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Run the Payroll Fee Auditor →Blog · Payroll Management · Auto Dealership
Auto Dealerships: Hourly vs. Salaried Employee Payroll (2026)
Hourly versus salaried in an auto dealership is not a preference, it is the exemption test: a salary of at least $684 a week plus a duties test, and auto dealerships have industry-specific exemptions on top. Automotive service technicians and mechanics at the national median earn $973 a week. BEG: $45 per employee per month inside the payroll software you already use, live in 3 to 5 days.
Who in an auto dealership can be salaried and exempt
Section 13(b)(10)(A) of the FLSA exempts salesmen, partsmen and mechanics who are primarily engaged in selling or servicing automobiles, trucks or farm implements at a nonmanufacturing dealership from overtime pay, but not from minimum wage. The exemption applies regardless of the dealership's annual dollar volume of sales.
A commissioned employee of a retail or service establishment is exempt from overtime under section 7(i) only if the regular rate of pay is more than one and one-half times the applicable minimum wage and more than half of compensation for a representative period of not less than one month is commissions on goods or services.
The salary math for auto dealerships
The standard salary level is $684 a week, $35,568 a year. BLS puts the May 2025 national median for automotive service technicians and mechanics at $50,620, which is $973 a week, above the floor, so for that role the duties test is the whole question. Paying a salary to a non-exempt employee is legal; it just does not remove overtime, which is then computed on the salary divided by hours actually worked each week.
What changes when a role moves between the two
Moving salespeople and finance managers from hourly to salaried changes the pay code, the timekeeping rule and the overtime treatment at once. A salaried non-exempt employee still needs hours recorded every week, and a salaried exempt one needs the exemption documented against the rule above, because in an audit the burden of proving the exemption sits with the employer.
The rules behind this page, with sources
General information, not legal advice. Every rule below was read on the agency page linked next to it.
- Section 13(b)(10)(A) of the FLSA exempts salesmen, partsmen and mechanics who are primarily engaged in selling or servicing automobiles, trucks or farm implements at a nonmanufacturing dealership from overtime pay, but not from minimum wage. The exemption applies regardless of the dealership's annual dollar volume of sales. [29 CFR 779.372]
- A commissioned employee of a retail or service establishment is exempt from overtime under section 7(i) only if the regular rate of pay is more than one and one-half times the applicable minimum wage and more than half of compensation for a representative period of not less than one month is commissions on goods or services. [29 CFR 779.412]
Read the full guide to FLSA overtime rules for employers, and the rest of the auto dealership payroll library.
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Frequently Asked Questions
Can an auto dealership pay salespeople a salary and skip overtime?
Only if the role meets an exemption: the $684 weekly salary floor plus the duties test, or an industry-specific exemption. Section 13(b)(10)(A) of the FLSA exempts salesmen, partsmen and mechanics who are primarily engaged in selling or servicing automobiles, trucks or farm implements at a nonmanufacturing dealership from overtime pay, but not from minimum wage.
Does the $50,620 national median for automotive service technicians and mechanics clear the salary test?
$973 a week is above the $684 floor, so salary is not the obstacle; the duties test is. BLS OEWS, May 2025.
What does managed payroll cost for an auto dealership?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum. Front-end and back-end commission structures, flat-rate tech pay and F&I chargebacks are configured at setup, not billed as add-ons.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries including Auto Dealerships. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Authoritative source: U.S. Department of Labor: Overtime Pay Under the FLSA
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