IN THE UNITED STATES
COURT OF APPEALS
FOR THE NINTH CIRCUIT
No. 03-35707
JOSEPH C. WICKERSHAM,
Plaintiff-Appellee,
v.
HASELWOOD
BUICK-PONTIAC COMPANY,
Defendant-Appellant.
On Appeal from the
United States District Court
for the Western
District of Washington
No. 03-35619
JERRY GIEG,
Plaintiff-Appellee,
v.
DDR, INC.,
Defendant-Appellant.
On Appeal from the
United States District Court
For the District of
Oregon
BRIEF FOR THE
SECRETARY OF LABOR AS AMICUS CURIAE
TABLE OF CONTENTS
INTEREST OF THE SECRETARY OF LABOR
STATEMENT OF THE ISSUE
STATEMENT OF THE CASE
SUMMARY OF ARGUMENT
ARGUMENT
CONCLUSION
CERTIFICATE OF COMPLIANCE
INTEREST OF THE
SECRETARY OF LABOR
Pursuant to Rule 29(a) of the
Federal Rules of Appellate Procedure, the Secretary of Labor (“Secretary”)
submits this brief as amicus curiae. These cases present a fundamental question of statutory interpretation
concerning the applicability of the exemption from the overtime requirements of
the Fair Labor Standard Act (“FLSA” or “Act”) under section 7(i) of the Act, 29
U.S.C. 207(i). The district court decisions
interpreting section 7(i) are directly contrary to the plain meaning of the
statute and the position taken by the Administrator, Wage and Hour Division, in
an opinion letter issued on March 17, 2003 (copy attached).
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STATEMENT OF THE
ISSUE
Whether the
section 7(i) exemption from FLSA overtime requirements applies to employees of
a retail automobile dealership who earn commissions from selling financing
agreements and warranties rather than directly from the sale of automobiles.
STATEMENT OF THE
CASE
A. Statement Of
The Facts
Wickersham and Gieg were employed
by auto dealerships as finance officers.
They each filed suit in federal district court seeking unpaid overtime
under the FLSA. The respective
defendants, Haselwood Buick-Pontiac Company and DDR, Inc. (“the dealerships”),
argued in each case that the plaintiffs were not entitled to overtime because
they met all the requirements of the section 7(i) “retail or service
establishment” exemption.
The job duties performed by
Wickersham and Gieg (“the finance officers”) were basically the same. The dealerships paid the finance officers
commissions based upon their sales of financing agreements, extended
warranties, insurance contracts, and various dealership-installed after-sale
items (e.g., paint and fabric protection packages and alarm systems). These commission sales were completed after
a separate sales staff of the dealership had sold the automobiles. The finance officers received no commissions
from the sale of the vehicle itself.
It is undisputed that the
dealerships were retail establishments within the meaning of section 7(i), that
more than 50 percent of the finance officers’ compensation was based on
commissions, and that the compensation the finance officers received from these
commission sales was at a rate greater than one and one-half times the federal
minimum wage.
B. The District
Court Decisions
Relying upon Mitchell
v. Kentucky Finance Co., 359 U.S. 290 (1959), the district court in Wickersham,
by decision dated August 16, 2002, determined that because Wickersham did not sell
automobiles, but rather sold “financing and insurance contracts,” his job
duties lacked a retail concept. Based
on its conclusion that a finance officer’s job duties were outside the scope of
the defendant’s retail or service operation, the court concluded that Haselwood
was not exempt as to plaintiff’s activities and therefore must comply with the
FLSA’s overtime requirements. The court
was also of the opinion that finding a finance officer exempt under section
7(i) would be inconsistent with the Ninth Circuit’s holding in Gieg v. Howarth,
244 F.3d 775 (2001), that a finance officer does not qualify as an automobile
salesman within the overtime exemption at 29 U.S.C. 213(b)(10)(A).
