How the Fair Labor Standards Act Protects Auto Dealership Workers

If you work at a car dealership, you have important rights under the Fair Labor Standards Act (FLSA), a federal law that helps ensure workers are paid fairly and treated properly on the job.

Here’s what you need to know about your rights and what your employer is required to provide.  

When the FLSA Covers Auto Dealerships

The FLSA covers most auto dealerships, but coverage depends on a few factors:

Enterprise Coverage

If the dealership has at least $500,000 in annual gross sales, the FLSA usually covers all employees.

Individual Employee Coverage

Even if the dealership's sales are below $500,000, you may still be covered if your work involves interstate commerce, such as:

• Handling paperwork for out-of-state buyers
• Taking calls from other states
• Ordering parts from suppliers in other regions

What Dealership Employers Must Provide

If you are a non-exempt employee, your employer must:

• Pay you at least the federal minimum wage ($7.25/hour)
• Pay overtime at 1.5× your regular rate for any hours worked over 40 in a workweek
• Comply with youth labor laws if you’re under 18
• Maintain accurate payroll and time records

Youth Minimum Wage and Employment Rules

Youth Minimum Wage

If you’re under 20 years old, your employer may pay a reduced minimum wage of $4.25 per hour, but only for the first 90 consecutive days of employment.

Important: Employers cannot fire other workers just to hire someone at this lower rate.

Youth Employment Rules at Dealerships

Because of safety concerns, there are strict age-related rules:

• No one under the age of 14 is allowed to work at a dealership.
• 14- and 15-year-olds have limits on the number of hours and times of day they can work.
• Under 18: Cannot drive vehicles on public roads or assist with driving.
• 17-year-olds: May drive light vehicles (under 6,000 pounds) under limited conditions for short distances as part of their job.

Understanding Overtime and Exemptions

While FLSA overtime rules protect many dealership workers, certain roles may be exempt:

• Managers and administrators: May be exempt under Section 13(a)(1) if they meet strict salary and duties tests.
• Salespeople, service writers, parts department staff, and mechanics: May be exempt under Section 13(b)(10)(A) — meaning no overtime pay is required.

Reminder:

A job title alone doesn’t determine exemption — the actual job duties and pay structure are what matter under the law.

How Pay and Commissions Work

• Employers can pay on a weekly, bi-weekly, or monthly schedule, but once they establish a regular schedule, they must consistently adhere to it.
• Commission-based employees may receive draws (advance payments) during pay periods. However, by the end of the full settlement period, your average hourly pay must meet or exceed the minimum wage.

Recordkeeping Requirements

Auto dealerships must maintain accurate records for each employee, including:

• Full name and address
• Job title
• Sex
• Birthdate (if under 19)
• Total hours worked each week
• Hourly wage, salary, or commission structure
• Regular and overtime earnings
• Any deductions taken from wages

Proper record-keeping helps ensure compliance and protects workers in the event of disputes or litigation.

Common Labor Violations in Auto Dealerships

Unfortunately, labor violations in this industry are not uncommon. Some frequent issues include:

• Misclassifying employees as exempt to avoid paying overtime
• Allowing underage workers to drive or perform hazardous duties
• Failing to pay for all hours worked, especially off-the-clock tasks
• Improper time tracking for commission-based employees
• Offering “comp time” (time off instead of overtime pay), which is only allowed for government workers
• Misclassifying employees as independent contractors to avoid paying benefits or overtime

If any of these situations sound familiar, you may have a case. And if you don’t know how to go about it, consulting an experienced employment lawyer is a great place to start.

Think Your Rights Are Being Violated? Morgan & Morgan Can Help

If you believe you’re not being properly paid, misclassified, or otherwise denied your rights at an auto dealership, Morgan & Morgan is ready to fight for you.

Contact us today for a free, no-obligation case evaluation, and find out how we can help protect your paycheck and your rights.

This information is based on fact sheets provided by the DOL.