GNYADA July 2014 Newsletter

To read these stories and get the latest news online, visit the GNYADA website at www.gnyada.com

For Dealer Principals / General Managers / Sales Managers The Newsletter A Publication of Greater New York Automobile Dealers Association

Bob Vail Named GNYADA Chairman 1

JULY 2014 Volume 24, Issue 5

automobile retailer. His grandfather opened a Chevrolet dealership in Ossining, N.Y., in 1918. Vail entered the family business in the '60s as a mechanic at the Ossining Studebaker dealership owned by his father and brother, John and Peter Vail. “Bob has been a dedicated advocate for dealers for many years,” said GNYADA president Mark Schienberg. He has been an active GNYADA member for more than three decades and has served the Board of Directors since 1993. During that time, he also served on the Executive Committee and as Chairman of the Finance Committee. Last year, Vail completed a $1.5 million renovation of his facility – a major investment in his community. “Our philosophy in business has always been that personal involvement and cus- tomer service are key to our business,” said Vail. At his installation, he recognized outgoing chairman Neale Kuperman’s contributions and achievements and pledged to build on those efforts.

HIGHLIGHTS

2014 Annual Meeting Review page 2

Dealers Win With Franchise Law Amendments page 3

Annual Payday Notice Eliminated page 4 EPA Auditing MVAC Certificates page 7

Robert Vail, Chairman, Greater New York Automobile Dealers Association

Robert Vail, of the Vail Auto Group became Chairman of the Greater New York Automobile Dealers Association (GNYADA) at its Annual Convention, held at the Old Westbury Golf and Country Club in conjunction with GNYADA’s Charity Golf Outing, on June 16, 2014. This year’s Outing raised more than $115,000 for scholarships for automotive technology students.

Factories Change Provisions page 9

Automotive Education & Training Summer Seminars page 10

Vail’s family has been in the auto industry since 1918, and Vail is a third generation

New Cobra Notice page 11

Governor Signs Franchise Bill on Day of GNYADA Annual Meeting Even as Bob Vail was being sworn in as GNYADA’s Chairman, we received a call from Albany that Governor Cuomo was signing GNYADA’s top legislative priority into law. A comprehensive bill, updating the New York State Franchised Motor Vehicle Dealer Act, which had passed both houses of the state legislature overwhelmingly, became effective immediately upon the Governor’s signing it into law. (See page 3 for more info)

The Newsletter is published by GNYADA, a not-for-profit organization representing franchised automobile dealers in the New York metro area. 18-10 Whitestone Expressway Whitestone, New York, 11357

Dealer Hotline 718.746.5900 www.gnyada.com

The Newsletter • July 2014 1

Annual Meeting: A New Vision for GNYADA

2

With a revised Franchise Bill under its belt, a new Chairman in place, a slate of new officers installed, and a new generation of young dealers actively participating through its NEXTGEN Committee, GNYADA is preparing an aggressive agenda to protect and promote the retail auto- mobile dealers of greater New York. “For over a century this Association has remained relevant. That role is as important as ever as we face new unfounded attacks on our businesses,” said incoming GNYADA Chairman Bob Vail. “GNYADA is up for the fight against unnecessary legislation and challenges to the franchise system itself. At the top of our list are assaults on dealers’ business model. Dealer-assisted financing has been enormously successful in increasing More than 400 GNYADA members/ allied members and their guests saluted four veterans who are training for careers in the auto industry. At GNYADA's Charity Golf Outing they were presented with $20,000. At the outing at the Old Westbury Golf & Country Club, GNYADA members raised a record $100,000 for scholarships for students entering the retail automotive industry. “This is an amazing commitment and show of support by the industry to help people,” said Mark Schienberg, GNYADA president. “We are excited to assist these veterans who have chosen the retail auto industry.” 3

l to r: Neale Kuperman, Bob Vail, Robert Penn, Nick Toomey, Jane Millman, and Lee Certilman are sworn in as officers for 2014-2015 by Stuart Rosenthal. (Not pictured: John LaSorsa).

excessive outside interference,” said Vail.

access to and reducing the cost of credit for millions of people,” continued Vail. “Our industry has faced many chal- lenges over the years, but GNYADA’s mission stays the same – to strength- en franchised dealers’ rights to allow them run their businesses without

Vail, thanked outgoing Chairman Neale Kuperman for his tireless work on behalf of dealers. “Your commit- ment and leadership have led us to success on critical issues,” Vail told Kuperman.