In Gieg,
the district court, by decision dated March 14, 2003, similarly concluded that
“invoking the Section 7(i) exemption requires a clear showing that more than
half of an employee’s compensation represents commissions on retail goods and services, and not all goods and services as long as they
are sold by a retail or services establishment, as argued by defendant.” 2003 WL 21087602, at *4. The court therefore reasoned that “finance
writers for automobile dealerships do not earn commissions on the sales of goods or services, as that phrase is fairly interpreted when evaluating
the applicability of the exemption found under 29 U.S.C. § 207(i). Since the duties of such employees fall
outside the scope of the employers’ retail or service business, those employees
therefore fall outside of any FLSA exemption that is based upon the employers
being a retail or service establishment.”
Id. at *5.
In each case, the
district court granted summary judgment against the dealership on the finance
officer’s claim for failure to pay overtime under the FLSA.
C. The District Courts’ Refusal To Reconsider
Based On The Administrator’s Opinion Letter
On March 17, 2003,
shortly after the district courts had issued their respective decisions, the
Administrator of the Wage and Hour Division issued an opinion letter stating
that the section 7(i) exemption applies to any employee of a retail or
service establishment if at least 50 percent of that employee’s compensation
represents commissions on sales of goods and services as defined in 29 U.S.C.
203(i) and 29 C.F.R. 776.20 (i.e., “articles or subjects of commerce of any
character”), and the employee meets the rate of pay requirement.
Focusing on the plain language of
the statute, the Administrator concluded that it is the nature of the
employer’s business (as a retail or service establishment), as opposed to the
work performed by any individual employee, that determines the applicability of
the section 7(i) overtime exemption.
Op. Letter, p. 3. Addressing the
specific facts presented and referring to the regulation at 29 C.F.R. 779.308,
the Administrator stated that the finance and insurance (“F&I”) salespeople
of a retail automobile dealer are “employed by a retail or service
establishment in activities within the scope of the establishment’s exempt
business.” Id. Thus, the Administrator concluded that the
section 7(i) exemption applies to F&I personnel of retail automobile
dealerships who are commissioned and otherwise meet the requirements of section
7(i). The Administrator also noted that
her March 17 opinion is consistent with the advice provided in an April 2, 1982
opinion letter, stating that the section 7(i) exemption may be applicable to
F&I employees of retail automobile dealerships.
The dealerships
moved the respective district courts to reconsider their rulings based on the
Administrator’s March 17, 2003 opinion letter and the Washington State Supreme
Court’s intervening decision in Stahl v. Delicor of Puget Sound, Inc.,
148 Wash.2d 876 (2003). The district
courts, after reviewing the parties’ additional briefing, summarily declined to
reconsider their decisions that section 7(i) is inapplicable to finance
officers. Wickersham, 2003 WL
22002687 (W.D. Wash. August 11, 2003) (Order Denying Defendant’s Motion for
Revision); Gieg, No. 98-1563-HA (D. Or. June 20, 2003) (Order), slip op.
at 2.
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SUMMARY OF
ARGUMENT
This Court should
reverse the decisions of the district courts based on the plain language of
section 7(i), which exempts “any employee of a retail or service
establishment” whose regular rate of pay exceeds one and one-half times the
applicable minimum wage and who earns more than half of his pay from
commissions on goods or services.
(Emphasis added.) “Goods,” as
defined in the Secretary’s regulations, include the financing and warranty
products that the finance officers sold in earning their commissions. See 29 C.F.R. 776.20. Thus, as spelled out in the Administrator’s
March 17, 2003 opinion letter, finance officers meet all the requirements of
section 7(i) and are therefore properly exempt from the FLSA’s overtime provisions.
The Secretary’s
position is also supported by analogous case law determining the applicability
of other exemptions under the FLSA.
These cases demonstrate that, if the exemption by its terms applies to
an overall establishment, individual employees do not have to perform the same
type of work that gave rise to the establishment’s exemption in order to fall
within the exemption. In other words,
the finance officers need not be directly engaged in retail sales in
order to be subject to the dealership’s “retail or service establishment”
exemption under section 7(i).
This is not to say that the work of
the finance officers need not be performed “within the scope” of the
establishment’s exempt business, as required by 29 C.F.R. 779.308. The finance officers, however, meet this
requirement because their work was directly related and integral to the
dealerships’ retail sales operations as a whole. These are not cases where employees perform separate and distinct
business activities, and thus should be deemed to fall outside the scope of the
employer’s exempt business. The
dealerships did not operate, nor were the finance officers engaged in, a
business separate and distinct from the dealerships’ retail auto sales
business.
