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Run the Payroll Fee Auditor →Blog · Payroll Management · Auto Dealership
Auto Dealerships: State Payroll Compliance Issues (2026)
State payroll compliance for auto dealerships layers each state's wage floor, overtime rule, pay frequency law, new hire deadline and final pay rule on the federal rules cited on this page, and auto dealerships carry industry-specific state duties on top. BEG runs auto dealership payroll for $45 per employee per month inside the payroll software you already use, all-inclusive, live in 3 to 5 business days.
Where state law touches auto dealerships specifically
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.
The FLSA does not require weekly pay, but the dealer must set a regular pay period, and a commission settlement period is presumed to be that pay period. Draws against commission paid within the pay or settlement period may be less than the minimum wage, and the employer may credit those draws against its minimum wage obligation when settling the amount due at the end of the period.
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 state layer every employer carries
Each state where an employee of an auto dealership works can set its own minimum wage, its own overtime trigger, a pay-frequency law, a new hire reporting deadline shorter than the federal 20 days, a final paycheck deadline, and a continuation coverage rule below the federal COBRA threshold. The state pages on this site carry those facts state by state from one data file, so the numbers here and on the multi-state checker never disagree.
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]
- The FLSA does not require weekly pay, but the dealer must set a regular pay period, and a commission settlement period is presumed to be that pay period. Draws against commission paid within the pay or settlement period may be less than the minimum wage, and the employer may credit those draws against its minimum wage obligation when settling the amount due at the end of the period. [DOL Fact Sheet #11]
- 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 payroll rules by state, and the rest of the auto dealership payroll library.
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Frequently Asked Questions
Which state rules hit auto dealerships hardest?
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.
Does an auto dealership need a separate state account for every state with an employee?
Yes, in most cases two: a withholding account, unless the state has no wage tax, and an unemployment insurance account. Under the localization of work rules, unemployment tax for a remote employee goes to the state where the work is performed.
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: Wage and Hour Division
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