Scholarships Awarded to Local Vets Members Raise Record $100,000 at GNYADA Charity Golf Outing

Additional GNYADA Scholarships GNYADA distributes thousands of dollars in scholarships annually to promising students looking to start a career at a franchised new car dealership. At the Awards Dinner, GNYADA also presented scholarships totaling $7,000 to the top three winners of our New York Automotive Technology Competition, awarded scholarships to the top performing automotive technology student from each of the 18 schools that participated in that Competition, and awarded $5,000 in scholarships to the winners of the World Traffic Safety Design Competition.

Since GNYADA started its annual Charity Golf Outing in 2005, when it opened the Center for Automotive Educaiton & Training, it has raised over $350,000 in scholarships.

GNYADA Education Committee Chair Nick Toomey (center) with the 2014 Automotive Education Scholarship for U.S. Veterans recipients.

Greater New York Automobile Dealers Association • www.gnyada.com

The Newsletter • July 2014

2

Dealers’ Full Court Press Wins Victory with New Franchise Law

4

Dealers now have many new protec- tions with the passage of the fran- chise law amendments in June. The bill, adds more than 20 significant dealer protections to the franchise law. Dealers’ expanded rights in key areas are described below.

fully crafted by a committee of GNYADA dealers representing virtually every linemake, with the final bill being hammered out with auto manufacturers in 18 months of meetings.

and weighed in on this bill, pushed it forward, even when resistance from Tesla and other groups threatened the bill’s progress. GNYADA thanks Governor Cuomo, the Senate and Assembly Leadership for their leadership and support.

A full court press by dealers across the state who contacted legislators

The bill’s broad coverage was care-

2014 Dealer Franchise Law Amendments

New Factory Stores Prohibited: The bill prevents DMV registering a dealership owned or controlled in any manner by a manufacturer. Pre-existing EV only stores are permitted to continue, but may only be transfered to a franchised dealer, and may not use the dealer development exceptions of the law. Facility Improvements: Dealers have substantial new protections including a new 10-year moratori- um once a dealer has completed renovations. Dealers can use com- petitive, alternative suppliers for many items. OEMs cannot discon- tinue incentive payments once a dealer has complied with an incen- tive program for renovations. Warranty Reimbursement: Expanding the 2009 enhancements to the Franchise Law, certain non- warranty-like repairs are now specifically excluded from the cal- culations (such as tires, recondi- tioning, wholesale parts, routine maintenance, batteries). The new law also improves procedures fol- lowing submissions of claims. OEMs have the burden to show that the dealer’s requested rate is unreasonable.

Audits: Franchisors must provide specific information before audit- ing dealers concerning claimed errors in warranty and sales sub- missions. A dealer’s failure to doc- ument part of a job properly cannot be a basis to deny the entire claim. Dealers must have a chance to cor- rect clerical or administrative errors. OEM must meet with dealer before chargebacks. No charge- backs are allowed unless claim was materially false or fraudulent or until the dealer has had a chance to commence a challenge. Allocations: Manufacturers must disclose their methodology for allo- cation in a clear manner. OEMs cannot use any unfair, unreason- able, or discriminatory allocation formula. Extended Service Contracts: Dealers can sell extended war- ranties from their choice of vendors and not be penalized by the OEM for doing so. Exclusivity: This amendment adds further protections from manufac- turers forcing dealers to maintain exclusive facilities. Site Control: OEMs may not exercise site control where the linemake has terminated (i.e., Oldsmobile, Mercury, Saturn, Plymouth).

Exports/Chargebacks: OEM may not penalize a dealer for exported cars if the dealer demonstrates due diligence and good faith. Registering a vehicle and collecting sales tax raises a presumption of good faith. OEM must provide notice and specifics before taking action. Dealer has no liability for courtesy deliveries or fleet sales that are exported. Manufacturers must provide dealers with notice prior to a chargeback for exported vehicles. Sales Outside the RMA: The new law requires franchisors to give credit to dealers for inventory allocation purposes for sales of new motor vehicles to buyers from areas inside and outside a franchisee’s assigned sales territory (PMA, AOR, etc.). Chargebacks: “Sales and marketing payments” are now subject to the existing charge back protections. Termination: Amendments enhance dealer protections in the event of a termination – adding reimbursement for purchased signs, furniture and special tools, or cer- tain leased items, like signs. The law also protects dealers who hold theirreal estate in a different entity than the dealership.

