morning my name is ford newman and i reserve i represent the secretary of labor who's just fading is that because we've talked about this previously was our intention that i would go first and used ten minutes i would be followed by mr in this case is that the finance officers need to play in terms of the statute that if these finance officers are employees of the retail establishment their regular rate of pay if this is way above highly paid commission employees they were in this is very important i think they work in a retail business for the hours the worst in the amount of taken fluctuates significantly depending on consumer demand and they're able to make up for the down times by working harder and for longer hours during the busy time so in that white seven i actually work for the benefit of the commission employees because their employer doesn't have the incentive of limiting the hours that they can work during these busy periods now we think that the secretary believes that the proper tale as to whether seven high flyers is not whether the goods or services were retail but whether the commission employee is employed by retailer services staff which meant as defined in the statute and we have regulations that specifically interpret sort of an opt in those regulations are located beginning at seven seven nine point  chan and they run through four twenty one and seven spending on four eleven fares that employees must be employed by a retail or service establishment and that the term is defined in section thirteen eight two which has subsequently been repealed but the definition remains in effect and the regulation and part in the four series for ten series also say is that the  application of that definition is considered at length in part d of part seven seventy nine and that's where seventy seven nine point three zero weight is located and that's where that's where that that regulation comes into play because it addresses what it means to be employed by an example establishment the employee must be employed in activities within the scope of the example business and this course well i believe it takes consistent with our position and in some way kind of proves our point because and that situation what you really have and what the regulations clearly contemplate is that companies can operate a separate establishment retail establishment and non retail establishment the retail establishment would be entitled to thirteen  exemption whereas those employees who work in the non retail establishment would not what that regulation recognizes that their burial operations are really a separate establishment and in one of the briefs that was f three sixty nine instructed among other things that there is no retail concept applicable to the insurance business and that's correct and what don't we exactly have  or who are engaged in aspects of the insurance business well but again let's go back to what the statutory test is and that is whether they are employed by a retail or service and i don't think i can say it any better than the tenth circuit did in the rocky rocky thought ok which result which is a thirteen between case much like the howard case and also sparked the howard case and it says that even though finance employees are not primarily gauged in obtaining contracts for the sale of cars they play a role that is answerable to the business of selling cars i don't understand that part of the argument i'm sorry i  at three o eight starts the davis v goodman lumber company case and that makes clear that if a company operate a non retail business that is separate and distinct from its retail business if the employees working in the non retail business dealers in addition to selling cars operated an insurance agent they were on the same premises where they sold car insurance and they told car insurance to the general public to people who already own callers people who would actually walk into the for the premises and walk by the cars and say well you have nice cars here but i really need for you to take care of my insurance needs and and and the the salesman the commission salesman there  any work in connection with burial insurance operations that's correct because it's their regulations says that's that's basically no different from selling life insurance and we know from  the scope of his employer's otherwise exempt retail business again there you have two different establishment and exempt one in a nonexistent one and it says that if there is no retail concept with respect to the  construction industry just like the insurance industry and such an establishment would be considered holy and wholly separate and distinct from the retail operations but the regulation goes on to say that there were retail business in addition the selling goods also installs them and an extra charge for the construction activities involved in the installation would be considered incidental to of retail sale and therefore considered exempt activity and that's what we really have here we have activities that are that are integral and put down all and in many cases in many cases essential to the engage in clearly fall within the scope of a retail automotive auto dealership operation they don't work for an insurance company they don't work for a finance company they work for an auto dealership and that's all the  fair labor standards act and what we try to do is is try to provide them guide through opinion letters and this was not the first opinion letter that we had issued on this matter and it's not the first time that we've ever had contact with the national auto dealership association years ago they had actually spent in their manual which they distributed to their dealerships to provide them guidance of how to comply with f l s a and we actually review it back with respect to their instructions concerning seven i we didn't have any disagreement with that and i want to say this that even if there