This website is designed to provide California new motor vehicle dealerships with resources on issues involving the coronavirus (COVID-19). CNCDA will use its best efforts to continue to update this website, but this situation is rapidly evolving. For the most current information, please visit government websites for your jurisdiction or call CNCDA at 916-441-2599.
I heard that the Governor issued a statewide Stay Home Order. Can I continue to operate my dealership?
On Thursday, March 19, the Governor issued a statewide order that incorporates federal guidance to determine whether a specific business or industry should close. This guidance states that “automotive repair and maintenance facilities” are critical. “Auto sales” is not listed as critical.
Under this statewide order, dealerships throughout the state can continue to operate their service and parts departments, so long as they practice adequate social distancing and take appropriate precautions in light of the outbreak.
Whether dealerships can continue to operate their sales departments is a much more difficult question to answer. Some local orders, such as the Sacramento County order, allow dealerships to continue to sell vehicles. However, the statewide order establishes statewide minimum requirements, and local agencies may only enforce stricter local orders. In other words, if there is a conflict between the statewide order and a local order, the more restrictive order will apply.
In light of continued confusion on this issue, we asked the Littler law firm to prepare a memorandum applying the Governor’s statewide Stay Home order to vehicle sales.
The Littler memorandum confirms the following:
- The statewide order does not specifically allow vehicle sales, so there is risk if dealers continue vehicle sales in California.
- The statewide order provides dealers with a good faith basis to continue operating a “skeleton crew” in their vehicle sales department to allow customers to obtain vehicles that are in immediate need of transportation.
- Dealers should not continue operating open, traditional in-person sales departments.
- The more dealers can develop vehicle sales practices that minimize face-to-face transactions, the easier it will be to justify continuing vehicle sales during the statewide order. Dealers may wish to consider remote work policies and home deliveries to minimize face-to-face interactions.
- Although dealers have a good faith basis to continue limited vehicle sales, it is still possible that local or state law enforcement may shut down such operations.
Dealers should note that the memorandum analyzes vehicle sales under the statewide order. Some jurisdictions (such as Fresno) have specifically stated that vehicle sales should not continue, and other jurisdictions may take the position that their local order is more restrictive that than the statewide order. As such, the relative risk of engaging in vehicle sales currently varies based on location. This memorandum also does not discuss issues involving remote work or online sales that exist under the Vehicle Code and Civil Code.
To provide dealers with specific guidance on online sales, remote work, and home deliveries, CNCDA asked the Arent Fox law firm to prepare a memorandum on this issue. The memorandum concludes that while subject to California’s current Stay at Home orders, dealerships can sell vehicles online, with or without the assistance of vehicle salespersons who work from home, and make home deliveries to consumers.
Finally, CNCDA asks its dealers to continue to use their best judgment on vehicle sales. Unfortunately, the reality of our current situation is that the transmission of the disease and economic activity are inversely related. When we speak to local health officials a common refrain is that “if something can be delayed a month or two, delay it a month or two.” Please take this advice to heart when implementing procedures at your dealership.
I’ve heard that my local jurisdiction is under a “shelter in place” or similar order. Can I continue to operate my dealership?
As of March 21, provisions in the local orders below are only enforceable if they are more restrictive than the statewide order, discussed above.
The following is a partial list of jurisdictions that have issued orders or directives instructing “nonessential” businesses or activities to shut down. You should visit your local government’s website for information applicable to your dealership.
- Northern California
- Contra Costa County
- Alameda County
- Marin County
- Santa Cruz County
- Sonoma County
- San Benito County
- Monterey County
- Solano County
- Southern California
- Central California
I need assistance on employment issues. Where should I go?
For general employment questions…
In response to frequent inquiries on employment law inquiries, we asked John Boggs of Fine, Boggs, and Perkins LLP to develop a Q&A, which you can access on our website here: https://www.cncda.org/coronavirus-employment-law-qa/.