n

n

n

n

n

n

n

n

n

n

n

n

Greater New York Automobile Dealers Association • www.gnyada.com

The Newsletter • July 2014 3

5 GMYields to Dealers onWarranty Reviews

GM, which had been demanding that dealers produce two months of R.O.s so it could review the warranty reim- bursement rate, has now reversed itself and withdrawn those demands, in the face of objections raised by GNYADA and dealers. In a letter to dealers this month, GM said that, “[G]iven the current environment and the feedback we have received from dealers, GM is suspending its review of parts handling allowances… Accordingly, [dealers] need not pro- vide at this time the job cards requested….” GNYADA had advised dealers that manufacturers have no right under New York’s Motor Vehicle Dealer The National Labor Relations Board has ordered an Arizona car dealership to reinstate a salesman who was fired after he launched into an offensive, profanity-laced tirade directed at the owner of the dealership. The salesman questioned the owner about vehicle costs, commissions, and minimum wage. The owner told him to follow policies and procedures, and to stop complaining about pay. The owner told the salesman that he did 6

Franchise Law to “adjust” an approved warranty reimbursement rate after it had been set. GNYADA also reached out to GM to urge them to reconsider their efforts to do so. One dealer, who complied with the request from GM, received notice that his warranty rate was reduced. GM has now reversed course even in that case. Though the manufacturer claimed that its review was consistent with the state’s Franchised Motor Vehicle Dealer Act (FMVDA), GNYADA believes this “review” and any unilat- eral reduction of warranty rates is not sanctioned under the state law. The not have to work there. The salesman became upset and told the owner, in an expletive-lace tirade, that he was dishonest and stupid, nobody liked him, and everyone talked about him behind his back. The salesmen said that if he were fired, the owner would regret it. The owner fired him. The NLRB found that the salesman’s questions about compensation consti- tuted activity protected by the NLRA. This protection applies to union and

FMVDA clearly authorizes only the dealer to submit a request to change its parts markup or labor rate. When GM began to send its notices to dealers, GNAYDA recommended dealers to protest, in writing, immedi- ately. GNYADA worked with its franchise law counsel Richard Sox, Esq., to frame the successful objec- tions to GM’s process. This item is intended to provide infor- mation, and should not be construed to constitute legal advice. For further information concerning this issue, please contact Stuart Rosenthal or Susan Bieber at 718.746.5900.

NLRB Reinstates Cursing Salesman

non-union employees. The NLRB found that the termination was unlaw- ful because the salesman’s behavior was protected. The lesson here is to proceed with caution when disciplining employees for inappropriate or insubordinate behavior if the behavior occurs in the context of a discussion concerning wages, hours and other terms and conditions of employment.

7 In a significant victory for dealers, the state has eliminated the annual requirement to provide each employ- ee a notice indicating their overtime rate of pay along with their regular payday/pay rate. Since the law went into effect, GNYADA has argued it was overly burdensome, and the annual notice was unnecessary. We actively supported its repeal. GNYADA’s Employee Relations Plan (ERP) prepared a comprehen- sive step-by-step instruction guide to completing these wage notices. The Guide to New York State Employee Pay Rate and Payday Forms along with sample industry-specific forms are available on GNYADA’s website at: http://www.gnyada.com/dealers/ payforms/overview Albany Votes to Eliminate Annual Payday Notice The requirement to provide this notice remains in place upon hiring and changes in pay for employees and failure to comply will result in stiffer penalties. Payday/Pay Rate Notices must be acknowledged by the employee and retained for 6 years.

Greater New York Automobile Dealers Association • www.gnyada.com

The Newsletter • July 2014

4

Dealership Buy/Sell Activity Jumps 60%

8 FTC Updates its Used Auto Parts Guide

9

The Guides also specify that certain acts and practices to be unfair or deceptive under the FTC Act, and are thus prohibited. The Guides prohibit misrepresenting: that a used part or assembly is new; the amount of use a part of assembly has had; the identity of anyone who worked on a used part or assembly after its removal from the original vehicle; the condition or the amount of work done to it after the part’s or assembly’s removal from the original vehicle. The terms “remanufactured,” and “factory rebuilt,” should be used only if the product was rebuilt “at a factory generally engaged in the rebuilding of such products.” The Guides now also apply to used tires. n n n n

