Carroca v. All Star Enterprises and Collision Center Inc.

Although not often the subject of litigation, pursuant to 29 U.S.C. § 213(10)(a), certain employees of automobile dealerships are exempt from the FLSA’s overtime requirements. Specifically, that statute exempts from overtime:

any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements, if he is employed by a nonmanufacturing establishment primarily engaged in the business of selling such vehicles or implements to ultimate purchasers…

In this case, the court was called upon, in part, to decide whether defendant—90% of its business was the repair of automobiles, with the remaining 10% of the business comprised of the sale of automobiles—qualified as such an automobile dealership. The court held, as a matter of law, that such a business does not qualify for the exemption.

The court reasoned:

All Star admits that Carroca was employed as an auto body repairman. D. 19 ¶ 5; D. 23 ¶ 5. Assuming without deciding that an auto body repairman is a “salesman, partsman, or mechanic,” the next question, which the parties dispute, is whether Carroca was “employed by a nonmanufacturing establishment primarily engaged in the business of selling [automobiles, trucks, or farm implements] to ultimate purchasers.” The Department of Labor has issued 29 C.F.R. § 779.372, which defines what it means to be “primarily engaged” in said business. According to the regulation, “[a]s applied to the establishment, primarily engaged means that over half of the establishments [sic] annual dollar volume of sales made or business done must come from sales of the enumerated vehicles.” Id.; see Donovan v. Bereuter’s, Inc., 704 F.2d 1034, 1036–37 (8th Cir.1983) (construing “the legislative history as indicating that Congress intended the exemption to be narrowly applied and was not designed to exempt those dealers who engage in the retail sales of automobiles to a limited degree”).

Here, as All Star acknowledges, D. 22 at 2, All Star has the burden of proof with respect to the applicability of the exemption. Hines v. State Room Inc., 665 F.3d 235, 240 (1st Cir.2011). Here, All Star has not met that burden where All Star admits that only “approximately ten percent” of All Star’s business constitutes automobile sales. Pl. Stmt. of Facts, D. 19 ¶ 2; Def. Resp., D. 23 ¶ 2; see Def. Resp. to Interrog. ¶ 5 (stating that “vehicle sales constitute approximately 10% of the business of Allstar; approximately 90% of the business consists of vehicle repair”). Thus, All Star is incorrect that it falls within the FLSA overtime exemption under 29 U.S.C. § 213. Accordingly, the exemption does not apply to All Star and it is bound by the overtime provisions under 29 U.S.C. § 207.

Click Carroca v. All Star Enterprises and Collision Center Inc. to read the entire Memorandum and Order.