hadn't been that opinion letter we still we monitor private litigation  we took in a brief i believe yeah and i mean it's not obviously we're not arguing that it's binding it is of his what a regulation that had gone through notice and comment but we believe that the court should give a considerable difference because we take that into account is not to say that those people who just those types of sales are eliminated from the establishment but it's those that you subtract those activities from the twenty five percent and the seventy five twenty five general in the first one is just a general policy e mails and i think everyone uses the term exemption to apply to seven i that it truly is not an exemption from the fair labor standards act section two thirteen if someone falls within one of those exemptions they don't have a minimum wage guarantee they don't have an overtime guarantee inspection and on it's an alternative method of pain people and giving them a higher stating that they are guaranteed one and a half times the people you don't need to strictly construe the statute for i'm with the other thing i'd like to know what it was in and i think mr newman covered the statutory piece fairly well but in terms of congress congress knows how to limit look regulations that a person needs to perform twenty percent or fifty percent or seventy five percent retail and service activity before they qualify now this is why that's very commissions or the source of commissions we would anticipate if the department would have been in the regulations required an employer to track that information and they did not do so in light of that you're out of spin and i see my time is controversy and it seems very clear the deal well believes that it does apply the standard that is not as simple as you consider only whether or not this mean frankly my thought coming into it was we're all like that from some supposed to give and when i read the statute yeah looks like a pretty reasonable interpretation anyway i feel like i'm all done so tell me why i'm not because the yes in any event it is true that if you just read the statute it sure sounds like they have a winner because it makes this very generalized reference however that isn't what the secretary of labor's regulations and as i heard counsel for the department he agreed that those interpretive regulations have more force than the letter of regulations would rule and in fact think of me as pretty talks about the regulations and talks about three o eight the problem here is how do you apply it and it's simply is not consistent to say that we have a regulation here that applies to this  through our carry forward because three year wait does relate to the employee and that's what we're this is the whole discussion is about whether or not you're just simply going to look at the employer or even consider what activities the employee  financing that is not an exit that's not retail it's not within reach and that's the very issue here whether or not the fact that he's a well if i if i go somewhere else like if i go to my family and can borrow money without regard to what the employee e's are doing and from their perspective is it doesn't matter the problem is that the rates actually on their face say that it does and that what they say in the of you both you buy a plot and somebody tells you in surance on the phone you can make all of the same arguments about the car dealership and if the funeral home although i guess we've had more experience with car dealerships but they all seem to be apart for most of us of of the transaction that goes on when you go in and purchase a car i know it's a little hard for me to see how one slices  conversation about financing that in terms of what the individual employee is doing if one regards seven seven nine three zero eight with regard to the statute itself this circuit has said that you cannot to fifty dollars a car she carlee painting and he pays them off three dollars an hour well they're not within the scope of his little retail business which is to exempt business so he has to pay them minimum wage and overtime i thought that's what it was for and that will cover that but it doesn't necessarily end there how does that mean that indeed is part of the issue al just you're saying you can't separate you can't have division of labor within a car dealership if you want to keep your exemption as i understand it i'm thinking some of the guys near car nothing they can talk to you about so interesting acceleration and other people are better at the paperwork and they can talk to you about finance and that's how they divvy it up they divvy it up very distinct thing between people who sell the cars and between people who just buy it's right well the case that's that is what they do the cases that they're you bring to our attention i don't think helped you very much in really have functions that are integrated into the in the process of selling our mobiles doesn't that make it much different than the other cases that you refer to you know not it not an answer that doesn't surprise me no because it doesn't have to be that extreme yes those are all examples of what could happen but that's not a requirement in terms of the rule it doesn't talk about you have to have these two separate things this is that the employ work has to be within the scope of quote the employer's exempt business the activities his activities have to be within that scope and it's it's presupposed under the statute that not all the activities of the employer are going to count as part of that because you only have to have seventy five percent so that the real fit what it comes down to is whether or not you're going to look at what the employee does because quite frankly if you want to you can talk about virtually any two businesses put side to side say well you know making no shoes really does help there are other customers who are coming into