The Federal Trade Commission (FTC) has published an update to its Guides for the Rebuilt, Reconditioned and Other Used Automobile Parts Industry (Used Auto Parts Guides) . The Used Auto Parts Guide addresses advertising, sale, and installation practices regard- ing previously used motor vehicle parts and assemblies of parts that con- tain previously used parts, such as engines and transmissions (“used parts”). The Used Auto Parts Guides require that used parts must be clearly and conspicuously identified as such in advertisements, on packaging, and, if the product appears new, on the prod- uct itself. Further, the Guides prohibit misrepresenting the identity of the used parts’ rebuilder. The Guides limit what can be described as “rebuilt” or “remanufactured,” and limit use of the term “factory rebuilt’’ to certain used parts. The Federal Trade Commission has approved final consent orders (settle- ments) involving charges against ten auto dealers for deceptive advertising. Under the settlement orders, the dealerships are prohibited from misrepresenting the cost of purchas- ing or leasing a vehicle, or any other material fact about the price, sale, financing, or leasing of a vehicle. In some cases, the consent orders also address the Truth-in-Lending Act and Consumer Leasing Act violations. Dealerships will have to disclose all “required terms” clearly. 10

According to recent reports, dealer- ship buy/sells rose dramatically in the first quarter of 2014. Kerrigan Advisors, a firm specializing in serving dealership sellers, released a report that found a 60% increase on buy/sell activity. Haig Partners Blue Sky Report indicated a tripling of transactions (from 14 to 42) during that same period, compared to a year ago. The Kerrigan Report offers a detailed view of public and private company dealership acquisition activity. In addition to the sharp spike in selling, the report found that that blue sky pricing remains high for most fran- chises and that the market has estab- lished a pricing floor. Erin Kerrigan attributed the growth to, “High blue sky prices, buyer demand for dealerships and a slow- down in dealership profit growth, meaning sellers are concerned about missing the market and want to ensure they exit on top. when acquisition spending by public retailers more than doubled in the first three quarters of the year, com- pared to the same time-frame in 2012. GNYADA’s smaller sample of the market revealed many more buy-sells and new DMV registration applications than previously. Further, the extent to which recent purchases of large groups, such as Lithia’s acquisition of DCH, have affected these numbers was not included in those announcements and may yet be seen in subsequent quarters. These reports continue the trend that GNYADA saw starting in 2013,

The amendments will be effective August 22, 2014.

FTC Settles Deceptive Ad Claims Against Dealers

In those cases where the dealerships misrepresented that consumers had won a prize, the consent order also prohibits misrepresenting material terms of any prize, sweepstakes, giveaway, or other incentive. The cases were part of Operation Steer Clear, a nationwide sweep focusing on misleading advertising associated with the selling, financing, and leasing of motor vehicles. Auto- related complaints remain a priority of the FTC. The agency brought sev- eral cases in the past year against auto dealers.

Greater New York Automobile Dealers Association • www.gnyada.com

The Newsletter • July 2014 5

Dealers Open Doors for Interns

11

interns around often fosters learning for the rest of their staff, especially service and fixed-operations man- agers, who mentor the interns. GNYADA’s AYES internships have a positive impact on retention rates. Interns often stick with the dealer- ships in which they interned. According to GNYADA’s AYES Coordinator, Stephen Mercaldo, more than half of such interns are still working at the dealerships where they interned. Internships are a cost- effective way to recruit and train the right talent for your shop.

These students will develop both their technical and “soft” skills, learning to work in an environment as valued members of a team. Interns learn how a dealership oper- ates, and since they arrive with some basic skills, they begin to clock labor hours in the service department like other full-time technicians. AYES internships work for dealers and for the interns. While the intern- ships provide a learning environment in a dealership service department, dealers have an opportunity to evalu- ate the next generation of techni- cians. In addition, having talented

This summer, 45 automotive technol- ogy students in our region are intern- ing at GNYADA-member dealer- ships. This opportunity has proven to be a classic win-win situation for the interns and the dealerships. During a 320-hour workplace intern- ship over the summer between the junior and senior year, students work alongside a mentor in a dealership.

Interns or Employees? The use of unpaid interns in businesses is being monitored by government agencies regarding concerns over wage and hour issues. High profile class-action lawsuits resulted in significant amounts of back pay when unpaid interns were found to be “employees” who should have been paid.

