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Visit Our Website
www.IllinoisDealers.com
Join our mailing list!
Do you know of other member dealership employees who should be receiving the IADA Electronic Bulletins? Let us know! Send an email to Meghan Sander (msander@illinoisdealers.com), Director of Communication, with the contact information of people who should be on our distribution list.
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2014 IADA OFFICERS
Chairman
Mike Mangold
Mangold Ford
Eureka
Vice Chairman
Dave Taylor
Taylor Chrysler Dodge & Jeep, Inc.
Bourbonnais
Treasurer
Sam Roberts
Roberts Motors, Inc.
Alton
Secretary
Jack Schmitt
Jack Schmitt Chevrolet
O'Fallon
President
Peter Sander
IADA
Springfield
IADA Staff Contacts:
Ph# 1-800-252-8944
Pete Sander
President
Ext. 103
psander@illinoisdealers.com
Larry Doll
Legal
Ext. 105
ldoll@illinoisdealers.com
Mark Harting
Administrative Services
Ext. 110
mharting@illinoisdealers.com
Mike Healey
Member Services
Ext. 107
mhealey@illinoisdealers.com
Joe McMahon
Legislative
Ext. 113
jmcmahon@illinoisdealers.com
Meghan Sander
Member Communications
Ext. 109
msander@illinoisdealers.com
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Your
IADA
Partner
Moving Vehicle Registration Into The Future
(click logo for more details)
Upcoming Webinars
May 29th
Steve Nicholes
Why 70% of Used Car Depts Underperform ... and How to Unlock Your Real Used Vehicle Potential (12 PM CST)
Click here to register!
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May 28th
Mat Koenig
Stop the Shop and Start the Conversation (12 PM CST)
Click here to register!
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May 23, 2014 Vol 2013, Issue 35
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NADA ISSUES MEMO ON BI-WEEKLY PAYMENT PRODUCTS
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NADA recently issued a Memorandum (CLICK HERE) in response to the Federal Trade Commission's civil investigative demands to dealers in connection with F&I products that provide for bi-weekly payments. NADA points out that "while details differ, these products generally provide a service to the F & I customer pursuant to which half of the monthly car payment is deducted from the customer's bank account every two weeks and sent directly to the lender on the borrower's behalf."
"If accurately presented to your customers, with full disclosure of the costs and optional nature of the product, such bi-weekly payment plans are not inherently 'illegal' or noncompliant with federal law," NADA points out.
Please read the entire memo for additional information.
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THE FALLACY OF FLAT FEES
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Attached is a new article, "The Fallacy of Flats," that addresses an important compliance issue facing dealers in connection with dealer-assisted financing. In this article, NADA's Paul Metrey cautions dealers that lender programs that pay dealers a flat fee do NOT eliminate the dealer's risk of violating fair credit laws. We will be publishing this article in NADA Headlines and on the NADA website, and I encourage you to share it directly with dealers in your state or metro area. But first let me provide a little background.
- As you are aware, the CFPB last year informed indirect auto lenders that buy contracts from dealers - that is, the captives, banks, and other finance sources that we do business with - that there is a "significant risk" that fair credit laws will be violated when the lender allows dealers the discretion to negotiate the interest rates on the financing dealers offer.
- The CFPB then informed these lenders that one way to eliminate this risk of a fair credit violation would be to take away that discretion by paying dealers a non-discountable flat fee per transaction.
- However, as the article explains, the CFPB's flat fee solution for lenders is not a solution for dealers. This is because, even if every finance source were to go to a flat fee approach, the dealer would still exercise discretion in selecting the lender to which it would sell the contract from among the group of lenders with which it works.
- This means that under flat fee programs dealers could be subject to being sued under the fair credit laws even if the indirect lenders with whom the dealers work are not.
As the article goes on to explain, it is therefore important that dealers develop an effective means of managing the discretion they exercise in pricing credit, regardless of the way lenders pay them. To that end, the NADA Fair Credit Compliance Policy & Program provides a dealer with an optional method of managing its discretion (and in a manner that allows consumers to benefit from competition) when working with lenders who pay dealers using a dealer reserve or dealer participation approach.