bank with them my name is john stanley and i'm representing wickersham i want to defer to the other co counsel this is taking longer i don't want to get into this time when i'm going to clobber anybody here with a clock if somebody has something they want to say about what i'm just you know don't waste time but long as i have the time to to deal with them i will talk about the specific differences and if you look at case and why we believe the secretary chose not to intervene i want to start with a question that seems to be bothering the panel about this notion of the vision of the words in davis versus goodman lumber it's very easy to say well you know selling lumber is very different then rollers rollers sure but there are a couple things there are clear lines of division and in fact one of the things i think the penalties to be mindful of is that exemption is a process of trying to sync sions when these people work the finance and insurance people they are licensed to sell they are selling insurance and finance separate from the car we have evidence and the facts now for the way they do it once you've made your deal with you two don't mean you don't sign anything he doesn't sign anything no money changes hands when you well that's from the consumer side perhaps that's how it appears to the purchaser but from the state from the employer and from the sales people that's not at all how the business  what happens first of all is that you can buy your car without insurance second of all these people sell products independent of cars in those new insurance you mean things like insurance so that if i insurance but that is still ok your honor it is still regulated by the state and the record is very clear at least in the chalupa case that each of these people have to have to be licensed by the state i have to step back for a minute and look more at this notion of of drawing distinctions because the ninth circuit has made very clear that you construe the exemptions narrowly against the employer and they would be withheld except as to persons plainly within their terms and spirit now what i fear the panel saying is well you know apparently the department thinks they can do it this way therefore maybe we reasoning in in the opinion but it was ridiculous well i think i think he was concerned about both the content and the process and i want to focus on the content for a moment because every authority that they rely on in that case in the opinion letter is an establishment exemption amusement parks in the museum of car setting your honor every person that works there is exempt it doesn't matter what they do it doesn't matter how they're fake and that's a very different type of exemption than what we have in place here this is not as the secretary wants to treat as an establishment based exemption not every employee who works in this in this facility is going to gentry and what's what's problematic about what the secretaries position is taking here with the system the secretary is taking here is that it ignores three oh wait a regulation that has been on the books it's advancing in this case the person who answers the phone the woman who types up purchase orders the guy who washes cars who are all employed by this dealership they are play activities within the scope of the exempt business car washing is not within the scope of sale of goods and services insurance sales under any type of analysis or finance or any type of you not because they are purely lacking in retail concept from the beginning from the most the poor thing in a retail transaction is exchange of goods for the consideration for the goods and the consideration for the goods where the goods are expensive and probably more often than not some sort of credit well but we've stuff from the get go there under  the president and insurance are not part of retail concert and so you use the question to my colleagues about well gee we're just if i arrange financing here in the dealership it goes with the car but if i go to the bank then you have a better flight but the reality is the activities test in three zero eight says exactly the opposite and my concern with the letter and my concern with deference to deal well on this well and this is in the chalupa record deal well takes defense information and misses it doesn't check with plaintiffs doesn't there's no nothing in the record that indicates that they have both sides of the story factually and they make certain assumptions agency seems to do i don't claim any deficiency in it now what good is that if you can't ask for answers to questions when congress and the lawsons they're supposed to be able to help you my understanding and perhaps i'm i'm wrong toiling in my little corner of the world is different guests or to two different things excuse me let me turn now to the issues that are that are different let's you have any particular visually questions one through it thank you in in if you look after the record that is not the case what happened was the dealers moved for summary judgment and they relied on their concise statement of material facts on summary judgment in which they concise statement every plaintiffs regular i'm summarizing every every faith hourly wage was more than one hundred fifty percent as far as i can tell you didn't contest that but we did your honor for what we did we did we didn't contest the amount per hour right what we did contest specifically in the response to concisely material facts was that was not the regular hourly wage ok and that's where they have a hole in their proof that that's pretty fatal the other issue i want to talk to you about is leases and sales defendants in which a look at all have admitted that if the lease is not a retail sale they cannot prevail in other words they don't meet the seventy five percent test and the question at least presented by the to look the case is whether a lease is a retail sale you need to look at