Employees may attempt to bring claims under this new law in state court, where it is difficult to secure summary judgment (as described in our prior post).There is some ambiguity in the Virginia law regarding whether and how the Virginia law restricts Virginia employers from relying on certain FLSA overtime exemptions other than the executive, administrative, and professional exemptions. Although the definitional section of the Virginia law states that it only covers an “employee,” which is defined as “any person who is exempt . . . pursuant to 29 U.S.C. § 213(a) . . . [or] 29 U.S.C. §§ 213(b)(1) or 213(b)(11)” (emphasis added), a later section in the law states that “[a]n employer may assert an exemption to the overtime requirement of this section for employees who meet the exemptions set forth in 29 U.S.C. § 213(a)(1) or for employees who meet the exemptions set forth in 29 U.S.C. §§ 213(b)(1) or 213(b)(11).” (emphasis added).

For instance, there is some debate over whether the “Computer Personnel” exemption under the FLSA has been eliminated by the new Virginia law. This is because the VOWA begins first by defining “employee” as not including those exempt under 29 U.S.C. § 213(a). The computer personnel exemption is found as a subsection to Section 213(a), specifically in Section 213(a)(17).

L. 101-157; 103 Stat. 938 (repealing Former FLSA Section 13(a)(2), 29 U.S.C. § 213(a)(2)); Reich v. Delcorp, Inc., 3 F.3d 1181, 1183 (8th Cir. 1993) (FLSA Section 13(a)(2)'s definition of "retail or service establishment" applies to Section 7(i) after Congress repealed Section 13(a)(2)).Your letter indicates that the dealership is an establishment with an annual dollar volume of sales of goods or services (or of both) of at least 75 per cent that is not for resale and is recognized as retail sales and service in the retail automobile dealership industry.

L. 101-157; 103 Stat. 938 (repealing Former FLSA Section 13(a)(2), 29 U.S.C. § 213(a)(2)); Reich v. Delcorp, Inc., 3 F.3d 1181, 1183 (8th Cir. 1993) (FLSA Section 13(a)(2)’s definition of “retail or service establishment” applies to Section 7(i) after Congress repealed Section 13(a)(2)).Your letter indicates that the dealership is an establishment with an annual dollar volume of sales of goods or services (or of both) of at least 75 per cent that is not for resale and is recognized as retail sales and service in the retail automobile dealership industry.

Where (i.)an employee’s work hours fluctuate from week to week, (ii.)the employee receives a fixed salary that does not vary with the number of hours worked; and (iii.)the employee and employer have a clear mutual understanding that the fixed salary is compensation for all hours worked in the workweek, the employer may lawfully pay a premium equal to only one-half the regular rate for all time worked above 40hours in workweek (i.e., may use the “fluctuating workweek” method of calculating overtime, see 29 C.F.R. §778.114).Exemptions from the Overtime ObligationOnly certain overtime exemptions available under the FLSA are available under Virginia state law. Specifically, this includes the exemptions set forth under 29 U.S.C. § 213(a), 29 U.S.C. § 213(b)(1) and (b)(11), and after August 10, 2021, 29 U.S.C. § 213(b)(10)(A).All exemptions available under the FLSA (29 U.S.C. §207, §213(a) and (b)), except the exemption under 29 U.S.C. §213(b)(3) as applied to derivative carriers, are available in Virginia. In addition, relevant interpretations and guidance issued under the FLSA apply.What Else Do Employers Need to Know?Virginia Secretary of Labor Bryan Slater will convene a statutorily required work group to review overtime issues that may arise under the VOWA amendments.

Service advisors did not receive an hourly wage or a salary but were instead paid by commission based on the services sold. The district court dismissed the overtime claim and concluded (consistent with an unbroken line of authority from federal and state courts across the country) that service advisors fall within the FLSA’s exemption for “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles,” 29 U.S.C. §213(b)(10)(A), because service advisors are “salesm[e]n … engaged in … servicing automobiles.” The Ninth Circuit reversed, deferring to a Department of Labor regulatory definition stating that the exemption is limited to salesmen who sell vehicles and mechanics who service vehicles, thus excluding from the exemption service advisors (i.e., salesmen who sell services).

Specifically, on August 10, 2021, Governor Ralph Northam signed a public appropriations bill, House Bill (HB) 7001, which included the following amendment to the VOWA:That for the purposes of the Virginia Overtime Wage Act § 40.1-29.2 the terms “Wages” and “Pay” shall also mean overtime compensatory time in lieu of wages for overtime pay by public agencies as provided by the Fair Labor Standards Act, 29 U.S.C. § 207(o), and the term “Employee” shall not include an individual described in 29 U.S.C. § 203(e)(4). In addition to the provisions of subsection D of § 40.1-29.2 of the Code of Virginia, an employer may assert an exemption to the overtime requirements for employees who meet any of the exemptions set forth in 29 U.S.C. § 213(a). Employees covered under 29 U.S.C. § 213(b)(10)(A) shall be exempt from the overtime requirements set out in Code of Virginia § 40.1-29.2.

The amendment, which became effective on August 9, 2021, as soon as both the House and the Senate passed the budget bill, reads as follows:That for the purposes of the Virginia Overtime Wage Act §40.1-29.2the terms “Wages” and “Pay” shall also mean overtime compensatory time in lieu of wages for overtime pay by public agencies as provided by the Fair Labor Standards Act, 29 U.S.C. §207(o), and the term “Employee” shall not include an individual described in 29 U.S.C. §203(e)(4). In addition to the provisions of subsection D of §40.1-29.2of the Code of Virginia, an employer may assert an exemption to the overtime requirements for employees who meet any of the exemptions set forth in 29 U.S.C. §213 (a). Employees covered under 29 U.S.C. §213(b)(10)(A) shall be exempt from the overtime requirements set out in Code of Virginia §40.1-29.2.This offers employers with some clarity on the following issues:Compensatory time is now back on the table for local governments and public agencies.

On April 2, 2018, the Supreme Court of the United States issued its opinion in Encino Motorcars, LLC v. Navarro, holding that, because service advisors at car dealerships are “salesm[e]n . . . primarily engaged in . . . servicing automobiles,” 29 U.S.C. § 213(b)(10)(A), they are exempt from the Fair Labor Standards Act’s (“FLSA”) overtime-pay requirement. According to the National Automobile Dealers Association, more than 100,000 service advisors are employed at dealerships nationwide.

Authored by Colton Long and Noah FinkelSeyfarth Synopsis: Employers seeking to show that they correctly have classified an employee as exempt from the FLSA’s overtime requirements often have faced hostility from courts under the misimpression that FLSA exemptions must be “construed narrowly.” Today the United Supreme Court put to rest the “narrow construction” doctrine, signaling to district and appellate courts that FLSA exemptions should be construed plainly as written and without a thumb tilting the scales toward a non-exempt finding.Today, in a 5-4 opinion (Justice Thomas writing for the majority) the Supreme Court reversed the Ninth Circuit in Navarro et al. v. Encino Motorcars LLC, holding that car dealership “service advisors” are “salesm[e]n . . . primarily engaged in . . . servicing automobiles” and therefore are exempt from the FLSA’s overtime requirements under 29 U.S.C. § 213(b)(10)(A). We have been tracking this case since January 2016, as the outcome of this decision is likely to have a significant impact on the nation’s 18,000 franchised car dealerships and estimated 45,000 service advisors.