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IRS ISSUES GUIDANCE ON TAX TREATMENT OF MANUFACTURER IMAGING PAYMENTS
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The Internal Revenue Service has released guidance addressing the tax treatment of payments that dealerships receive from manufacturers pursuant to facility image programs with three different sets of features. In the guidance, the IRS Office of Chief Counsel concludes that the manufacturer payments under each of the three programs must be included in the dealership's gross income. Dealers who receive manufacturer facility image program payments should consult with their tax advisor concerning this guidance. Click here to read. |
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DEALER EMPLOYEES PAID MORE, BUT RETENTION REMAINS ISSUE
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Auto Remarketing reports that according to NADA's Dealership Workforce Study - which was produced in partnership with DeltaTrends - car dealership employees, on average, earn 27 percent more than the average weekly earnings of all U.S. private sector employees. The report is based on 2012 hard data culled from 290,000 car and truck payroll records, and includes both national and regional data. More than 2,240 dealerships enrolled in the 2013 Dealership Workforce Study. Perhaps not surprisingly, compensation in luxury dealerships tends to be higher than compensation in non-luxury dealerships. F&I managers had the highest income growth in 2012, at 8.4 percent, followed by service managers at 8 percent and sales consultants at 7.8 percent. Overall, the overall median salary in dealerships rose by almost 4 percent in 2012. Dealerships are also shifting a bit when it comes to who they are hiring. According to the study results, many dealerships are looking to the younger generation when ramping up their teams. Dealers hired members of Generation Y 41 percent of the time in 2012. Dealerships are also increasing their female employee numbers, as dealerships hired women 19 percent of the time in 2012, up 2 percent from the previous year. |
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EMPLOYMENT OF MINORS
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With the school year ending, your dealership may be hiring high school age employees for the summer. Below are some important guidelines from the U.S. Department of Labor regarding the employment of minors.
Child Labor Prohibitions
In general, the federal wage-hour law sets a 16-year-age minimum for employment in all occupations unless otherwise provided by regulation. The law, however, contains the following exceptions and conditions:
Employment of minors Between 14 and 16 Years of Age: Regulations permit the employment o minors between 14 and 16 years of age in a limited number of occupations where the work is confined to periods that will not interfere with their schooling and under conditions that will not interfere with their health and well-being. Working time is specifically limited to:
1. Employment outside of school hours and between the hours of 7 a.m. and 7 p.m., except during the summer (June 1 through Labor Day) when the evening hour will be 9 p.m.; and
2. Employment for not more than 3 hours a day nor more than 18 hours a week when school is in session; and
3. Employment for not more than 8 hours a day nor more than 40 hours a week when school is not in session.
Further, permissible work must be deemed nonhazardous and is restricted in retail establishments to work such as the following:
• Office and clerical work (including the operation of office machines);
• Cashier and selling;
• Assembling orders, packing and shelving parts (but not if involving the operation or tending of hoisting apparatus or of any power-driven machinery);
• Errand and delivery work by foot, bicycle, and public transportation;
• Clean-up work, including the use of vacuum cleaners and floor waxers;
• Maintenance of grounds (but not including the use of power-driven mowers or cutters);
• Car cleaning, washing and polishing;
• Dispensing gasoline and oil (but not the use of pits, racks and lifting apparatus or the inflation of any tires mounted on a rim equipped with a removable retaining ring).
Employment of minors Between 16 and 18 Years of Age: At 16 years of age, minors may be employed for any number of hours and during any periods of time in any occupation other than those declared hazardous by the Department of Labor.
Where the occupation is considered particularly hazardous (as for example, any occupation involving driving on any public road or riding on a motor vehicle on a public road outside the cab to assist in transporting or delivering goods) the employee must be at least 18 years of age. However, the Department of Labor has ruled that it is not particularly hazardous for a minor between the ages of 16 and 18 to operate automobiles or trucks if all of the following conditions are met:
1. The automobile or truck does not exceed the 6,000 pounds gross vehicle weight (which includes the truck, chassis with lubricants, water and full tank or tanks of fuel, plus the weight of the cab or driver`s compartment, body and special chassis and body equipment, and payload); and
2. The driving is restricted to daylight hours; and
3. The operation of the automobile or truck is only occasional and incidental to the child`s employment;
(Driving is "occasional and incidental" if it is limited to no more than 1/3 of the minor`s work in any workday and not to exceed 20% of the minor`s work time in any workweek when performed); and
4. The child driver holds a state license valid for the type of driving involved in the job which he/she performs, has completed a state approved driver education course, and has no record of moving violations at the time of hire; and
5. The vehicle is equipped with a seat belt or similar device for the driver and for each helper, and the employer has instructed each child that such belts or other devices must be used; and
6. The driving does not involve the towing of vehicles, any urgent or time-sensitive deliveries, or more than 2 trips per day away from the primary place of employment to transport passengers or to deliver goods for the employer.