The Fisher Phillips law firm also maintains two helpful FAQs – one FAQ provides California-specific guidance to auto dealers and the other FAQ is a comprehensive resource on employment related issues involving the coronavirus. They are both great resources that are updated on a regular basis.
The Fine, Boggs, and Perkins LLP firm has developed new FAQs and other documents, which assist dealers on critical questions involving cornavirus related matters, including the new federal leave law and recent changes to layoff procedures under the sate WARN Act. You can receive copies of these resources on the legal updates potion of their website.
CNCDA dealer members can also contact Fine, Boggs, and Perkins LLP free of charge as a CNCDA member benefit. Their contact information is: (650) 712-8908 (Half Moon Bay Office); (858) 451-1240 (San Diego Office); (562) 366-0861 (Long Beach Office).
The California Labor and Workforce Development Agency (LWDA) also has a dedicated website on coronavirus resources for employers and workers. These resources include a FAQ on relevant California laws and website that provides a helpful chart that identifies benefits for workers impacted by the coronavirus.
For questions involving new federal paid leave requirements (FFCRA)…
The US Department of Labor’s (DOL) website contains various helpful resources on the Families First Coronavirus Response Act (FFCRA), including a Q&A page and a downloadable poster (which employers are required to post under the law). You can access the DOL’s website here.
The following law firms have developed helpful Q&A’s on this issue:
- Scali Rasmussen – FAQ on The Families First Coronavirus Response Act
- Fisher Phillips – Labor Department Offers Guidance On Families First Coronavirus Response Act, Effective As Of April 1
I need assistance on taxation and/or accounting issues. Where should I go?
A variety of programs have been launched by government agencies to allow businesses to delay tax obligations due to the coronavirus crisis. This allows businesses to retain cash on hand in the near term. The IRS has a special page on coronavirus tax relief, which is accessible by clicking here. The California Department of Tax and Fee Administration (CDTFA) has a webpage that outlines the process to request tax relief.
DHG has a comprehensive COVID-19 resources webpage, which is accessible at: https://www.dhg.com/covid-19.
Moss Adams also has a variety of resources available on taxation issues, such as Guidance Issued for 90-Day Federal Tax Payment Deferral, and State of California Emergency Tax Relief Provisions.
I need assistance on vehicle registration or related issues. Where should I go?
DMVDesk/Vitu is available to answer dealership questions and meet all their needs, regardless of whether or not they are DMVDesk/Vitu clients. You can contact them 24/7 at: 818-706-1949 or firstname.lastname@example.org.
What actions are manufacturers taking in response to the coronavirus?
Manufacturers have announced several initiatives, including changes to dealership performance standards, relief on their floorplan programs, and new incentive programs. Contact your manufacturer representative to learn what programs may be applicable to your dealership.
I’m considering closing my store for the duration of this crisis. Will I breach of my franchise agreement?
There isn’t a universal answer to this question. If you are considering closing your store, contact your manufacturer representative. Some manufacturers have announced that they are excusing their dealers from requirements to stay open due to the coronavirus crisis. Other manufacturers may be less accommodating. In the event your manufacturer resists a request for temporary closure, you may want to consider whether you could invoke a “force majeure” or similar clause in your franchise agreement, which could excuse performance in extraordinary circumstances. Please consult a competent franchise law attorney in the event you are considering escalating such a matter with your manufacturer.
What is CNCDA doing to help dealers during this crisis?
CNCDA began remote operations on Tuesday, March 17, 2020. Since this time, CNCDA staff has been in continuous contact with local and state officials on issues involving coronavirus and your business. Our legal hotline (916-441-2599) continues to operate and staff is fully accessible by phone or email. And we are continuously developing compliance resources (such as this website and daily alerts) to help our members during this difficult time.
The content on this webpage is not intended as legal advice. If you require legal advice, please contact competent counsel.
Media contact: Jenny Dudikoff, 916-599-5415