According to the NYS Department of Labor, an intern is only exempt from Minimum Wage laws if they meet all 11 of the following criteria:

The training is similar to training provided in an educational program. The training is for the benefit of the intern. The intern does not displace regular employees, and works under close supervision. The intern does not provide an immediate advantage to the employer. The intern is not necessarily entitled to a job at the conclusion of the internship and is free to take jobs elsewhere in the same field. The intern is notified, in writing, that there are no wages and are not considered employees for minimum wage purposes. Any training is performed under the supervision of knowledgeable and experienced trainers. The intern does not receive employee benefits. The training is general; interns would qualify to work in any similar business. The screening process for the internship relies on criteria relevant for admission to an educational program. Advertisements, postings, or solicitations for the program clearly discuss education or training, rather than employment. If your internship program does not satisfy all 11 criteria, you should pay interns at least minimum wage for all hours worked and time and one-half for all hours worked over 40 in a workweek. This is the case even if the intern accepted an “unpaid internship”. n n n n n n n n n n n

Greater New York Automobile Dealers Association • www.gnyada.com

The Newsletter • July 2014

6

Auto Credit Must Remain Affordable and Accessible for Car Buyers By NADA Chairman Forrest McConnell, III

12

ers to secure discounted financing. Most troubling is that the CFPB has even admitted that it has not studied how this change would impact consumers. Members of Congress have taken notice. Rep. Marlin Stutzman, R-Ind., introduced H.R. 4811, The Bureau Guidance Transparency Act, which passed the House Financial Services Committee on a bipartisan vote on June 11, thanks to strong grassroots support from NADA and other industry trade groups. The bill would require the CFPB to be more transparent by requiring prior public notice for other future guid- ance. The bill would also rescind the CFPB’s auto finance guidance issued in March 2013 that threatens to elimi- nate a dealer’s ability to offer interest rate discounts in the showroom.

Franchised new-car dealers do much more than sell cars. We provide serv- ice for the long term. And we offer our customers competitive financing options. Dealer-assisted financing provides great value and competitive advan- tages, which saves our customers bil- lions of dollars each year. And the proof is in the numbers. Despite the fact that dealer-assisted financing is always optional, a large majority of consumers still choose to finance their vehicles through dealers. But in March 2013 – without prior notice or public comment – the Consumer Financial Protection Bureau (CFPB) issued guidance that could eliminate the flexibility that dealers have to negotiate lower auto financing rates for the benefit of con- sumers. Instead, the CFPB is pressur- ing auto finance sources to compen- sate dealers with a flat fee, which would weaken the ability of car buy-

sources, NADA released its Fair Credit Compliance Policy & Program last January. This optional program provides a dealership which adopts it with a viable means of managing its fair credit risk, while still allowing for pricing flexibility. Chris Stinebert, the president and CEO of the American Financial Services Association, issued a state- ment on July 9 that strongly support- ed NADA’s program, calling it “a legitimate tool that helps provide lenders with evidence that there are legitimate non-discriminatory reasons for pricing differences.” NADA is working to protect dealers – and our customers – by making sure auto loans remain affordable and accessible while still addressing fair credit risks. For more information, visit www.nada.org/cfpb .

To help address the fair credit risk to consumers, dealers and finance

McConnell is president of McConnell Honda/Acura, Montgomery, Alabama .

13 Technicians who repair or service motor vehicle air-conditioning (MVAC) systems must have completed an EPA-approved air condition- ing repair training program. Recordkeeping Requirements Under EPA rules, dealers must keep records showing that only trained technicians are operating dealership refrigerant recycling equipment. Dealers must keep tech’s “609 Certificates at the deal- ership for a minimum of three years. EPA has recently audited dealerships in our region for those records. Best Practice GNYADA suggests dealers review their files immediately to ensure copies of each AC tech’s certificate is kept in a file of MVAC certifi- cates for as long as the tech works at your dealership plus at least three years after the tech no longer works at the dealership. EPA Auditing NY Technicians

Franchise Law Update SEPT 24, 2014 9:30am -12:30pm Center for Automotive Education & Training Presented by: Douglas Clark, Esq., Wilson, Elser, Moskowitz, Edelman & Dicker LLP and Richard Sox, Esq., Bass Sox Mercer To register contact Ann Daly at 718.746.5900 or ann@gnyada.com

Save the Date

Greater New York Automobile Dealers Association • www.gnyada.com

The Newsletter • July 2014 7

To Keep Plate Orders on Track, Monitor Your Inventory

14

will send dealers a new batch of plates when the previous plates show up as registered in their records. If you request additional plates before you submit paperwork for all of the plates in a single box of your inven- tory, red flags are raised at DMV. Dealers should submit all title and registration paperwork to DMV within 5 calendar days from the date of delivery of the vehicle to your customer, as required by DMV regs. When your biller prepares to send deals to the bank, separate the motor vehicle work and put it on a transmittal. Send the transmittal to your pro- cessing service (such as DMV- DIRECT ) the same day to meet DMV’s 5-day rule. n n n n Best Practices to Avoid Delays (and Violations)

