2022 September Bulletin

Just as we predicted, late summer has proven to be a busy time at the California New Car Dealers Association. As the legislative session ended on August 31, much of our advocacy and policy efforts in Sacramento came down to a race to the checkered flag at the finish line.

I am proud of CNCDA’s ability to nimbly act, respond and navigate this challenging political landscape to ensure new car dealers are represented and their requests are heard by legislators and policy makers. If you haven’t read it yet, you can review the 2022 legislative recap email sent earlier this week, which includes the defeat of SB 986 (the fundamentally flawed catalytic converter marking mandate bill) on the Assembly floor at the last minute.

In addition to these efforts, you may have seen one of the many media publications and interviews last month with CNCDA President, Brian Maas, with our organization’s response With a strong push that CARB undertake a formal midterm review to the California Air Resources Board rule mandating all new vehicles sold by 2035 be ZEVs.

Our stance: We’re all in for EV’s and dealers are essential to their acceptance by consumers. We also asked CARB to approve a formal midterm review just in case we don’t meet the aggressive targets on the way. Getting to 100% ZEV sales is going to be difficult with challenges including: potentially limited capacity in manufacturing and vehicle production (during labor shortages), EV affordability, charging and grid infrastructure (especially during power emergencies and outages), and supply chain constraints. Not to mention the unpredictability of unforeseen events (like the COVID-19 pandemic disruptions) that we could face in the next 12+ years before 2035.

CNCDA is prepared to play our part in achieving a zero-emission future, but we can’t ignore the difficult road ahead to achieve this dramatic shift in personal transportation

Our success in the future is dependent on the engagement of dealers up and down the Golden State who can share with policy makers what it will take to achieve zero emissions in the coming years. There is power and strength in numbers to help with this vital effort (and efforts like it). Please forward this bulletin to any non-dealer members to show the great work we are doing on behalf of ALL new car dealers.

Lastly, do not forget to register: CNCDA’s New Law Seminars are around the corner! Visit the Association events page to find a seminar located near you. I am looking forward to meeting other members and comparing notes for best practices moving forward. Hope to see you there!

John Oh
Lexus of Westminster
Chairman, CNCDA

New Motor Vehicle Board to Host Industry Roundtable on September 28-29
By: CNCDA Staff

The California New Motor Vehicle Board is hosting its 2022 Industry Roundtable on September 28 and 29 from 10 AM- 12 PM each day. The topic is “Equity, Justice and Inclusion in the Motor Vehicle Industry.” The two-day roundtable will include discussions with representatives from Ford, GM, Nissan, Stellantis, and Toyota. Anthony Bento, CNCDA’s Director of Legal and Regulatory Affairs, will also present with officials from nonprofits and state agencies. CNCDA encourages interested members to attend the Roundtable. To learn more about the Roundtable or to attend, click here or the flier to download.

COVID-19 Exclusion Pay may Finally End in 2023 with Cal/OSHA’s Proposed COVID-19 Permanent Standard
By: Anthony Bento, Director of Legal and Regulatory Affairs

At its September 15, 2022, meeting, Cal/OSHA will consider adopting “permanent” rules on COVID-19 in the workplace. Although they are called “permanent”, the proposed rules would last two years and become effective January 1, 2023, and expire on December 31, 2024.

Unfortunately, this means that COVID-19 rules will not end anytime soon in California. However, the permanent rules modify certain key requirements in the Cal/OSHA Emergency Temporary Standards (ETS), which is effective until the end of this year.

Beneficial changes include:

Eliminating the requirement to provide exclusion pay for COVID-19 absences.
Employers would only be obligated to provide testing to employees with close contact exposure in the workplace.
Notice of potential exposure would need to be given “as soon as possible” instead of within one business day.

Additional restrictions include:

The definition of “close contact” would be broadened to “sharing the same indoor space” instead of the older six-feet/15-minute rule.
Employers would need to maintain records of close contact exposures and provide them upon request to authorities.

If you’re interested, you can access the proposed rules by clicking here.

CNCDA is working alongside the California Chamber of Commerce to push Cal/OSHA to adopt final rules that are more sensible than the status quo. A top priority is to ensure that the COVID-19 exclusion pay requirement is eliminated, as it costs dealerships millions of dollars per year statewide.

And, of course, CNCDA will inform you once Cal/OSHA adopts any final rules.