the lease transaction what happens here is the car are there any further questions at this time no thank you thank you covered i think the things i'd like to bring i've been covering these questions and i could spend a lot of time here pointing out that if we start out with language of clearly in plain language of a statute and nobody wants to talk about on the other side both the department of labor and attorney for wickersham both of whom are are far better schooled in the specific regulations quite frankly than i am both of them assume that section three zero eight applies to the interpretation of section two and seven i but as we live in our brief and i don't i don't want to make a big point about this i certainly don't want to get into an argument with mr newman on this issue but i do just want to point out that there that's mr newman said there are regulations that specifically apply to tools seven subchapter and none of those regulations say anything about whether or not someone is working within the scope of the work of the example  regulations does say that since we are incorporating into two zero zero seven the former to thirteen a two definition a retail or service staff i meant that the regulations that apply to the definition of retail or service service of sandwich means three away talks about whether someone is employed by a retail or services staff which meant and you know when you think about it because of the the the safeguards  course crafty employers are going to try to put a manufacturing facility out in the backyard and say they're all one facility so you have a lot of issues like employed by but as i think came up in one of your questions you don't have that problem into a seven are your if you could maybe come up with some  l examples i haven't thought of but for the most part you're not going to have that problem because you can't hide an assembly line person in the back of a real to read or service establishment and or to a seven i because they have to be commissioned employees and they have to run through and i understand the thrust of your argument when are you are you are you putting three o eight off in the wings are you are you are you regarding it is unnecessary to comply with either way i don't think the three o it is necessary to comply tool seven now however that's not to say that if somebody could you know if you have two separate retailer services stablish months one can certainly look at three oh wait by analogy and say well here's how you might be able to determine whether you have two separate s first time we hear about this is in the reply every day now meaning leases and sales are no the notion that somehow we've not divided up our sales into individual weeks so that you can actually make a determination about whether or not each week they're being paid one and one half times the minimum wage there are allegations made in the complaint intially because we point out the reply brief that these were highly paid employees and for relevant periods of time they were making fifty sixty eighty dollars an hour the court treats as undisputed the fact that we meet the one and one half times requirement everybody standing in this room knows that we meet the one and one half time requirement we now hear in the in the respondents brief or we came up with a  argument maybe you didn't break it down by week now that that argument of course had been made at a previous time would have resulted in if there is any problem with the record would have resulted in the breakdown by week  but it comes to late and it also strikes me as a little bit of a little bit disingenuous because we also point out in the reply brief that issue because after summary judgment went to trial and there was a trial in the damages in this part of the trial in that case it was proven that in fact we meet when i want to have times requirements for each week so this is laying in the weeds now i know they said something about there was something in their response to our state of material fact but well i'll tell you what that's a pretty thin reed to be relying on it's as they try to make that argument there's certainly no assertion i can find in any memorandum anything they said in the district court would have brought that argument to the functions of district court precisely what are you asking us to do on behalf of that the argument itself has no merit the one thing we didn't point out a reply various in that regard is that it's a sale for resale and everybody knows what that's going for that's going to the idea of wholesale and they're looking for a situation where i am selling something to another party for the purpose of that other party flipping it reselling it to somebody else in a relatively new condition now what if i understand the argument what the plaintiffs are trying to say is that somehow because ultimately after the person uses the vehicle for two or four years the last week because ultimately it may come back and what ultimately be sold if that's some been qualified as a still for resale but the issue is not the issue is not what we might do with the property way down the road the issue is precisely the sale to the fact that we're selling it and the purpose of the sale is for somebody to drive the car just exactly like sale for resale i would point to one other regulation in that regard to support my argument that the question is you know why  whether the car whether the the item is being purchased for the purpose of resale and so i think that to solve this argue that i mean the fact the matter is that item in this case and retail least three total sales is being purchased after that but not for the sake of resale  system is right i would i would i would add one of the thanks we have discovered in preparation for oral argument that the deal will field operations manual contains some language which supports the position that leases that leases are considered to be