Thus, the driving of automobiles or trucks that meets the above definition by minors between 16 and 18 years of age on dealership premises for purposes such as courtesy service, storage, and servicing is permissible.
Employment of Employees 18 Years of Age or Older: An employee who is 18 years of age or older may perform any job, whether hazardous or not, for unlimited hours during any periods of time.
Parental Exemption: A parent, or a person standing in place of a parent, may employ his/her own child or a child in his/her custody under the age of 16 in any occupation other than those deemed to be particularly hazardous or detrimental to the health or well-being for children between the ages of 16 and 18 years. The exemption applies only in cases where the child is exclusively employed by his/her parents, i.e., not where a child simply assists a parent in his/her work for the parent`s employer.
Additional information can be found on the U.S Department of Labor's website, including the "Employer's Pocket Guide on Youth Employment" (http://youthrules.dol.gov/documents/for-employers/YouthRulesBrochure.pdf) and Child Labor Provisions for Nonagricultural Occupations Under the Fair Labor Standards Act (http://www.dol.gov/whd/regs/compliance/childlabor101_text.htm).
If you have any questions about the employment of minors, please contact IADA at (217) 753-0220 or ldoll@illinoisdealers.com. |
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IADA THANKS OUR SPRING CONFERENCE SPONSORS
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Once again we are fortunate to have so many generous sponsors for this year's conference, which was held at the Atlantis Resort, Paradise Island, Nassau. Their participation allows us host a first-class event. Please thank them for their support and give their products and services your careful consideration.
GOLD SPONSORS
Computerized Vehicle Registration Service (CVR)
TRUECar
UnitedService Companies
SILVER SPONSORS
Century Trade Show Services, Inc.
Federated Insurance
NADART
Safety-Kleen Systems, Inc
BRONZE
American Fidelity Assurance Company
Call One
PATRON
Woodward & Associates
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RANKEN TECHNICAL COLLEGE RECRUITING STATE OF ILLINOIS
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Ranken Technical College is now recruiting in the entire state of Illinois for their Factory Certified Technician Program (FCTP). They will recruit students from the dealer's geographic area and help select and screen the best candidates. Ranken is now partnered with all four of the major car companies to provide factory trained technicians. Graduates will be certified by Toyota, GM, Ford, or Honda.
GM ASEP program - https://gmasep.org/automotive-colleges.php
Ford ASSET program - http://www.newfordtech.com/
Toyota T-TEN program - http://www.toyota.com/about/tten/
Honda PACT program - http://hondapact.net/
The advantages of having a FTCP graduate is that he/she will have thousands of dollars' worth of certifications and training. The training cycle allows eight weeks of training followed by eight weeks of working at the dealership. Multiple interns are staggered to allow for one to always be productive for the dealer. The training takes place on brand new donated vehicles using factory scan tools and equipment. Graduates will have brand specific certification.
The dealer's participation will include paying the intern an agreed upon wages and assign sufficient quality work. The dealer will be responsible for providing a job orientation concerning dealership and service department procedures in addition to training, guidance, and supervision of the intern. This will include an evaluation of the intern's progress at appropriate points during his or her internship.
The advantages of Ranken's FTCP training is that students are trained by manufacturer approved curriculum and complete online training. Once completed, graduates possess Factory Certifications and an associate's degree. Students are Express Lane ready after eight weeks of training.
To participate or receive further information regarding Ranken Technical College Factory Certified Technician Program, please contact:
Dan Kania
Automotive Division Chair, Ranken Technical College
4431 Finney Avenue
St.Louis, MO 63113
314-286-4834
dakania@ranken.edu |
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LEGAL REMINDER: DAMAGE DISCLOSURE
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At this time of year, hail storms can cause serious damage to vehicles on dealer lots, raising the question of a dealer's obligation to disclose vehicle damage to customers. When you sell a new vehicle that has sustained damage with a repair cost in excess of 6% of its MSRP, Section 5 of the Motor Vehicle Franchise Act requires you to disclose the damage to your customer. The manufacturer is obligated to make a similar disclosure to a dealer before delivering a new vehicle that has sustained damage in excess of 6% of the MSRP prior to delivery to the dealer. A dealer may revoke acceptance of a vehicle with damage in excess of 6% of the MSRP or request authorization to repair the damage. If the manufacturer refuses authorization of fails to make authorization within 3 days, the dealer may revoke acceptance of the vehicle. Damage to glass, tires, bumpers, video and telephonic components, and in-dash audio equipment is not considered in the calculation of repair cost if replaced with the manufacturer's original equipment.
