhefka
L.J. King and Associates
email lj@ljking.com