Know what size generator will serve your essential business needs. Call your electrician to get help figuring that out. Get permits and permissions before the storm hits. Double-check your data backups – and your ability to recover data from those backups. Conduct a drill. Don’t forget employee’s needs, either. During Hurricane Sandy, we saw lots of dealerships that accommodated employees’ families, and everyone benefitted. If any motor vehicle paperwork is returned to you, correct it and return it to your service immediately. Periodically, request a copy of your inventory list from Vehicle Safety and review it to ensure that you have not missed any plates. Assign one person to be responsible for tracking dealer- ship plate inventory. Keep a DMV approved plate log, and complete it on a daily basis to spot any missing plates immediately. DMV has established title and regis- tration processing procedures that must be followed exactly. Otherwise, you may experience delays in filling passenger plate orders and receive notices of violations. Follow the steps above to avoid delays or denial of passenger plates for your dealership. n n n n

Ever wondered why you did not receive a box of plates you ordered from DMV? Even a simple slip-up on DMV paperwork may delay your plate order. Perhaps you’ve seen this at your deal- ership: plates were issued but the deal was canceled, and the plates were not returned to the billing office. Alternatively, if the plates were returned to the biller, they were not issued to the next deal that required new plates? Manage Your Plate Inventory Plates assigned to your dealership (passenger, commercial, and in-tran- sits) by DMV’s Vehicle Safety Division. It maintains an inventory showing all the plates it has assigned to your dealership (specific to your facility number). It tracks these plates through the registration process and it

Lessons Learned from Hurricane Sandy As we found out after Hurricane Sandy in 2012, it only takes one monster storm to change the course of your business, permanently. nesses do not reopen after a disaster, and another 25 percent fail within one year, according to the FEMA. n 15

There are a number of basic measures to take to ensure you are ready as the storm season develops: Create and emergency action plan. Do a risk assessment. What are potential threats to your business? Where is your inventory stored? Can it be moved or protected? Make alternative communications plans. Make sure you have power – 60% of interruptions will result in a business needing alternative power. n n n n n

The Atlantic hurricane season offi- cially started on June 1, 2014, and even though we typically don’t see much action around here until the autumn, now is the time to make important decisions to help keep your employees, business, and property safe. Planning and preparing for a disaster is key to minimizing costs and stay- ing in business. Forty percent of busi-

n

n

Greater New York Automobile Dealers Association • www.gnyada.com

The Newsletter • July 2014

8

It’s Getting Hot - KeepWorkers Safe

16

Shorts not recommended in the repair shop Clothing should protect each employee from known chemical and environmental hazards. Shorts do not provide protection from machin- ery, tools, chemical spills, sparks or other hazardous materials regularly found in repair shops. GNYADA recommends that employ- ees who work around machinery or hazardous substances should wear long pants in the workplace.

extreme temperatures includes: frequent breaks for workers to cool down in an air conditioned or shady area frequent hydration (water, juice, or other non-caffeine beverages) providing as much air flow as possible (to limit the build-up of excess heat) Train and instruct supervisors to monitor employees for signs of heat stress during extreme hot weather or heat waves, especially anyone who works outside. OSHA considers heat related illnesses and injuries (and fatalities) as very serious and pre- ventable. n n n

Dealers are required to provide a “safe work environment” under OSHA’s general requirements, and that includes preventing heat-related illnesses. As dealerships are among the businesses targeted by OSHA in this regard, we have provided some reminders and tips on how to comply with this requirement, below. There are steps dealers can take to provide a safe work place for all employees. Working safely under

17 Porsche and Kia Amend Dealer Agreements Two automakers recently instituted programs with potentially adverse effects on dealers. Below is an update on those developments. These tactics underscore the importmance of reading all communications from the factory, and respond- ing promptly.

