The Puget Sound Dealer, 2014 Issue #4 by Blue Water Publishers, LLC

The Puget Sound Dealer Official Publication of the Puget Sound Automobile Dealers Association 16101 Greenwood Avenue N Bldg 2100 Seattle WA 98133 Phone: 206 542-3551 Fax: 206 542-7561 Email: linda@psada.com www.psada.com

BOARD OF DIRECTORS 2014 President Steve Klein Klein Honda, Everett 1st Vice President Jim Walen Ford-Hyundai of Kirkland 2nd Vice President Dan Wilder, Jr. Wilder Auto Center, Port Angeles 3rd Vice President Marc Ikegami Doug’s Lynnwood Mazda, Doug’s Lynnwood Hyundai, Doug’s Northwest Cadillac Trustee Position #1 Vince Hanson Hanson Motors, Olympia Trustee Position #2 Mark Revord Revord Buick GMC Truck, Everett Immediate Past President Sara Carter Carter Subaru, Shoreline PSADA STAFF Linda Halverson Executive Assistant Susan Leonhardi Programs and Data Base Manager Michele Foley Administrative Assistant

Inside this Issue

For information on advertising in this publication contact Jim Aitkins Blue Water Publishers, LLC 360.805.6474 www.bluewaterpublishers.com

A Message from the President Steve Klein Klein Honda

Seattle Auto Show Showcases an Optimistic Year A walk through this year’s Seattle Auto Show truly lifted the spirits. More than 40 manufacturers brought everything from fast to frugal - their newest, their coolest, and everything in between. Whether you were a focused car buyer or just out for a fun afternoon or evening, CenturyLink Field Event Center was the place to see it all under one roof. The Auto Show is always a great place to people-watch. It’s fun to observe families, singles, millennials, and seniors all taking in the sights and sounds of the business we love. Our research tell us that a large percentage of show visitors are thinking of a car or truck purchase in the near future, and there’s no better place to “shop” before they come to see us in the showroom. The interest definitely grew for more than 8000 potential buyers who got behind the wheel of one or more vehicles from 15 manufacturers through our test drive program. The positive feel of the crowd reflected an upbeat consumer attitude that was part of 2014. The recovery from the worst downturn in decades has not been easy, but folks are starting to feel better about the direction of the economy and it’s showing up in sales numbers here and nationwide. Interest rates and fuel costs are down, carmakers are producing quality products, and marketing – whether its TV ads or car shows – has been showcasing everything our industry has to offer. NADA predicts 2014 new vehicle sales will be in the 16.9 million range, with total sales pushing 54 million. That’s more than $1.1 trillion in revenue. The auto industry continues to be at the core of our economy. Some forecasters believe 2015 might bring us back to the magic 17 million units of a dozen years ago. It’s a bold prediction, but if you were at this year’s Auto Show and felt the excitement, you just might be a believer.

Message from the President – Steve Klein

2015 Estate and Business Succession Planning – Are You Prepared?

Jim Hammond – Teacher. Dreamer. Showman.

The 2014 Auto Show – What’s New. What’s Hot.

Managing By the Numbers – Days’ Supply-Units vs. Days’ Supply-Dollars

Taxberg Ahead! Beware of These Hidden Deal Killers!

TV Advertising in Seattle: Live Sports – Still the Place to Be!

Best Employment Practices for Handling Facebook Follies

Preparing for the road ahead should feel this good.

Work with Peterson Sullivan and experience the difference. Our proactive approach makes tax savings a breeze. Did you know the IRS issued new regulations on repairs and depreciable assets that contain favorable opportunities for dealerships? These changes create an opportunity to significantly reduce your tax expense. By reviewing fixed assets and adopting these new rules now, your dealership can take advantage of these new benefits.

Confidence earned. pscpa.com

Tax advice thatâ&#x20AC;&#x2122;s this good is like driving with the windows down! 5

Knowing your business is our business. Every dealership has unique legal needs. At Ryan Swanson, we pride ourselves on not only being great listeners, but in truly hearing what is affecting dealer businesses. By understanding your business goals and the auto industry, we are more than trusted advisorsâ&#x20AC;&#x201D;we are collaborative partners. Itâ&#x20AC;&#x2122;s with this collaborative style that we have built a lasting trust with auto dealers in the Puget Sound for over 20 years.

Humanese Over Legalese.

206.464.4224 | www.ryanswansonlaw.com

2015 Estate and Business

SUCCESSION SUCCESSION Succession PLANNING PLANNING Planning Are You Prepared?