Finally, this
Court’s decision in Gieg v. Howarth, supra, holding that
finance officers employed by an auto dealership do not qualify as automobile
salesmen under the overtime exemption at 29 C.F.R. 213(b)(10)(A), does not
foreclose the applicability of the section 7(i) exemption in this case. Section 7(i) represents a separate exemption
with its own distinct requirements that can be met regardless of the
applicability of section 13(b)(10)(A).
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ARGUMENT
SECTION 7(i) DOES NOT REQUIRE THAT
EMPLOYEES OF RETAIL ESTABLISHMENTS EARN THEIR COMMISSIONS FROM RETAIL SALES IN
ORDER FOR THAT OVERTIME EXEMPTION TO APPLY.
A. The Secretary’s Interpretation Is
Compelled By The Plain Language Of Section 207(i).
“Statutory
interpretation begins with the plain language of the statute.” United States ex rel. Barajas v. United
States, 258 F.3d 1004, 1010 (9th Cir. 2001) (citing United
States v. Alvarez-Sanchez, 511 U.S. 350, 356 (1994)). “It is a well-recognized rule of statutory
construction that ‘[t]he plain meaning of the statute controls, and courts will
look no further, unless its application leads to unreasonable or impracticable
results.’” United States ex rel.
Barajas, 258 F.3d at 1010 (citing United States v. Daas, 198
F.3d 1167, 1174 (9th Cir. 1999), cert. denied, 531 U.S. 999 (2000)). See also Gieg v. Howarth, 244 F.3d
775, 777 (9th Cir. 2001) (“The ‘unambiguously expressed intent of
Congress’ binds us.”) (quoting Food and Drug Admin. v. Brown &
Williamson Tobacco Corp., 529 U.S. 120, 132 (2000)). See generally Chevron,
U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S.
837, 842-43 (1984) (stating that courts must first consider “whether Congress
has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the
matter, for the court, as well as the agency, must give effect to the
unambiguously expressed intent of Congress”).
Section 7(i) exempts from the
FLSA’s overtime requirements “any employee of a retail or service establishment
. . . if (1) the regular rate of pay of such employee is in excess of one and
one-half times the minimum hourly rate applicable . . . under section 6
[minimum wage], and (2) more than half his compensation for a representative
period (not less than one month) represents commissions on goods or services.” Thus, as stated in the Administrator’s
opinion letter, to qualify for the section 7(i) exemption, three conditions
must be met:
(1) the employee must be employed by a retail or
service establishment;
(2) the employee’s regular rate of pay must exceed
one and one-half times the applicable minimum wage; and
(3) more than half the employee’s total earnings
in a representative period must consist of commissions on goods or services.
The finance officers in both cases
meet all the requirements for being considered exempt under section 7(i). Their employers are retail establishments,
their rate of pay is greater than one and one-half times the minimum wage, and
more than half of their earnings were derived from commissions on “goods”
within the meaning of the Act. See
29 C.F.R. 776.20(b) (“[G]oods as defined in the Act are not limited to
commercial goods or articles of trade, or indeed, to tangible property, but
include articles or subjects of commerce of any character,” including
such items as “fiscal and other statements and accounts,” “ideas,” “[i]nsurance
policies,” “bills of exchange, bills of lading, checks, drafts, negotiable
notes and other commercial paper”) (internal quotation marks, citations, and
footnotes omitted).
The district courts, however, read
into the statute a fourth requirement -- that the employees must earn
commissions from the sale of retail goods and services. The courts concluded that, even though the
finance officers were employed by a retail establishment, they failed to qualify
for the section 7(i) exemption because they earned commissions from the sale of
financing and insurance contracts, which are not retail in nature.
