Are F&I managers still exempt from the overtime pay requirement of the Fair Labor Standards Act?

The issue became clouded early this past year – and dealers are advised by expert attorneys that an exemption still is allowable despite a ruling by the Ninth U.S. Circuit Court of Appeals in a dealer case arising in Portland, Ore. In the Portland case, Gieg vs. Howarth, the appellate court decided F&I writers are not defined as vehicle “salesmen or servicemen” who automatically qualify as exempt.

Although on the surface this opinion appears to rule out an exempt status for F&I staffers, another allowable exemption exists in the Act, according to Mark Ricciardi, attorney for the Fisher & Phillips law firm in Las Vegas. The court did not rule on this exemption in the Gieg case, according to Ricciardi.

Section 207(i) of the Act exempts from overtime any retail or service establishment worker who earns 1½ times the applicable federal minimum wage or more than half of whose compensation represents commissions on the sale of “goods and services.”

“This broader exemption,” said Ricciardi, “encompasses duties of F&I writers, who earn commissions for securing financing and selling credit insurance and other products, such as service contracts.” Further, according to Ricciardi, “As long as dealers can confirm that their F&I personnel receive over 1½ times the minimum wage, they will almost certainly be considered exempt under both state and federal law.”

Fisher & Phillips warns dealers that pay practices are undergoing scrutiny from plaintiff attorneys and should be reviewed annually for compliance with wage and hour statutes. In July 2001, a Los Angeles jury found Farmers Insurance liable for $90 million damages for misclassifying a group of employees as overtime-exempt.

Questions regarding wage and hour compliance may be addressed to Ricciardi at (702) 252-3131 or Robert J. Bekken of the Fisher & Phillips office in Irvine, Calif., at (949) 851-2424.