Porsche sent dealers a Dealer Agreement thatcontained new dealer obligations that related to facil- ities, new vehicle sales effectiveness, CPO sales effectiveness, ownership transfers, and customer data among others. Some dealers objected timely (with the help of franchise counsel). Update: Porsche offered dealers a revised Sales and Service Agreement, making many of the changes that were requested. The new proposals are under review and may be subject to some additional tweaking before becoming final. Kia announced plans to allocate it new luxury model only to certain dealerships, based on CSI, sales performance, and exclusivity of facilities. New York’s franchise law requires manufacturers to make all models within a linemake available to every franchisee. Further, the vehicles must be allocated fairly, without regard to a dealer’s performance at the time of the launch. Also, the fran- chise law requires that facility requirements be “reasonable.” Update: So far, Kia has been holding firm on providing the new model to only some dealers, in violation of state law, and won’t reveal how those dealers are selected. However, based upon infor- mation disclosed to other industry members, it appears that production plans for the vehicles will be sufficient for all Kia dealers to receive a fair allocation. We will advise dealers if there is any formal announcement or outcome of any challenges to Kia’s practice.

The foregoing information is provided for educational purposes only and is not to be construed or interpreted as legal advice. GNYADA thanks Richard Sox, Esq. of Bass Sox Mercer for providing the information for this item.

Greater New York Automobile Dealers Association • www.gnyada.com

The Newsletter • July 2014 9

Summer School is in Session

18

Continuing with a program that is popular with dealers, GNYADA has offered training classes throughout the summer at the Center for Automotive Education & Training. Sign up now to keep from getting locked out!

Mastering the F&I Presentation From Greeting to Signature: A Step-by-Step Guide to increasing

2014 Franchise Law Update Experts will discuss the impact of the changes on dealership opera- tions and important new dealer rights and protections under the amended New York State Franchise Motor Vehicle Dealer Act. Don’t miss this opportunity to discover vital protections afforded dealers’ under New York’s Franchise Law. Presented by Douglas Clark, Esq., Wilson, Elser, Moskowitz, Edelman & Dicker LLP and Richard Sox, Esq., Bass Sox Mercer

Registration is fast and easy.

Online: www.autoedcenter.com/ education/seminars.php Call: GNYADA Education & Training team directly at 718.640.2012 Email: Carole Rogner at Carole@gnyada.com .

F&I sales for your dealership Presented by Ken Carlson, MANAGE-RITE, Inc. August 7, 2014 10:00am-4:00pm

Introduction to Automotive Billing

Learn the essential steps to becoming a successful biller Presented by Jean Marie Rugg, General Manager DMV Direct

August 20, 2014 10:00am-4:00pm

September 24, 2014 9:30am-12:30pm

Effective Onboarding and Training Programs

19

Some dealers have very sophisticated “onboarding” and mentoring pro- grams for new hires, while others don’t find out they have a new employee on the job until that person comes looking for their first pay- check. Compli has offered the fol- lowing key points to make sure your dealership is getting the most from new hires. Consistency is important You must have a defined process that is followed for each candidate and new hire. This is much easier when done through automation. If done right, great onboarding and training will dramatically reduce the time it takes to move an employee

from a “beginner” to a “peak per- former.” Not surprisingly, 76% of employees surveyed said that train- ing was the “most important” thing a new employee needed to be able to contribute quickly. Some dealers leave only a short time to “onboard” employees, but even so, there are steps to make that time have more of an impact for the new employee. These simple steps can improve your orientation program: Be on time Stay focused on your new employee Pick a setting free of distractions Make sure your forms are current and professional (electronic is even better!) n n n n

Don’t ignore the need for your new employee to socially inte- grate into their new team Pay attention to how you commu- nicate your company culture Have clear job descriptions, goals, and performance metrics documented for new hires. The takeaway: onboarding doesn’t have to be time-consuming, if it is managed properly. Getting the new employee situated can be time very well spent and produce immediate ROI. n n n

GNYADA thanks Jason Porter of Compli for material for this item.

Greater New York Automobile Dealers Association • www.gnyada.com

The Newsletter • July 2014

10

Prepare Now for Affordable Care Act Reporting

20

Information Reporting on Employer-Sponsored Coverage If an employer offers a fully insured group health plan, the health insur- ance issuer is required to submit annual information reports to the IRS identifying who is covered. The first reports must be submitted in 2016 for the 2015 year. The returns must be furnished to employees by January 31, 2016 and filed with the IRS by February 28, 2016 if filed on paper or March 31, 2016 if filed electronically. Information Reporting on Offers of Coverage by Large Employers Large employers will have to report to the IRS each year on anyone who was a full-time employee for one month or more, including whether that person was offered health coverage, and, if so, the lowest fees employees could pay for coverage that meets minimum value requirements.