This conclusion is contrary to the
plain language of the statute. “The
term ‘any’ is generally used to indicate lack of restrictions or limitations on
the term modified.” United States ex
rel. Barajas, 258 F.3d at 1011. See
also Hertzberg v. Dignity Partners, Inc., 191 F.3d 1076,
1080 (9th Cir. 1999) (“According to Webster’s Third New Int’l
Dictionary (3rd ed. 1986), ‘any’ means ‘one, no matter what
one’; ‘ALL’; ‘one or more discriminately from all those of a kind.’ This broad meaning of ‘any’ has been
recognized by this circuit.”) (citations omitted); Madrid v. Gomez,
150 F.3d 1030, 1036 (9th Cir. 1998) (the court must accept “the
plain meaning of the word ‘any.’ In its
conventional usage, ‘any’ means ‘ALL-used to indicate a maximum or whole.’ It certainly does not mean ‘some’”).
Applying the statute’s plain
meaning, the Secretary interprets “any employee,” as used in section 7(i), to
mean any employee of a retail or service establishment, without any limitations
or restrictions other than the conditions specified in the statute (i.e., the
employee’s rate of pay must exceed one and one-half times the applicable
minimum wage and more than half of his earnings must consist of commissions on
goods or services). Thus, as the Administrator correctly
concluded in her March 17 opinion letter, which is based on the statute’s plain
meaning, the Act does not require that an employee earn his commissions
from the sale of retail goods or services in order for the section 7(i)
overtime exemption to apply.
To the extent that this Court deems
it necessary to go beyond the plain text of the statute, it has recognized that
the Wage-Hour Administrator’s opinion letters, although not in the form of
legislative rules promulgated pursuant to specific congressional authorization,
are entitled to deference according to their consistency with past opinions and
their power to persuade. See Biggs
v. Wilson, 1 F.3d 1537, 1543 (9th Cir. 1993), cert. denied,
510 U.S. 1081 (1994). See also
United States v. Mead Corp., 533 U.S. 218, 227-28 (2001); Christensen
v. Harris County, 529 U.S. 576, 587 (2000). As the Supreme Court stated in Skidmore v. Swift &
Co., 323 U.S. 134, 140 (1944), the Secretary’s interpretive regulations
“constitute a body of experience and informed judgment to which courts and
litigants may properly resort for guidance.”
In considering the appropriate weight to be given a Wage-Hour
Administrator’s opinion letter, this Court emphasized that “[w]hen faced with a
problem of statutory construction, federal courts should show ‘great deference
to the interpretation given the statute by the officers or agency charged with
its enforcement.’” Biggs, 1 F.3d at 1543 (quoting Udall
v. Tallman, 380 U.S. 1, 16 (1965)).
This Court should give the
Administrator’s March 17 opinion letter “great deference” because it is well
reasoned and consistent with the only prior opinion directly addressing this
issue. In accordance with the
fundamental principles of statutory interpretation, the Administrator properly
relied on the plain meaning of the statute.
Her opinion was also thoroughly reasoned in that she followed the
guidance provided by cases construing similar statutory language in other
exemptions provided in the Act.
Finally, her opinion is consistent with an Administrator’s opinion dated
April 2, 1982, stating that the section 7(i) exemption may be applicable to
finance officers employed by auto dealerships.
See Excerpt of Record, pp. 49-50.
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B. Case Law Construing Analogous Exemptions
Supports The Secretary’s Interpretation That Employees Need Not Engage In
Retail Sales To Qualify For The Section 7(i) Exemption.
Although we are aware of no cases
arising under section 7(i) directly on point, a number of cases determining the
applicability of other exemption provisions in the Act, using similar inclusive
language, support the Secretary’s interpretation. For example, in Hamilton v. Tulsa County Public
Facilities Authority, 85 F.3d 494, 497 (10th Cir. 1996), the
court, noting that the FLSA specifically exempts from the minimum wage and
overtime requirements “any employee employed by an establishment which is an
amusement or recreational establishment,” 29 U.S.C. 213(a)(3), rejected an
argument that maintenance employees of such an establishment were not subject
to the exemption because they were not serving in traditional recreational or
amusement activities. The court stated,
“By its own terms, § 213(a)(3)
of the FLSA exempts employees employed by amusement or recreational
establishments; it does not exempt employees on the basis of the work performed
at an amusement or recreational establishment.