By Kari Brotherton , Ryan, Swanson & Cleveland PLLC

For individuals who wish to manage their estate portfolio as they would manage their investment portfolio, having the peace-ofmind that comes with a finished, thorough estate and business succession plan is often far from reality. Why? Certainly many of us simply have yet to get around to it, or never move beyond a basic Will. Others start the estate planning process but do not see it to completion. Why not start now?

WHY IS ESTATE AND BUSINESS SUCCESSION PLANNING IMPORTANT? There are at least two compelling reasons to plan your estate. First, proper estate planning ensures that your assets will be distributed in accordance with your wishes. Second, proper estate planning can minimize or eliminate estate tax upon your death. Having professional assistance is critical, in order to ensure your plan is not derailed by failure to attend to details. For example, did you know that your Living Trust has to be funded to work as designed? Are you confident your beneficiary designations are protected, and not working at cross-purposes to your Will? WHAT SHOULD YOU CONSIDER FOR YOUR ESTATE AND GIFT TAX PLANNING? Gifting. In order to limit the growth of your taxable estate, you may gift up to the annual exclusion, or $14,000 in 2015, per person per year without using your lifetime exemption. You may choose to gift cash, an interest in a business, or other property. You may also contribute to a child’s 529 college savings plan: these plans may also be front-loaded with five years’ worth of annual exclusion gifts. If you pay a beneficiary’s medical or education expenses directly to the institution, these payments will not be counted against your annual or lifetime gifting exclusions. In the event you have charitable goals, gifting to a charity reduces your taxable estate and also provides a current income tax deduction. Finally, it is always advisable to review your estate planning documents, especially if you have had any material changes in your life.

Review Current Estate Plan. If you have experienced significant changes in your family, you should make sure the appropriate family members are named and taken care of consistent with your plan. If your financial circumstances have changed considerably, adjustments may be required for formulas, set amounts or specific bequests in your Will, and various tools or gift plans. In addition, updates to your Will may be required based upon changes in the law. Portability. In 2015, each individual has a $5.43 million Federal estate tax exemption. With spousal portability, if the first spouse to die does not use his or her estate tax exemption, it is transferred (ported) to the surviving spouse so that any unused exemption can be used at the surviving spouse’s death. Portability can be helpful when a married person dies intestate, an estate is left outright to a surviving spouse, or there is unequal asset ownership. It can also be a useful capital gains and income tax planning tool and can allow individuals to take better advantage of trusts. Spousal portability is just one of many considerations in your estate planning. However, an important note is that we do not have spousal portability for the State estate tax. In the State of Washington, the estate tax exemption is only $2,054,000 million per person. While this may seem high enough per person, it can be more easily exceeded when adding in life insurance policy proceeds or when one spouse leaves everything outright to the surviving spouse without using their exemption. Since Washington does not have portability, if an individual does not use his or her exemption, it is lost and the surviving spouse has the entire estate with the benefit of only one exemption. Through proper planning with trust formulas in your estate planning documents, this issue can be avoided. 7

Naming Representatives. Careful consideration should be taken when naming personal representatives and trustees through your Will or Trust documents, as well as attorneys-in-fact in your Durable Power of Attorney. If you have these documents in place already, the named representatives should be revisited to make sure they are still appropriate, taking into consideration the type of assets in your estate, potential beneficiaries, and the overall role expected. There are many factors to consider when choosing your representatives. First, you should trust your representative to perform his or her duties with your best interests or the best interests of the beneficiaries in mind. Second, your representative should be organized and capable of managing assets, paying bills and providing accurate reporting. While an expertise in financial or legal matters is not required, it may be helpful. Finally, your representative should be available, which means having the time and being in close proximity. While you may choose a spouse, family member, or friend to serve in any of these representative roles, remember that there are professional fiduciaries that could be appointed as well.

Name a Charity as a Beneficiary. If you have charitable goals as part of your estate plan, naming a charity as the beneficiary of your traditional IRA or retirement plan can be compelling. When you name your spouse, children, or others as beneficiaries, the full value of your traditional IRA or retirement plan will be part of your taxable estate. In addition, the beneficiary will be subject to income tax on the distributions received. In contrast, if you name a qualified tax-exempt charity as your beneficiary, your traditional IRA or retirement plan will not be subject to estate tax as your estate will receive a charitable deduction. Moreover, the charity will not have to pay any income tax on the funds received. If you are including charities in your estate plan, you should consider if this is the right choice for you. Finally, if you are a business owner, your succession plan in the event of your death or incapacity should be updated based upon the current ownership, management, and overall plan.

