U.S. Department of Labor 

Wage and Hour Division 

 (Revised July 2008) 

Fact Sheet #11: Automobile Dealers Under the Fair Labor Standards Act (FLSA) 

This fact sheet provides general information concerning the application of the FLSA to automobile dealers. 

Characteristics 

Automobile dealers are non-manufacturing establishments engaged in the business of selling new or used 

automobiles and trucks to the ultimate purchaser. 

Coverage

There are two types of coverage under the FLSA. Either or both may apply in a given situation depending on 

the circumstances. 

Enterprise coverage applies to all employees of new or used automobile dealerships which have at least 

$500,000 per year in gross sales. 

Individual coverage applies to any employee whose work regularly involves commerce between states 

("interstate commerce") even if the employer's annual sales are less than $500,000. 

Requirements 

The Federal minimum wage is required to be paid to all non-exempt employees. 

Youth Minimum Wage: The 1996 Amendments to the FLSA allow employers to pay a youth minimum wage of 

not less than $4.25 an hour to employees who are under 20 years of age during the first 90 consecutive calendar 

days after initial employment by their employer. The law contains certain protections for employees that 

prohibit employers from displacing any employee in order to hire someone at the youth minimum wage. 

The FLSA requires the overtime payment of time and one half the employee's regular rate of pay for all hours 

worked in excess of 40 in a workweek to all non-exempt employees. 

 

Numerous exemptions exist which remove certain types of employees from specified requirements of the 

FLSA. Among those most commonly applicable to automobile dealerships is one which exempts certain sales 

and parts personnel, mechanics, and service writers from the overtime requirements. Another exempts certain 

managers and administrative employees from the minimum wage and overtime requirements. 

There is no requirement that wages be paid weekly, as long as some regular pay period (such as bi-weekly or 

monthly) is established by the employer. Once the employer has established the pay period the FLSA requires 

that employees receive "prompt payment" for all hours of work within the pay period. Although the "settlement 

period" does not have to coincide with the regular pay period, in the absence of strong evidence to the contrary 

it will be assumed that an employer intended that a settlement period for commissions represents the pay period 

for the affected employees. Periodic draws against commission earnings within the pay/settlement period may 

be less than the minimum wage. Employers may credit such draws against their minimum wage obligation 

when settling the amount due to employees at the end of the pay/settlement period. 
Workers under the age of 18 are prohibited from working in certain jobs. With regard to minors operating 

vehicles for automobile dealers, generally, no employee under 18 years of age may drive or serve as an outsidehelper on a motor vehicle on a public road; but 17-year-olds who meet certain specific requirements may drive 

automobiles and trucks that do not exceed 6,000 pounds gross vehicle weight for limited amounts of time as 

part of their job (See Fact Sheet #34). Minors younger than 16 may work only during particular times of the day 

and for a limited number of hours. Minors under 14 may not be employed. 

Employers must keep records showing their employees' names, hours worked, rates of pay, regular and 

overtime pay, home addresses, dates of birth (if they are under the age of 19), gender, and occupation. 

Where to Obtain Additional Information 

For additional information, visit our Wage and Hour Division Website: http://www.wagehour.dol.gov

and/or call our toll-free information and helpline, available 8 a.m. to 5 p.m. in your time zone, 1-866-

4USWAGE (1-866-487-9243). 

This publication is for general information and is not to be considered in the same light as official statements of 

position contained in the regulations. 

U.S. Department of Labor

Frances Perkins Building 

200 Constitution Avenue, NW 

Washington, DC 20210 

1-866-4-USWAGE

 TTY: 1-866-487-9243

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