Smog Check Equipment Security and Fraud Prevention Rule Approved by OAL
By: Les Swizer, Staff Counsel

On August 15, 2022, the Office of Administrative Law (OAL) approved a rulemaking promulgated by the Bureau of Automotive Repair (BAR) titled the Smog Check Equipment Security and Fraud Prevention Rule. BAR put out an ET Blast with details on the rule, which can be accessed here. The final rule can be accessed here. Below is a summary of the rule.

Approved by OAL August 15, 2022
Effective October 1, 2022
Makes additions and amendments to 16 CCR §§ 3340.15, 3340.41, 3340.45, and 3394.26
Some requirements include:
- In lieu of a password for BAR-OIS and BAR-97 operating systems, techs will be required to use biometric log ins (palm-vein scanner).
- Smog Check inspectors are to provide biometric data to BAR.
  - Biometric data is defined as “data collected from a scan of the licensee’s hand(s).”
- “When prompted by the software, the BAR licensee shall permit BAR and/or a BAR designee remote access to view and record audio, video, pictures, and text relating to the inspection.”
  - There aren’t specific details on how BAR will gain video access, but the webcam device will likely be part of the equipment in the biometric kits that will be made available either through Data Acquisition Device (DAD) providers or a third-party vendor.
  - BAR is supposed to announce when those kits will be available – no date given as of yet.
- Allows a BAR representative to gain access any time an inspection is performed, even outside of business hours.
Penalties range from $250 – $5,000.
- Seems to be a cap of five thousand in fines per citation, but no cap on amount of citations.
Licensees are to submit their biometric data to BAR and sign a consent form to use said data as a means of access to the smog check equipment.
- Licensees must present two forms of ID.
  - Valid, government issued, photo ID (Driver license/passport/military ID).
  - ID showing the licensee’s signature and legal name (SS card/CC).

If you have questions or wish to discuss further, feel free to reach out at lswizer@cncda.org.

To USB or Not to USB: Navigating the Drama of Modern Contracting
By: Les Swizer, Staff Counsel

Through the developments within the DMV and because of COVID, the vehicle sales landscape has evolved into an increasingly electronic one, with transactions more akin to an Amazon purchase than the traditional paper and pen four-square to delivery process. Now customers may complete most (and sometimes all) of the car buying process through an easy, streamlined online process. With these advancements in the way dealers contract come questions about the details often left behind. One of those details is how the contract should be delivered, retained, and stored after consummation.

Several calls have come into the CNCDA Legal Hotline concerning giving a USB drive to the customer with a copy of the contract on it in lieu of a paper copy. There are some risks to that practice and CNCDA does not endorse this method for giving a copy of the contract to the customer or for purposes of storage for the 90-day physical retention period required by the DMV.

California law requires dealers to provide customers with a fully executed, written copy of the contract before delivering a motor vehicle. While there may be an argument that the USB drive has the contract “written” on to it, this argument has not been tested in the appellate courts and thus is not settled law. Further, there are requirements that a customer be given a copy of “any vehicle purchase proposal and any credit statement which the seller has required or requested the buyer to sign and which he or she has signed during the contract negotiations.”

California regulations require a dealer to maintain “all original business records” at the principal place of business or a branch location for at least 90 days after a contract is consummated. Given the dealer is given the option to store the records electronically after that, it can be inferred that the “original” records will likely be considered a paper copy of the original contract.

Given the risk of violating California law, specifically 13 CCR § 272.02 and California Civil Code § 2981.9, it is considered best practice to print out (if not already in paper form) the fully executed contract and any required disclosures to give the customer prior to delivery of the vehicle. There is a high risk of customers coming back claiming they cannot access the contract on a USB drive, which could lead to claims of violative behavior by the dealership. Until the use of USB and other such devices as a means of providing the customer a copy of the final contract, it is best to stick to paper copies.

New Communications & Marketing Director
By: CNCDA Staff

If you haven’t met her yet, CNCDA has hired a new Director of Communications and Marketing: Autumn Heacox. Autumn has 20+ years of marketing experience specifically for private companies and nonprofits, with experience ranging from time at a commercial general contractor, to the Make-A-Wish Foundation, to working with marketing and branding agencies. Autumn has a B.A. in Public Relations from Sacramento State University where she was the president of the university’s competitive ballroom dance company. Additionally, Autumn helped found and was the inaugural president of the Sacramento Metro Chamber’s first young professionals’ program and recognized as one of the region’s “Top 40 Under 40” professionals by the Sacramento Business Journal. We welcome her to the CNCDA team, and we can’t wait for you to connect with her.