It is the character of the revenue producing activity which affords the
employer the protection of the exemption.”
85 F.3d at 497. Accord Gibbs
v. Montgomery County Agricultural Society, 140 F. Supp.2d 835, 840,
843-44 (S.D. Ohio 2001). See also Marshall v. New
Hampshire Jockey Club, 562 F.2d 1323, 1331 n.4 (1st Cir. 1977)
(stating that “[t]he § 13(a)(3) exemption turns on the nature of the employer’s
business, not on the nature of the employee’s work”).
There also is authority supporting
this conclusion in case law interpreting section 13(a)(2), 29 U.S.C. 213(a)(2)
(subsequently repealed, see n.3 supra), see Mitchell
v. Gammill, 245 F.2d 207, 208-09, 211 (5th Cir. 1957) (the
section 13(a)(2) “retail and service establishment” exemption applied to all
employees, including those who did no retail or service work); and in case law
interpreting section 13(b)(2), 29 U.S.C. 213(b)(2), see McComb v.
Union Stock Yards, 168 F.2d 375, 377 (7th Cir. 1948) (the
section 13(b)(2) “rail carrier” exemption applied to employees of a railroad
which owned a stockyard and related businesses, where the employees were
responsible for the guarding and care of the livestock, protection of
structures, and traffic control; “[t]he employees’ exemption does not depend
upon the character of the work performed by them”).
The Secretary’s interpretation of
section 7(i) is also entirely consistent with a recent decision of the Supreme
Court of Washington that interpreted a similar state law provision to mean that
all employees of a retail and service establishment can be paid pursuant
to the “retail sales exemption” regardless of their duties. See Stahl v. Delicor of
Puget Sound, Inc., 148 Wash.2d 876, 886 (2003). The court relied in part upon guidance published by the state
Department of Labor, stating that “‘[i]f the establishment qualifies for the
exemption that is, 75
percent of dollar volume is not for
resale and is recognized as retail sales or service – then all employees whose pay
is at least 50 percent comprised from commissions are exempted from the
overtime premium . . . whether they work in sales or in other
activities.’” Id. at 886-887
(quoting DLI (Department of Labor and Industries) Employment Stds., No.
ES.A.10.2, at 1-2) (second emphasis added by court).
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C. Finance Officers Are Employed Within The
Scope Of A Retail Auto Dealership’s Exempt Business Consistent With The
Secretary’s Regulation at 29 C.F.R. 779.308.
The regulation at 29 C.F.R.
779.308, under the general heading “‘Establishment’ Basis of Exemptions,”
states that in order for an exemption to apply to a particular employee hired
by a retail or service establishment, he “must be employed by his employer in
the work of the exempt establishment itself in activities within the scope of
its exempt business.” In her March 17
opinion letter, the Administrator expressly concluded that F&I salespersons
(i.e., finance officers), although not directly engaged in the retail sale of
automobiles, are nonetheless employed by the automobile dealership “in
activities within the scope of its exempt business” as required by section
779.308.
In reaching this conclusion, the
Administrator noted that “F&I salespeople work along with and as part of
the new and/or used car sales departments; are physically located together with
those departments; are paid directly by the retail dealership; are employed by
retail automobile dealerships; perform all activities within the dealership’s
physical place of business; and are covered by the same benefits package,
policies, and procedures as other dealership employees.” Op. letter, p. 3. The Administrator also noted that, “[a]s part of its business,
the dealership assists customers in financing and insuring vehicle purchases,”
but “does not operate a finance company, insurance company, or any other separate
business.” Id. at 2. She stated that, because F&I
salespersons generally work closely with the automobile sales staff (within a
single establishment) in completing transactions directly related to the sale
of the automobile, such employees “are an integral part of retail automobile
dealers.” Id. at 3-4. See Gieg, 2003 WL 21087602, at
*3 (“[The finance officer’s] duties included verifying pertinent information
regarding sale deals being made by defendant’s sales staff, inputting
information into a computer, printing up the necessary bank and Department of
Motor Vehicles (DMV) forms, and obtaining the buyer’s signature on the
paperwork.”). See also Gieg
v. Howarth, 244 F.3d 775, 777 (9th Cir. 2001) (noting that
the work of finance officers, “obtaining financing for customers and offering
profitable services,” is “ancillary to car sales”).
