CNCDA

Major highlights of today’s update include further guidance on vehicle sales (online sales/home delivery in particular), new information on the federal leave law, links to important employment resources, and new reports of pending enforcement actions on vehicle sales in the San Diego area. 

Guidance on Vehicle Sales – Memorandum on Online Sales, Remote Selling, and Home Delivery

As we’ve noted in our prior alerts, dealers seeking to engage in vehicle sales must comply with both the spirit and letter of the statewide and local orders shutting down nonessential businesses. On Sunday, we distributed a memorandum prepared by the Littler law firm that discusses whether (and to what extent) vehicle sales are allowed under the statewide order. The memo concludes that while vehicle sales are not specifically authorized by the order, dealers have a good faith basis to continue vehicle sales in limited circumstances. You can download a copy of the Littler memo by clicking here.

The following are examples of some business practices adopted by dealerships to attempt to comply with these restrictions:

  • Some dealerships have closed the entrance to their showroom and only process deals coming from their service department and/or on an appointment basis.
  • Some dealerships are launching or expanding remote work policies for salespersons, developing online sales processes, and/or delivering vehicles directly to customer residences.

Over the past several days, we’ve received requests from many of you to provide additional guidance on remote work, online sales, and home deliveries. In light of these requests, we 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. Dealerships must comply with the following requirements:

  • All deal terms must be agreed upon prior to delivery; there are to be no negotiations at the consumer’s home
  • Any licensed salesperson engaged in selling must have their sales license on display at the dealership
  • Although most forms can be signed electronically, dealerships must obtain original (ink) signatures on DMV forms (Report of Sale and Reg 262)
  • Customers entering into installment sale contracts must have an opportunity to review the contract, in a form they can keep, prior to execution
  • Red-flags procedures must be followed, including the requirement to confirm each customer’s identity prior to or at delivery
  • CDC rules must be observed, including social distancing, use of gloves, hand-sanitizers, etc. throughout the delivery process

The memorandum on online vehicle sales, remote selling, and home delivery can be downloaded by clicking here.

CNCDA would like to thank the Arent Fox team for their extraordinary efforts over the past 48 hours to develop this resource for our members. CNCDA would also like to thank Rob Robards of Robards & Sterns PC for his feedback and guidance on this issue during the past week.

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.

Feds Issue Guidance Explaining New Paid Leave Benefits 

Last week, President Trump signed into law the Families First Coronavirus Response Act (FFCRA), which requires businesses with fewer than 500 employees to provide paid leave to employees for specified reasons related to the coronavirus. The law further requires the federal government to reimburse businesses for their cost in providing leave in the form of immediate tax credits. Earlier today, the Department of Labor issued guidance on the FFCRA, which you can read about by clicking here. The guidance includes a new fact sheet for employers (click here) and a questions and answers document (click here).

Critically, the new guidance suggests that the effective date of the new law will be April 1, not April 2, as previously believed. The guidance also clarifies how the 500 employee threshold is calculated. If they have not already done so, dealers should consider immediately contacting competent employment counsel to determine effective strategies in designing employee leave and related policies in light of this new law. 

Helpful Employment Resources

Over the past several days, we’ve received many calls and emails on employment issues, which often involve employee furloughs, layoffs, and new federal leave requirements. Thankfully, two prominent dealer employment law firms have developed resources that provide answers to many of these questions.

The Fisher Phillips law firm 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.

Fine, Boggs, and Perkins LLP has developed FAQs and other materials, which assist dealers on critical questions involving the new federal leave law and recent changes to layoff procedures under the sate WARN Act. These materials are current as of March 21. You can access these resources here:

  • Fine, Boggs, and Perkins LLP – COVID-19 FMLA Leave and Paid Sick Leave Information Sheet, click here.
  • Fine, Boggs, and Perkins LLP – Warning Info Memo and Notice Sample Letter Packet, click here.

A Note on Enforcement Actions 

Since yesterday’s alert was published, we’ve received reports that authorities in the San Diego area are beginning to notify dealerships that their sales operations must close. While CNCDA continues to believe that dealerships can engage in limited sales activity under the statewide Stay Home Order, dealers should note that any amount of vehicle sales in the current environment could result in a shutdown order or citation. We encourage dealers to review whether advertising and marketing activities are appropriate during this crisis. For more information on this issue, please visit our coronavirus resources webpage at https://www.cncda.org/dealer-coronavirus-resources/.

Dealership Registration Personnel are Essential-DMVDesk/Vitu Available to Answer Registration Questions

For those dealers who are continue to make limited sales, processing registration and titles remains an essential dealership function consistent with the Governor’s order. Dealers should closely monitor their registration operations to ensure they retain enough personnel to properly process transactions. DMVDesk/Vitu is also 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 help@dmvdesk.com.

Please Continue to Contact CNCDA To Report Important Information

CNCDA’s greatest resource is our relationship to our dealer members and the many business leaders and attorneys that serve them. Please do not hesitate to contact CNCDA to report important information, such as examples of how your dealership has helped customers with critical transportation needs, local enforcement actions or legal developments. Such reports should be directed to Brian Maas, President (bmaas@cncda.org) or Anthony Bento, Director of Legal Affairs (abento@cncda.org). And as always, do not hesitate to call us at 916-441-2599, or visit our Dealership Coronavirus Resources webpage at https://www.cncda.org/dealer-coronavirus-resources/.

This alert is not intended as legal advice. If you require legal advice, please contact competent counsel.

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916.441.2599 | 1517 L Street, Sacramento, CA 95814 | www.cncda.org