succession plan can provide for the management of your business, ensuring that your dealership will continue to operate in the event of your incapacity or death. This protects your family as well as preserves what you have worked hard to build. A succession plan may also be a means of transferring the business to employees or family members and can be structured as a sale or as a gift. In order to implement a plan, it is important to identify your goals, consider the goals of family, other owners or key employees, review the management of the business, explore various options of succession, and ultimately design the plan. In reviewing the current business, you should consider other owners, key employees and management. In relation to the family members, determine which family members are currently active in the business, what positions they hold, what their competence and commitment levels are, and whether any other family members want to be involved in the business. Keep in mind any key employee or management issues. Outline whether ownership has been promised to anyone, whether a buy-sell agreement currently exists, and whether a promise has been made about who will succeed to control. If there is a buy-sell agreement, also determine how it will be funded. Finally, if there is a long-term business plan, this should be incorporated into the succession plan. You should have an idea of the value of the business, considering the assets and liabilities of the business. Also, keep in mind whether operations have been profitable, what the sources of cash flow have been, and what is expected. Review your current succession plan, if you have one, and determine the timing of the plan. If you plan for transition during your life, consider gifting, use of nonvoting versus voting stock, employee equity compensation, and a sale or transfer structure. If you plan for transition at your death, consider restrictions of a buy/ sell agreement, life insurance funding, and transfers to trust for the benefit of your spouse and/or children. ou should also consider your plan in the event of your incapacity by reviewing the restrictions in your buy-sell agreement, as well as your Durable Power of Attorney and any powers specific to the business. Even if you have a plan in place, it is important to review it often. For example, you should review your shareholdersâ&#x20AC;&#x2122; agreement or LLC operating agreement for restrictions on transferability in certain situations. Consistent with above, you should also review your Will and/or revocable living trust, as well as the representatives that you have named keeping in mind their inclusion in business decisions if serving as a representative, such as a trustee or attorney-in-fact. As always, there are many considerations to keep in mind to make sure your succession plan is consistent with your estate plan. Estate and business succession planning can be viewed as a tremendous opportunity to build a lasting and dynamic legacy. Traditional estate planning leaves so much of this potential untapped. Make 2015 the year your estate plan becomes be the capstone on a life lived with purpose and foresight.

HAVE YOU REVIEWED YOUR SUCCESSION PLAN? As a dealer, or as any business owner, making sure your business succession plan is coordinated with your estate plan is important. A

Kari Brotherton is the Chair of Ryan, Swanson & Cleveland PLLCâ&#x20AC;&#x2122;s Estate Planning & Probate practice group. She can be reached at 206.654.2227 or brotherton@ryanlaw.com.

Review the Titling of Assets and Beneficiary Designations. It is also important to review the titling of your assets and beneficiary designations. Based upon the intent of your Will, all or a large portion of your estate assets may need to be available to fully fund trusts or provide for specific bequests. However, non-probate assets pass outside of your Will, even though these assets are still included in your estate for estate tax purposes. Non-probate assets include assets held as joint tenants with rights of survivorship, payable on death accounts, life insurance, and retirement plans. If you are relying on any of these assets to be available to fund a testamentary trust, then accounts or property should be held as community property or tenants in common. Moreover, depending on the direction of your Will, beneficiary designations should name the trust itself or provide for a disclaimer into the trust.

Photo by Adam Buchanan

By Craig Chastain

Jim Hammond

Teacher. Dreamer. Showman.

“Do not go where the path may lead. Go instead where there is no path and leave a trail.” Ralph Waldo Emerson

The young Jim Hammond had some big dreams growing up in the warm environs of Southern California. His passions immerged early, from writing poetry as a fourth grader to roaming the stage with high school productions. He signed up for the California State Debate and Speech competition to impress a girl and ended up winning the state title. His inspiration was the ultimate dreamer – Walt Disney. Writer. Thespian. Communicator. Showman. He would find a way to do it all. As he looks forward to retirement and back on a half century of work and play, it appears Jim Hammond found a way. The dean’s list scholar earned a scholarship to the University of Washington which brought him to the Northwest. His communications and journalism studies were augmented by service to his campus and national fraternity – a commitment he continues to this day. “My faith teaches that iron sharpens iron – that we are called to mentor and pay forward what we’ve learned,” he says. “With that purpose I’ve stayed involved with Alpha Sigma Phi, its alumni and undergrads for close to fifty years.” Jim continued after college with work and

travel for the national fraternity headquarters before resettling in Seattle to embark on a career in advertising and marketing. He learned by doing from two of Seattle’s advertising pioneers – Monte Solkover and Irv Stimpson – who entrusted the young copywriter/account exec with some of their biggest accounts. One of Stimpson’s key clients was the Seattle Auto Dealers Association, and on April Fool’s Day, 1973, Jim joined with SADA to launch the Seattle Auto Show. Housed in the Seattle Center Coliseum, the new event was small in its infancy – 29 local dealers, no displays, no manufacturer participation – just some cars and trucks. Forty-two years later, the Auto Show is ten times its original size, respected internationally for its innovation and commitment to showcasing the industry with excellence. Jim gives homage to the “Disney Way.” “Walt Disney set a standard for showmanship that we’ve always tried to emulate,” he says. “When you visit a Disney park, there’s the presence of wonder and excitement that you never forget. You don’t see what’s behind the scenes – the infrastructure, the planning, the people.