While disclosure of damage equal to or below 6% of the MSRP to a customer is not statutorily required and damage to a used vehicle is not required, you may decide that the best course of action is to disclose such damage. In the case of Check v. Clifford, a new vehicle was scratched by a vandal while on the dealer's lot. The dealer had an outside shop repair the damage and sold the vehicle without disclosing the damage, which was well below the 6% threshold. The paint repair failed and the customer successfully sued the dealer under the Consumer Fraud and Deceptive Business Practices Act. The customer's lawsuit was not based on the dealer's nondisclosure of the scratched paint, but on the dealer's failure to disclose that the paint repair was substandard. Disclosure of minor damage at the time of sale could prevent a lawsuit later.
Additional information about damage disclosure requirements as well as damage disclosure forms are available on IADA's website at www.illinoisdealers.com. You can also direct any questions to IADA Legal at (217) 753-0220 (extension 105) or ldoll@illinoisdealers.com
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DESIGNATED RISK MANAGEMENT SEMINAR - JULY 17 - ST. LOUIS
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On July 17 IADA along with Federated will be hosting a designated Risk Manager Seminar designed to help you cut your insurance cost through controlling losses. Seminar attendees will receive valuable insight to help your business initiate a designated risk manager-a key person with the authority to act on and the responsibility for all aspects of safety and government compliance.
Sessions target specific risk management concerns for selected industries because we've found that the companies that are the most successful at controlling losses have assigned a key person as their risk manager. Seminar topics include:
Designating a Risk Manager - Distracted Driving - Emergency Preparedness -Federated's Shield Network - Hiring Practices: Drug- & Alcohol-Free Workplace, Background Checks, and Training - Industry Input Session - Industry Losses - Industry Specific Claims Handling - Industry-Specific Risk Management Practices - Motor Vehicle Reports - Risk Managing Workers Compensation - Spending Risk Management Dollars Wisely - Underwriting Your Business
Register today - utilizing the attached registration form! |
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REMINDER TO PARTICPATE IN THE DEALESHIP WORKFORCE STUDY
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To accommodate numerous requests from dealer members, the deadline to participate in the 2014 Dealership Workforce Study (DWS) was extended to June 30, 2014. Dealers are encouraged to submit their data as soon as possible in advance of the deadline to allow for the extensive data review process.
The DWS is the only NADA-ATD study that compares dealership compensation and benefits, retention and turnover and hours of operation to aggregated peer data. With the results, dealers can make data-based decisions on recruiting, hiring and motivating employees. Only NADA and ATD members are eligible to participate, and there is no cost.
It's easy to participate. There are separate processes for single dealership and dealer group enrollments. Further, participants in the 2013 study will find the survey conveniently pre-populated with their previous answers, which can be changed as necessary. Finally, this year's reports will be sent directly to the person identified as report recipient. Reports will be sent as soon as they are available.
Each participating dealership will receive a complimentary, customized Basic Report comparing its data against data aggregated on a regional and national basis-plus a complimentary, comprehensive Dealership Workforce Study Industry Report.
Participants can also purchase a customized Enhanced Report, which further compares individual dealership data against data for the franchise and state. Additional customized group reports are available, as is the Compensation and Tenure Search Tool, which enables ad hoc searches, including searches by dealership or dealer groups. Visit www.nadaworkforcestudy.com to participate. |
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IADA OFFICE CLOSED FOR MEMORIAL DAY
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Please note: The IADA Office will be closed on Monday, May 26th, in observance of the Memorial Day Holiday, as are all of the State Offices that we deal with on your behalf: Illinois Secretary of State, Department of Revenue, Attorney General's Office, EPA, Department of Transportation and other various agencies. IADA is available 24/7 at www.illinoisdealers.com. |
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