New Clean Vehicles Tax Credit Timeline

SOURCE: NADA, Regarding the Federal Inflation Reduction Act

California Forces Employers to Implement Seating Availability Policy
By: John Boggs, Fine, Boggs & Perkins

A recent decision from the California Court of Appeal confirms that employers are required to provide suitable seats when possible and to notify employees that seating is available to them even where obvious. Takeaway: Make sure you update your Employee Handbook to reflect the availability of seating.

What does the law really say?

California law—and particularly IWC Wage Order 7–2001 that applies to dealerships across the state—requires that employers provide suitable seats for all working employees when the nature of the work reasonably permits the use of seats. The rule goes on to require that where the work itself requires standing, sufficient seating must be provided nearby to enable sitting when it does not interfere with performance of work duties.

In many environments, there is little controversy here. Most of your business office probably sits most of the day. And desks with chairs are often utilized during negotiations and as customers review and approve terms in Finance. But what about other jobs:

Can a technician use a chair while swapping out a radiator?
Can a service writer use a chair during a walk-around?
How about a retail encounter at the cashier’s desk or parts counter?

In many cases, employers generally want their personnel to appear most approachable to potential customers, and someone who is standing will often appear more attentive than someone who is sitting. But is that preference enough to make it unsuitable to provide seating in those environments?

Many of the legal issues involving seating arise out of retail settings, such as grocery clerks, bank tellers, and—in the most recent published decision—clerks at the counter at an auto parts store. These are settings in which many employees may choose to stand during most of the shift, as it may be more efficient than having to rise and sit repeatedly during the workday. But if the employee needs a seat (for physical reasons for example), is it enough to have available seats in the facility, or does California require more?

In this latest case, the trial court found it sufficient that the employer provided counter-height chairs in an accessible office for employees to use at their workstations if they chose. But the Court of Appeal reversed, finding the analysis of the trial court too generalized. Concluding that whether the employer had truly “made available” the seating options was a fact-specific analysis, the panel sent the decision back for answers to important factual questions:

Did employees know where the seats were located, and how to set them up at their workstation?
Were employees informed in a policy or handbook provision that use of the chairs was available and would not be discouraged?
How difficult or complicated was it to move the chairs into the work area from the storage location?
What steps were taken to ensure that employees who took advantage of the available seating were not subjected to ridicule or other more adverse actions?

In the context of that auto parts store, the available seats were in plain view and there were no restrictions on their use. Ignoring the obvious, the Court of Appeal ultimately concluded, whether the employer has complied with the requirements requires a comprehensive, common-sense approach. Then it went on to be non-sensical and ignore the obvious, instead turning to how employers should let employees know that seating is available even in situations where the availability is obvious.

Courts are unlikely to require employers to completely redesign their operations and customer-service approach to make room for employee Barcaloungers in the service drive. Or to shorten the parts counter so that no clerk ever has to stand. But employers should not expect to escape scrutiny simply by having a few folding stools in a storage room somewhere in case someone seeks an accommodation.

Here are some practical suggestions:

Evaluate workflows across the dealership to evaluate where standing or seating may interfere with the performance of the position. In most cases, having an available seat in the immediate work area will be both practical and sufficient to meet the requirements, even if employees are generally requested to stand during one or more phase of performance, such as meeting and greeting a customer, conducting a walk-around, or moving from one area to another.

Where performance requirements limit the usefulness of a table- or desk-height seat, consider higher options such as stools.

Where quarters are tighter, consider rearrangement of tables, desks, equipment, and storage units to open up the flow. Or the use of chairs or stools that can fold down or move to facilitate movement.

Finally, modify your written policies to inform employees that seating is available, where the seating is located and that they should use it as necessary when they are permitted to or need to sit.

What happens if you are found not to have provided adequate seating?

The Wage Order requirement does not provide a specific penalty for failure to provide suitable seating. However, because Wage Order provisions are tied to Labor Code enforcement mechanisms, including the Private Attorney General Act (PAGA), failure to provide suitable seating can trigger multiple civil penalties per violation, together with attorneys’ fee shifting provisions that make the employer responsible to pay the legal fees of the employees suing for relief. At the very least, employers should expect that these claims will continue to accompany claims of other violations, just as meal period violations are almost universally added to lawsuits about minimum wages and overtime.

Suitable Seating or Reasonable Accommodations?

