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June 20, 2016 FacebookTwitterFlickrRSSSEND TO A FRIENDPRINT
Inside this issue
Supreme Court Issues Pro-Dealer Opinion in Service Writer Overtime Case
Long Wait Puts VW in a Hole
Dealer Lobby to Scrutinize Cadillac Plan
Dealers Vulnerable to Hackers, Survey Warns
Red Tape Snags Mercedes E-Class
Mulally, Nader Lead New Class Into Auto Hall of Fame
Top Stories
Supreme Court Issues Pro-Dealer Opinion in Service Writer Overtime Case

The Supreme Court today issued an opinion in Encino Motorcars v. Navarro, vacating a 2015 Ninth Circuit Court of Appeals decision that had held that dealership “service writers” are not covered by the federal “salesmen” exemption from overtime pay. In doing so, the Supreme Court expressly rejected a 2011 U.S. Department of Labor (DOL) interpretative regulation that service writers/advisors are not "salesmen" exempt from overtime. In particular, the Court faulted DOL for failing to give adequate weight to dealerships’ reliance interests during the rulemaking process, and for failing to provide a “reasoned explanation” for the abrupt change of policy. The Supreme Court’s decision requires the Ninth Circuit to reconsider its prior decision consistent with the language of the Fair Labor Standards Act (FLSA) without giving “controlling weight” to the DOL’s 2011 regulation. 
 
In March 2015, the federal Ninth Circuit Court of Appeals ruled that service writers are not exempt from overtime as “salesmen.” That decision was based on the Ninth Circuit’s conclusion that preamble language found in a 2011 DOL rulemaking constituted an interpretation of the FLSA entitled to legal deference. Together with the state dealer associations covered by the Ninth Circuit, NADA filed an amicus brief in support of a certiorari petition with the U.S. Supreme Court. The Supreme Court granted “cert” in January and heard oral argument in April. Former Solicitor-General Paul Clement expertly (and successfully) argued on behalf of the petitioner with NADA’s amicus brief being cited several times during the argument and in the Opinion itself. 

Unless exempt, employees are generally entitled to an overtime pay premium for all hours worked over 40 in a workweek. Congress amended the FLSA in 1966 to exempt dealership “salesmen, partsmen, and mechanics” from the federal overtime pay entitlement. Soon after, the Department of Labor (DOL) issued a rule narrowly interpreting the statute to exclude service advisors. In 1973, the Fifth Circuit rendered the first of several uncontroverted federal court decisions spanning three Circuits finding the DOL’s rule to be unduly restrictive and holding that service advisors do fall within the statutory overtime exemption. In 1978, the DOL issued a letter opinion, consistent with the case law, stating that service advisors are exempt from overtime as “salesmen.” In that letter and elsewhere, the DOL stated an intent to amend its rules consistent with the case law, which it proposed to do in 2008. But in 2011 the Obama Administration issued a rule purporting to reverse its 1978 position that service writers, service advisors, service managers, and service salesmen employed by car and truck dealers are exempt from overtime, an attempt the Supreme Court has now soundly rejected. 
Source: NADA

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Long Wait Puts VW in a Hole

Dealers see a struggle to rebuild customer faith

Nine months is a long wait in the car business, as VW and its dealers are finding out. Even as the company nears a settlement with regulators on a package of repair proposals and customer compensation --the court-imposed deadline was extended to June 28 last week at the request of the settlement's mediator -- it faces a long road ahead in restoring consumer confidence in the brand and rebuilding sales volume, dealers and analysts say.
Source: Automotive News

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Dealer Lobby to Scrutinize Cadillac Plan

Group cites concern of unequal treatment

Cadillac’s dealers won’t be the only ones listening intently this week when brand chief Johan de Nysschen begins laying out the details of his new dealer-incentive program, Project Pinnacle. State dealer associations and the National Automobile Dealers Association will be poring over the plan too. Dealer attorneys say the outline presented to retailers so far indicates that the plan may test the bounds of state franchise laws meant to protect dealers from unequal treatment by the factory.
Source: Automotive News

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Dealers Vulnerable to Hackers, Survey Warns

A new survey suggests some dealerships could be vulnerable to cyberattacks that endanger the personal information of their customers. Such data breaches not only would prove an immediate business threat to dealerships, they also could result in spooked consumers never doing business with hacked stores again, the study warned. Total Dealer Compliance, a New York City auditing firm, surveyed 200 dealerships in five states to show the impact of data security on the sales and reputations of dealerships. TDC conducts security audits for all areas of dealerships.
Source: Automotive News

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Red Tape Snags Mercedes E-Class

Exler hopes to have regulators' approvals within a couple of weeks

A certification slowdown means Mercedes-Benz dealers will have to wait longer than expected to sell the redesigned 2017 E-class sedan. In May, Mercedes-Benz USA CEO Dietmar Exler said the 2017 E300 models would be on sale in June. But last week Exler told Automotive News that the vehicles are still awaiting regulatory approvals.
Source: Automotive News

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Mulally, Nader Lead New Class Into Auto Hall of Fame

Alan Mulally, the CEO who flew in from Boeing to rescue Ford Motor Co., leads 2016’s inductees to the Automotive Hall of Fame. Click here for the rest of the class.
Source: Detroit Free Press

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              Quotable
              "There is no doubt that we have severe weaknesses, above all when it comes to our structure, culture and efficiency. We want to eradicate them, and the new strategy will make a considerable contribution."

                  -- VW CEO Matthias Mueller, on the new 15-point plan to transform the automaker over the next 10 years, Automotive News, June 19

               
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