Auto Dealers under the FLSA – Fair Labor Standards Act

Automobile dealerships are subject to certain rules and regulations under the Fair Labor Standards Act. Here are some need-to-know facts.

Fact: Automobile dealers are non-manufacturing establishments. They partake in the business of selling new and/or used cars and trucks to the final purchaser.

Fact: There are two separate ways to be covered under the FLSA. Dependent upon circumstances, one, or both of the following can apply:

  • Enterprise coverage—Applicable to all employees, of both new and/or used auto dealerships with at least $500,000 in gross sales per year.
  • Individual coverage—Applicable to employees as long as their work regularly involves commerce between states, gross sales irrelevant. 

Fact: Youths under 20 years of age are entitled to as low as $4.25/hour, only during the first 90 consecutive calendar days after initial employment. This is also known as a “training wage.” There are protections placed in order to keep employers from displacing employees so that they may hire someone at the youth minimum wage.

Fact: Minors (employees under 18 years of age) are prohibited from working certain jobs. They are not allowed to drive, or serve as an outside-helper on a motor vehicle on a public road. Workers at the age of 17, who meet specific requirements, can drive cars and trucks as long as they do not exceed 6,000 pounds for limited amounts of time.

Fact: It is a requirement to pay all non-exempt employees the federal minimum wage.

Fact: For all non-exempt workers, overtime pay is required for all hours worked more than the standard 40 hour work week. It is at a rate of time and one half of the employee’s regular wage.

Fact: Employers must maintain up-to-date records with employee’s names, hours worked, rates of pay, regular + overtime pay, home addresses, dates of birth (if younger than 19 years), gender, and title.

Seek the services of a legal or tax adviser before implementing any ideas contained in this blog. 



Topics: Auto, Accounting Tips