The district courts, however,
concluded that because the finance officers did not engage in retail sales,
they were not employed in activities within the scope of the dealerships’
exempted retail business. Both courts
cited the situation described in Davis v. Goodman Lumber Co., 133
F.2d 52 (4th Cir. 1943), which is also cited in section 779.308, as
an example of when an establishment’s employee is not employed in the
activities within the scope of its exempted business. Davis involved the applicability of the section 13(a)(2)
exemption for retail or service establishments to employees of a company
primarily engaged in the retail business of selling lumber, but which also
engaged to a limited extent in the non-retail manufacture of rollers for cotton
mills. The court in Davis held
that, because the manufacturing business was “separate and distinct” from the
company’s retail lumberyard, the exemption did not apply to employees of the
company’s manufacturing business. 133 F.2d at 54.
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This Court in Wirtz v. Western
Compress Co, 330 F.2d 19 (9th Cir. 1964), similarly concluded
that the exemption at 29 U.S.C. 207(c) for employers engaged in ginning and
compressing cotton (subsequently repealed) did not create an employer exemption
which would cover all of the employer’s employees, regardless of their actual
work. The Court stated that if the defendant
compressing company “had caused shoe manufacturing machines to be set up and
operated in seasonally unused portions of its building, the fact that the
shoemakers were employees of a cotton compressing employer would not put them
under their employer’s §
7(c) exemption from overtime pay, even though they worked at the place of
employment where the employer is so (i.e., in the compressing business)
engaged.” 330 F.2d at 22. On the other hand, the Court acknowledged
that the section 7(c) exemption would cover all those employees engaged in “the
activities which occur at a compressing plant and which relate to the business
of compressing,” including “loading, unloading, weighing, sampling, tagging,
recording and all the paper work related to the [compressing of cotton].” Id. at 23.
Unlike the facts in Davis or
the hypothetical situation posed in Western Compress, neither dealership
here maintained on its premises separate and distinct business operations
in which the employees in question were engaged. Like the dealership considered by the Administrator in her
opinion letter, these dealerships do “not operate a finance company, insurance
company, or any other separate business.”
Rather, the duties performed by the finance officers were an integral,
and integrated, part of the their employer’s auto dealership operations as a
whole. See McComb, 168
F.2d at 378 (holding that watchmen who guarded their employer’s loading and
unloading facilities were covered by the overtime exemption provided in 29
U.S.C. 213(b)(2), which exempts certain rail carriers, “because they are
employees of an employer engaged in the operation of a railroad terminal, and
their duties are intimately related to the operation as a whole”). See also Thibodeaux v. Executive
Jet International, Inc., 328 F.3d 742, 754 (5th Cir. 2003)
(because plaintiff’s duties as a flight attendant for a common carrier are
“directly related to air transportation,” the “common carrier by air” overtime
exemption at 29 U.S.C. 213(b)(3) applies).
The decision in Mitchell v. Gammill,
supra, also supports the conclusion that only work that is truly
functionally distinct should fall outside an establishment’s exemption. In Gammill, the court considered
whether an employer who operated at the same location several retail
businesses, as well as a non-retail “poultry processing department,” was a
retail establishment exempt under 29 U.S.C. 213(a)(2). The Department of Labor argued that “the
poultry department was a separate unit not functionally related to the other
departments, and that it was a wholesale enterprise subject to the wage and
hour provisions of the [FLSA].” 245
F.2d at 210. The court determined that
the employer was entitled to the exemption with respect to all of its
employees, including those involved in non-retail activities in the poultry
processing department, because “[i]n most respects of management [the
employer’s business] was operated as a unit.
It was a single establishment.” Id. at 211. See also 29 C.F.R. 779.304(a) (when different
departments of a retail or service establishment “are operated as integral
parts of a unit, the departmentalized unit taken as a whole ordinarily will be
considered to be the establishment contemplated by the exemptions”); 29 C.F.R.