The first reports must be furnished to employees by January 31, 2016 and submitted electronically to the IRS by March 31, 2016. For purposes of determining whether an employer is a large employer, the law defines an entire controlled group as a single applicable large employer. However, for purposes of determining how the members of the controlled group are to be evaluated for penalty liability, each member of the controlled group will report separately.

The Affordable Care Act (“ACA”) creates a new employer "play or pay" requirement with respect to health coverage and it also requires new types of annual tax information reporting. Those reports include: Employers that offer self-insured health plans must report on every individual covered under the plan. Large employers that are subject to the play or pay requirement must report to the IRS each year on every individual who was a full-time employee for one month or more during the year. The IRS requires employers to submit the first set of information reports in 2016 . Start planning now because it will be a challenge to cap- ture all the data required beginning January 1, 2015. n n

For assistance with your health insurance needs, contact Mike

Conway at GNYADA Insurance Brokerage. 718.746.8100 or mconway@gnyada.com .

21 Changes to COBRA Model Notices The U.S. Department of Labor (DOL) has released proposed There are no “substantive” changes to existing COBRA rules or

If you use GNYADA’s Insurance Brokerage’s new COBRA notice service, you will be automatically compliant with these changes. Contact Michael Conway to see how you too can improve your employee benefit package and save money.

changes to the COBRA notification regulations. The changes pertain to two areas: New content about the availability of state health insurance exchanges. It includes n additional detail on top of the changes to the model general notice released last year. The changes also update the sec- tions describing basic COBRA rules in an attempt to make them more easily understood. n

processes. These model notices will be required when the changes are approved and finalized. They repre- sent a best practice approach. There is no effective date for the new model notices yet. Any dealership that is utilizing an outside service for their COBRA administration can check to see if they are incorporating the proposed changes in their COBRA documents. The updated model COBRA notices are available in the COBRA section on the DOL website.

Michael can be reached at mconway@gnyada.com or 718.746.8100.

Greater New York Automobile Dealers Association • www.gnyada.com

The Newsletter • July 2014 11

EMPLOYMENT CORNER

Error on Monroney Label Leads to Lawsuit

22

GNYADA’s Employment Corner is a free recruiting and job placement service that lists qualified candidates for positions at dealerships. If you have a position to fill, call 718.640.2012 .

FILE #

POSITION

RESIDES IN

GM has been sued by a buyer of a 2014 Cadillac who alleges that she was misled by a false Monroney label that indicated the vehicle had five-star ratings in three categories (frontal crash driver, frontal crash passenger, and rollover protection) from the National Highway Transportation Safety Administration (NHTSA). Nearly five months after buying the vehicle, the consumer received a letter from General Motors notify- ing her of an "inadvertent error." In fact, the vehicle had not been tested or rated by NHTSA, according to GM’s letter. stepping up to notify the consumer of a potential problem that it dis- covered, but their reward was a class action lawsuit in Florida, alleging violations of the Florida Deceptive and Unfair Trade Practice Act. If the error is wide- spread, dealers in New York (and every state) could see similar lawsuits, insofar as almost every state has passed similar consumer protection laws. In the event of such lawsuits, we would expect GM to indemnify and defend any dealer who is might be sued. However, it is important to timely notify GM and the dealer’s insurance company of such claims that are filed. No Good Deed Goes Unpunished? GM did the right thing here,

OFFICE

Biller

Glen Cove Ozone Park Staten Island

710 711 712 713 714 715

Bookkeeper

Hicksville

Staten Island Whitestone

Controller

Long Beach

716 717

South Ozone Park

Controller/Full Charge Bookkeeper

Freeport Jamaica

718 719

Receptionist

SALES

Pre-Owned Sales Manager

Hauppauge Hicksville

720 721

SERVICE

Service Advisor

Roosevelt

722

Contact Us: 18-10 Whitestone Expressway | Whitestone, NY | 11357 Dealer Hotline: 800.245.4640 GNYADA Headquarters: 718.746.5900 E-Mail: assistance@gnyada.com DMV-Direct: 718.747.0400 GNYADA Insurance Brokerage, LLC: 718.746.5900 New York International Automobile Show: 718.746.5300 Center for Automotive Education and Training: 718.640.2000

The information contained in this newsletter may not be relied upon for the avoidance of tax penalties. Readers are urged to discuss any issues raised in this newsletter with their legal and tax professionals. Printed on FSC certified material. All original material except where noted. © GNYADA 2014

Greater New York Automobile Dealers Association • www.gnyada.com

The Newsletter • July 2014

12