California Auto Dealer: A New Twist on Redevelopment Agencies

February 2016

Over 30 Years’ Experience Handling Buy/Sells And Automotive Law
CALIFORNIA AUTO DEALER 
HAS A NEW HOME!

Effective January 1, 2016, we have a new home with Gray·Duffy, LLP in Encino, CA.  Gray·Duffy, LLP brings a wealth of experience in employment law, construction law, insurance law and litigation. The established practice areas of Gray·Duffy are already proving to help our auto dealer clients.
A NEW TWIST ON 
REDEVELOPMENT AGENCIES

In late 2015, Assembly Bill 2 was passed, which restored the ability for cities to provide redevelopment money to businesses such as auto dealerships through Community Revitalization and Investment Authority.  Previously known as Redevelopment Agencies, a Community Revitalization and Investment Authority enables dealers to obtain assistance from local governments to buy real property and “rehabilitate, repair, upgrade or construct infrastructure.”  Assistance can also be obtained to “remedy or remove a release of hazardous substances” and “provide seismic retrofits of existing buildings.”  Each city is responsible for forming a Community Revitalization and Investment Authority.  The area must be low income and meet certain criteria to qualify for assistance.  
For more information, give us a call at (818) 907-4071.
NEW LAWS FOR 2016
A decision on December 29 by the Northern District of California provides some hope for auto dealers caught in litigation over compensation plans implemented for their service departments prior to the Downtown LA Motors decision.
 
The Court distinguished the Downtown LA Motors case by finding that it only applies in situations where the employees were not otherwise being paid minimum wage for all hours worked. Oman et al. v Delta Airlines Inc.15-CV0131 (N.D. Cal. Filed Dec 29, 2015).  

Dealers who were paying minimum wage for wait time and paying flag time on top of it, rather than just adding up all pay and dividing by all hours worked, may have an argument to get around the costly outcome of wage and hour claims based on violation of the new rules imposed by the Downtown LA Motors case. The Oman Court noted that had Downtown LA Motors actually paid for wait time, there would have been no issue.
 
Below is news you should know to keep you in compliance with new laws:
 

1. If you are charging customers for electronic vehicle registration, make sure the fee is being used only for electronic vehicle registration and that you have documentation to prove it. This could be a subject of future class actions.


2. A new law gives the Labor Commissioner the right to impose a lien and collect wages owed from any person to whom notice of lien or levy is given if they fail to pay the amount owed or fail to deliver the property on which the levy is placed. Make sure these notices are getting to the business owner and are handled properly.

3. Minimum Wage beginning January 1, 2016, is now $10 per hour in California.

4. Not new, but still a catch-22 for some dealers, is the law governing independent contractors. Make sure you know when a person is and is not an independent contractor. If they are called an independent contractor, even in a contract, but they really are an employee, and they file for unemployment compensation upon termination of services, you could get stuck paying all the taxes you should have withheld from their wages, even if they paid taxes on their wages as an independent contractor.

5. Compare wages for male and female employees doing the same jobs. If they are not equal, check to make sure the discrepancy can be accounted for in full by one of the exceptions under the CA Equal Pay Act:
  • a seniority system; 
  • a merit system;
  • a system that measures earnings by quantity or quality of production; or 
  • a bona fide factor other than gender that meets the parameters set by the law.
6. If you haven’t done so already, now is a good time to update your corporate record book and your employment policy manual. Failure to keep record books updated can expose owners to unnecessary personal liability for company obligations. Failure to update employment policy manuals can lead to liability that could have been easily avoided. How? If you get sued by an employee, your employment policy manual can be used as evidence that you failed to comply with the law. This can happen in two ways:
  • Outdated policies can be used as evidence of disregard for the law;
  • Employees unaware of the manual and effective changes are evidence of a pervasive problem of failure to comply. 
Spending a little time and money now to make sure you are up to date is a good investment that can save you a lot of money later – and help you sleep at night!
GETTING THE MOST OUT OF YOUR DMS
We are no strangers to the issues with the Reynolds and Reynolds contract and I have heard many complaints about ADP, but the one DMS system I have heard only good things about is DealerBuilt. Why do people seem to like it so much? Here are a few of the reasons I have heard:
 
1. The system is user-friendly and easy to learn, so transitioning from other systems to DealerBuilt is not complicated.

2. It is easier to make money using DealerBuilt because it is so easy to use that it speeds things up.

3. It can be tailored for the particular needs of each dealer.

4. It easily integrates with other systems.

5. You can easily drop and add users and features and at the same time drop or add charges, so you only pay for what you really need.

6. You can block factory intrusion.

7. You can ask DealerBuilt to design features just for you and they will.

8. You can always reach someone friendly to help if you have a problem.

9. They can help you manage the transition from your current system if you contact them well before your renewal.
 


Please Note: 
These articles are necessarily general in nature and do not substitute for legal advice with respect to any particular case. Readers should consult with an attorney before taking any action affecting their interests.


California Auto Dealer is a registered trademark. The content of this Newsletter may not be duplicated without permission.

(818) 907-4071
Editor: Erin K. Tenner, Esq.
Publisher: Gray·Duffy, LLP


February 2016


CA State Bar No. 123296


FRAUD ALERT – 
BANK FRAUD ON THE RISE
Fraud is on the rise. A newer version involves fake wire transfers. Hackers look for people who are requesting wire transfers by email. If you use email to give instructions to wire funds, be sure the person you are giving them to knows to verify that you sent the request.
 
Hackers who find a wire transfer email will often duplicate the message later, with a different amount and provide their own account information as the “send to” account. If the person receiving the email thinks it was from you and authorizes a wire transfer from your account, you may have no recourse.
 
A banker told me he received such a wire request from a customer and attempted to process it. One number was missing so the bank called the customer to verify the account number. The assistant who normally authorizes the wire transfers had to call her boss, who would typically send her such requests. When she did, she found out he had not sent an email making the request. His email account had been hacked and used to request an unauthorized transfer. He almost lost $85,000. He was saved by a typo made by the hacker. The bank would not have been responsible because the assistant had authorized transfers for him in the past.  


LISTEN TO WHAT PEOPLE ARE SAYING ABOUT ERIN
“Erin represented me when I bought my Mercedes, BMW, GM, Volvo and Subaru dealership.  It was great having someone on our team who has handled hundreds of auto dealership transfers.  She was able to help us coordinate all the manufacturers, landlords and lenders and deal with several road bumps we encountered along the way.  I highly recommend her to anyone buying or selling a dealership!”
 
-Jerry Pajouh,
Courtesy
Automotive Group
 
“Erin helped me when I decided to sell my auto dealership.  We had several bumps in the road, but none that became obstacles thanks to Erin’s knowledge, experience and ability to navigate difficult situations.  I am very happy with the deal we put together.   I don’t know if we would have gotten it done without her.” 
 
-George McCall,
Toyota Central

“Erin represented me when I bought my Buick GMC dealership.  Her knowledge and experience literally saved me tens of thousands of dollars.  She was able to explain complex concepts in a way that made them easy to understand so that I could make informed decisions about how I wanted to proceed.   I highly recommend Erin to anyone buying a dealership and I will use her again if I purchase another!”

-Terry Gilmore,
Paradise Buick GMC
 

 
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Gray·Duffy, LLP  

15760 Ventura Blvd., 16th Floor
Encino, CA 91436
(818) 907-4000 		210 B Twin Dolphin Drive
Redwood City, CA 94065
(650) 365-7343 

 

Please Note: This article is necessarily general in nature and is not a substitute for legal advice with respect to any particular case. Readers should consult with an attorney before taking any action affecting their interests.