779.305 (two or more physically separated portions of a business located on the
same premises may constitute more than one establishment for purposes of
exemptions if they are physically separated from the other activities and
“distinct and separate from and unrelated to that portion of the business
devoted to other activities”).
It is clear that each of the
dealerships, including the financing and insurance functions performed by the
finance officers, were operated as a single, integrated retail
establishment. It therefore follows
that all of dealerships’ employees, including the finance officers, are exempt
if their method and rate of compensation complies with section 7(i).
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D. The Secretary’s Position Does Not Conflict
With This Court’s Previous Decision In Gieg.
In Gieg v. Howarth, supra,
this Court held that an auto dealership employee whose primary duties were
selling financing and warranties (i.e., a finance officer) did not qualify as
an automobile salesman within the overtime exemption at 29 U.S.C.
213(b)(10)(A). Section 13(b)(10)(A)
exempts from the FLSA’s overtime requirements:
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.
The district court in Wickersham stated that “[i]t
stands to reason then, that an employee of an automobile dealership with
virtually the same job duties as in Gieg would disqualify a ‘retail or
service establishment’ from exemption under § 207(i). To hold
otherwise would create a loophole which would abrogate the Ninth Circuit’s
opinion by encouraging ‘retail and service establishments’ to seek avoidance of
overtime payments pursuant to 207(i), thereby circumventing the exemption
available in 213(b)(10).” 2002 WL
32152269, at *6. However, an
examination of the marked differences between the section 7(i) and section
13(b)(10) exemptions demonstrates that the district court’s statement has no
merit.
In her March 17 opinion letter, the Administrator reaffirmed her
position that section 13(b)(10)(A) does not apply to F&I salespersons,
because they are not automobile salesmen, partsmen, or mechanics. She also noted that section 7(i) provides a
separate exemption with distinct requirements.
Whereas section 13(b)(10)(A) focuses on three specific types of
employees in the vehicle sales industry, section 7(i) more broadly provides an
exemption for any employee of a retail or service establishment who
satisfies certain compensation requirements.
Unlike section 13(b)(10)(A), section 7(i) requires that employees be
compensated on a commission basis or at a rate greater than one and one-half
times the minimum wage in order to be exempt.
Thus, according to their terms, one of these statutory
provisions may exempt a particular employee, while the other may not. As relevant to this case, although the auto
dealership finance officers are ineligible for exemption under section
13(b)(10)(A), they can be exempt under section 7(i) where they meet certain
compensation requirements. Such a
result is compelled by the distinct requirements of each exemption. Congress would not have intended, without
expressly stating, that failure to meet the section 13(b)(10)(A) exemption
necessarily means an inability to meet the distinct exemption under section
7(i). Thus, the Administrator’s opinion
that section 7(i) may, under certain circumstances, apply to F&I
salespersons employed by auto dealerships does not conflict with this Court’s
decision in Gieg.
This point is buttressed by the district court’s decision in Gieg
v. DDR, Inc., in which the court permitted the defendant auto dealership
to “renew an argument” based upon the applicability of section 7(i), following
a remand resulting from this Court’s determination in Gieg that section
13(b)(10)(A) does not apply to finance officers. 2003 WL 21087602, at *1.
The district court stated that “[t]he exemption described by 29 U.S.C. §
207(i) was addressed by the parties on appeal before the Ninth Circuit, but in
its remand the Court of Appeals provided no guidance regarding the possible
applicability of the exemption in this case.” Id.
The district court aptly saw no inconsistency in considering the
applicability of section 7(i) to F&I personnel following this Court’s
determination that section 13(b)(10)(A) does not apply to such employees.
Back to TopCONCLUSION
For the foregoing reasons, the district
court decisions granting summary judgment against the dealerships on the
finance officers’ claims for failure to pay overtime in violation of the FLSA
should be reversed.
Respectfully submitted,
HOWARD M. RADZELY
Acting Solicitor of Labor
STEVEN J. MANDEL
Associate Solicitor
PAUL L. FRIEDEN
Counsel for Appellate Litigation
FORD F. NEWMAN
Attorney
U.S. Department of Labor
200 Constitution Ave., N.W.
Room N-2716
Washington, D.C. 20210
(202) 693-5555