The Overtime Exemption For "Partsmen" At Automobile Dealerships
It's come to our attention as Des Moines overtime lawyers that some automobile dealerships are trying to avoid paying overtime to their parts department employees by asserting the "partsman exemption" to the federal overtime requirement. Specifically, some employers are telling their parts department employees that if the employees touch parts, that alone, without more, makes the employee ineligible for overtime. But the analysis is more complicated than that.
It's true that certain employees of automobile dealerships, including parts department employees, may be exempt from overtime law under the "automobile dealership exemption." That portion of the federal overtime law exempts “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.” Let's focus just on the "partsman" exemption.
You can see that there are three requirements for the partsman exemption. The employee must actually be a partsman, which is defined as "any employee employed for the purpose of and primarily engaged in requisitioning, stocking, and dispensing parts." The employer must be primarily engaged in the business of selling the enumerated products. Finally, the parts employee must be "primarily engaged" in selling or servicing the products that the employer's selling.
"Primarily engaged" means the major part or over 50 percent of the salesman's, partsman's, or mechanic's time must be spent in selling or servicing the enumerated vehicles. As applied to the establishment, primarily engaged means that over half of the establishments annual dollar volume of sales made or business done must come from sales of the enumerated vehicles. If the employer can't meet either or both of those tests than the partsman exemption is inapplicable and the employee must be paid overtime.
Employers who reject overtime for any parts employee, without further analysis, are taking a risk because of the "primarily engaged in selling or servicing the products" requirement. It's not enough for the employee to just fill orders, touch the parts, and deliver the parts. The employee must also be involved in selling or servicing the vehicles the employer's selling.
The partsmen exemption has rarely come up in the caselaw. Most overtime cases that involve automobile dealerships concern salespeople, mechanics, finance employees, and similar positions. In fact, there seems to be only one reported federal case, from New York, involving parts employees at automobile dealerships. Dealership owners should heed that case, McBeth v. Gabrielli Truck Sales, as a warning because the employees there engaged in common parts department activities, such as taking parts orders, locating the parts, retrieving the parts, and delivering the parts, sometimes for mechanical work at the dealership, sometimes for outside customers, but didn't sell or service vehicles. The employer argued that those employees weren't entitled to overtime because of the partsmen exemption. But the court held that there was an issue for trial concerning whether the parts employees were primarily engaged in selling or servicing the employer's vehicles or whether they just retrieved and delivered parts. That's an important lesson for employers who classify their parts department employees as exempt under the partsmen exemption because, when you think about it, how many parts department employees are primarily engaged in selling or servicing vehicles? The McBeth decision and the federal overtime law's plain language lead to the conclusion that parts department employees who don't sell or service vehicles are not exempt and are entitled to overtime for any hours worked over forty in a given week