Finally, be reminded that while these seating requirements demand a “reasonable” inquiry into what may be “suitable” under individual circumstances in much the same way that a disability accommodation inquiry looks at whether particular accommodations may be “reasonable,” these rules are different in key ways. Most significant may be that disability accommodation requirements are not triggered without the employee being a qualified employee with a disability. But seating rules have no such requirement. While specific disability conditions may require employers to consider seats with specific ergonomic features for employees with disabilities, even the most able-bodied employees are entitled to suitable seating and could trigger penalties or other damages if this requirement is not met.

We encourage all employers to consider whether seating is provided for all employees, to make sure their policies address seating availability and to direct any questions or concerns about whether such arrangements satisfy California requirements to qualified employment counsel for review. Contact John Boggs directly at JBoggs@EmployerLawyers.com with any questions or concerns.

GRIT: Why Cowboys and Car Dealers are More Similar than You Think- and the TRY Required to Execute the Shift in Our Industry with Gusto
By: Savannah Simms, Price Simms Family Dealerships

As a child, my mentor would share frequent lessons from Cowboy Ethics to help me navigate life’s early challenges. Back then, it was hard to see the wisdom in the dusty yet straightforward advice. But now, a little older and somewhat wiser, the lessons are more important than ever.

Our industry is shifting, though we’ve seen it coming, and electric cars are already on our lots. But there is still confusion, frustration, and oftentimes resistance from our teams on the front line. Let us look at this “challenge” we are faced with in a new light and think like a cowboy…

“It’s that quality of steely resolve ~ that mental toughness ~ that keeps you pushing toward your goal in spite of the struggles and setbacks. Although the word grit was long out of vogue, social scientists have recently brought it into today’s lexicon. Studies have discovered that grit is more essential to long-term success than talent or I.Q. What’s more, that’s been found to be as true for children in school as it is for adults in the workplace. People with grit are better able to handle trials and disappointments of all kinds. They realize there is an upside to failure, in that it can motivate you to redouble your efforts or try a different approach. Beyond that, learning how to cope with life’s inevitable upheavals is how you develop grit in the first place.”

We have miles of land. We settled on this land and oftentimes built it from the ground up. We have raised our families on this land and have helped many others do the same. This is not a job for the faint of heart. We do this because we are passionate, devoted, and know how crucial we are to society. We are amongst the strongest cowboys – resilient, determined, and have put in the blood, sweat, and tears for generations. We have the equipment we are familiar with and are damn good at what we do!

We all know what the word ‘try’ means in the dictionary but in cowboy culture, ‘try’ carries more weight.

When Cowboys say, ‘That cow hand, he’s got try,’ they’re talking about the quality of giving something every ounce of effort you can muster. The TRY is that burning desire to accomplish a goal, coupled with the belief that you can do it, and the determination to give it 110% effort every day. In short, The TRY is attitude plus effort — and when you think about it, those are the only two things in life that we can control. Success doesn’t depend on IQ, talent, or connections. It’s all about The Try — and if you’ve got it, anything is possible. - James P. Owen, Cowboy Ethics: What It Takes to Win at Life

Times have changed for cowboys… Weather is more intense, margins are not as good as they once were, and the tradition of ranching is at risk. But we are cowboys – despite the challenges we show up with courage and integrity and take pride in what we do. Like on a ranch, everyone has roles, and we must stick to those clearly identified responsibilities to make it through.

We are approaching a standstill. We, the dealers, manufacturers, and consumers alike are feeling stuck. Without answers of our own, we look to one another for support.

Dealers –> Manufacturers: Training, support in infrastructure changes, inventory to support the initiatives. OEMS have built beautiful plans to tackle the changes from all angles but due to many circumstances outside their control, they may not be implemented in the time we all originally hoped (cars are already on our lots).

OEM –> Suppliers: Clear timelines on supply change challenges, moving much of their product manufacturing to the US, advancement in technology more rapidly than competitors but truly supplying all manufacturers (think charging providers)

Manufacturers –> Local Dealers: Fully embrace the changes upon us with decreasing margins, less education and support than originally rolled out, and to ultimately sell more with less on the ground- reinventing how we have sold cars on this ranch for generations

Consumers –> Local Dealers: Master capitalizing on incentives and home/public charging, and a simple straightforward way to buy a car like the good old days by continuing to be their one stop shop for their mobility solutions.

The reality of it is this- we all have answers, and we need to make them easily digestible. The OEMS are our partners and vice versa- all here to best support our community and consumers in their mobility needs. Selling EVs is no different than ICE vehicles… First, we start with a needs analysis and find the best way to support the customer in their journey. We need to lean more heavily on what our roles truly are on our ranch and stick to those- that is what we are best at and that is how we remain in good partnership.

