Car Dealership's "RO System"—Violation of California Labor Law?


Dublin, CA Percy works as a mechanic at a car dealership that operates with a closed Repair Order (RO) system. This system means that Percy and other mechanics don't get paid until the store gets paid, which may be a violation of the California labor law.

The dealership had this system in place when Percy was hired four years ago. He says it was a "new concept" and seemed to be OK at first. And he didn't have much choice??"in 2008, dealerships in California and nationwide were closing. Percy says about 500 mechanics found themselves unemployed when he was hired. "I was told to take it or leave it, so there was nothing I could do about it," he says.

"Everything was going well when we were busy; I was getting $32 an hour and worked 40 hours per week. But it went sideways when the economy slowed down, and to make it worse, we had a personnel change. Now I work 40 hours a week but get paid for about 18 hours."

Working as a mechanic under this RO system is like being paid for piece-work in the textile industry??"like getting a flat rate. Say a car comes into the shop (the dealership) for an oil change. The customer is told the job will take one hour but it takes the mechanic two hours. Or it may take the mechanic 30 minutes. Regardless, they will only get paid for one hour??"the time quoted by the service writer.

Needless to say, this system boosts profits for the owner, but it would seem to be a violation of the California labor code.

"We get weekly printouts, and if there are errors (and there usually are) that we don't catch, we don't get paid," says Percy. Let's go back to that oil change. Percy is supposed to get an hour's pay, but if the service writer inputs the repair order into the computer incorrectly and Percy doesn't catch the error, he is out of pocket.

"For instance, one hour has to be input as 1.0 hours," Percy explains, "but the service writer might type in '1.1' or '0' or he might even credit the work to another mechanic. The service writers are usually careless??"they aren't affected by their errors. So there is no incentive for them to be correct and some of them even treat this like a game, seeing if we can catch the error. This is so juvenile and this system is so frustrating…

"We have all talked to our employer but he just pleads ignorance and says this system is new and, as I said, we can 'take it or leave it.' Of course, we are taking it because the alternative is unemployment."

Percy adds that there are other problems that result from this system:

"A customer brought her car in and I worked on it," he explains. "Little did I know that she had made a deal with the service writer. She was quoted three hours of labor but she told the service writer that she was unemployed with a few kids and couldn't afford three hours of work. He felt sorry for her and only charged one hour; I was paid for one hour's work, meaning that I worked two hours for free. I was never consulted; the mechanics never have any say.

"As for breaks, with this flat rate system, do we take breaks on our own time, and is our employer supposed to pay us? Nobody seems to know, but if we are on the clock and take a break, we lose money.

"When I started working at this dealership, we were told there would be no overtime whatsoever, and if anyone works overtime, they will get written up. But we often work over eight hours off the clock because our manager insists. I believe that all these issues are California labor law violations."

The California labor law states that you must be paid for all time worked. An experienced wage and hour attorney can help Percy and others in similar situations.

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