Now how do we use our cowboy ethics: our grit, our ‘TRY’- to simplify the car buying experience around electrification? We stay resilient, we adjust to the changes, have the right attitude to lead our teams through what may look like unclear times as we coach them to the right answers and inspire the grit from within. We must do our part, the part we know best- run our stores well and focus on every detail that makes us great. First, we must look at our people, our facilities, and our technology.

People: How do our people feel about the change and what do they need to have the confidence to speak to the most educated customers that walks in?

Have they driven an EV and experienced the charging out in the “wild west”? Ever been stranded in low power mode searching for the closest DC Fast charger?
Do you have an EV Leader on your sales floor to answer any tough questions?
What trainings have you had with your team and how frequent?
Just as important as the people in your store- how is the community doing? Can you get more involved in local programs and initiatives to support your consumers after the delivery of their new EV?

Facility: How are we equipped today and how are we set up to grow?

Charging infrastructure up to date?
Charging ability in the future- what are you electrically equipped with (above and below ground).
If incentives were to change in the near future- what would you look back on and wish you had one?
Have you filed for your incentives to date?

Technology: Have our tools grown with us as we have ventured into electrification?

Are you familiar with the latest most effective tools to calculate savings, charging rates/times/ and locations?
Do you offer solutions for the first time they get home and need to plug in?
Think digital- resources on your website, your inventory pages, chat, answer questions about all inventory new AND used across all manufacturers.
Check in with service- What do you offer? Are your techs ready? Are they excited? If not- get them behind the wheel…

These three areas are what make us the best cowboys in the west. Notice we first focus on the people…To do that, we must lead with GRIT, TRY, integrity, and the passion we all have for this industry. Conversations need to be had with all of those involved (dealers, manufacturers, and suppliers) to see who should be taking on what responsibilities and be transparent where we need support.

It is not time to hang up our spurs, well-loved hats, or tie up our horses- it is time to show off our cowboy ethics to be amongst the best car dealers in the world. It is time to show up with the right tools for the job and get work as a team with our OEM partners, charging providers, and our consumers.

Events

Join the experts from National Business Brokers for Buy/Sell Tips for Smart Buyers in a Seller’s Market!

Monday, September 19, 2022, 10 – 11 AM, $49 CNCDA Members

It’s been a record-breaking season in the automotive industry, and many dealers are trying to add new stores to their groups. But there aren’t a lot of dealerships on the market because successful dealers are reluctant to sell while profits are rolling in. In this webinar, National Business Brokers will show you how to find the best store for your group, and how to position yourself to win the deal. Register today.

Register Now for The Safeguards are Coming: FTC Revised Rule Becomes Effective in December!

Tuesday, September 27, 2022, 10 AM – 11:30 AM, $49 CNCDA Members

The effective date of the GLBA’s Safeguards Rule is fast approaching and your IT company needs help. Join the legal experts at ComplyAuto to learn about what you must do, could do, and should do to make sure your dealerships are compliant with these data protection and cybersecurity regulations by December 9.
Register today.

Dealer Appreciation Dinner

Tuesday, October 25, 2022, 6 – 10 PM

To our Dealer Owners, as a thank you for your loyalty and valued membership, we cordially invite you and a guest to our complimentary Dealer Appreciation Dinner at The Top of the Market in San Diego this fall. We can’t wait to celebrate you!

Please submit your RSVP as early as possible by clicking here.

2022 New Laws Seminars

2022 Upcoming Events

Thank You to CNCDA’s 2022 Sponsors!

Thank you for investing in CNCDA and the franchise new car system in California. We could not accomplish our goals without the continued support, involvement, and enthusiasm of our committed sponsors.

2022 September Bulletin

Chairman’s Corner: Session Recap & Month-in-Review
By: John Oh, Lexus of Lexus of Westminster, Chairman, CNCDA

New Motor Vehicle Board to Host Industry Roundtable on September 28-29
By: CNCDA Staff

COVID-19 Exclusion Pay may Finally End in 2023 with Cal/OSHA’s Proposed COVID-19 Permanent Standard
By: Anthony Bento, Director of Legal and Regulatory Affairs

Smog Check Equipment Security and Fraud Prevention Rule Approved by OAL
By: Les Swizer, Staff Counsel

To USB or Not to USB: Navigating the Drama of Modern Contracting
By: Les Swizer, Staff Counsel