Photo by Adam Buchanan

You simply see and feel the magic, refreshed every day as if brand new.” It’s not surprising that Jim expanded and nurtured his love for all things Disney. At one time he had one of the largest private collections of Disney memorabilia in the country, visited frequently by Disney execs and featured in national media. He attended Disney University and was given the title of “Citizen of Walt Disney World.” In 2010 he donated his collection to his church to help fund children’s ministries and missions and to share his treasures with other Disney enthusiasts. “Walt’s life was all about children, families and his country,” says Jim. “My team and I believed those values should be at the core of a successful auto show.” As the auto show grew, so grew the dealer group. In 1975, at the request of two northwest automotive icons – Larry Norton Jr., and Stan Nelson, Jr., – Jim took the reins of the former King County Auto Dealers and helped form the Puget Sound Automobile Dealers Association. The PSADA operation was, at first, a Spartan affair, with Jim sharing desks with Norton before moving to a car storage floor in need of renovation at Westlake Chevrolet. As it turned out, Jim did most of the renovation himself. “I hung drywall, laid flooring, painted and pounded at night while doing PSADA business during the day,” says Jim. “It was my home away from home for many months.” Jim was joined in the early days by Phyllis Woodward, his part-time assistant whom he credits with a major role in shaping the fledgling PSADA. By 1978, the two had the organization and systems in place to take on a new project – the Professional Automotive Training Center. Prompted by the dealers’ stated need for qualified technicians, Jim met with Jack Pohanka, then president of NADA and founder of ASE (Automotive Service Excellence) and NATEF (National Automotive Technicians Education Foundation). It wasn’t long before the first nighttime training program, FAST (Fundamentals of Automotive Service Technology) was initiated and installed in the service department at Chuck Olson Chevrolet. “Eleven colleges were approached before Shoreline Community College stepped up and offered us a permanent home,” says Jim. “We then launched a capital campaign with $250,000 in seed money from the PSADA board and the automotive training center became a reality.” Today, the PATC program is a model of world-class technical training for dealer associations around the country.

Major manufacturers including GM, Honda, Chrysler and Toyota have embraced and supported it, and its graduates have brought their learned skills to countless service facilities throughout the Puget Sound region and Washington State. Jim and his team have also built programs designed to assist dealers in their operations. He considers the employee handbook – now the Online HR Guide - to be PSADA’s most important product. It emerged from a union strike in the mid-1970’s and has become a template for human resource and personnel management tools throughout the U.S. Similarly, the annual wage and benefit survey – first composed on four typewriters lined up in a row – has proved to be a valued resource as dealers address compensation issues with their personnel. Education and philanthropy are among Jim’s core values, so it’s small wonder that they are a vital part of PSADA operations. “We believe that technical training opportunities should be available to students at the high school level,” he says. “Our work through the PSADA High School Training Program and,

Photo by Adam Buchanan

later, AYES (Automotive Youth Education Systems) has led to the development of a terrific technical career path in the Auburn School District. We hope it can grow in other school districts.” “In addition, we created, with Pam Nelson’s help, the PSADA Foundation to collect funding for the training center and to provide scholarships for financially challenged students,” Jim continues. “Since 2002 we’ve raised close to $750,000 for the PATC.” Behind the scenes, of course, it is primarily the Seattle Auto Show that funds the work and programs of PSADA. Jim’s leadership role in growing the event to national prominence has led him to positions on the national board of ATAE (Automotive Trade Association Executives) and dozens of keynote presentations on how to do it like Seattle does. The Auto Show event has grown and endured through economic downturns, venue changes – even the collapse of the Kingdome roof. Jim Hammond has been at the helm for more than four decades, adapting to the times, the trials, the technologies from the vantage point of a showman. “I look at everything as a stage, an empty stage that offers

opportunities for creativity and risk taking,” he says. “You get to set the stage, pick the scenery, cast your players, and write the script.” “I’ll be forever grateful to the dealers for giving me the freedom to do that.” Jim intends to carry that creativity, along with his communication and performing skills, into what promises to be a very active retirement. Already active in Seattle’s theatrical community, he envisions a return to the stage. His writing, honed by decades of contributions to regional and national trade publications and PSADA’s Dealer Magazine, will continue to flow. His teaching and mentoring will also continue through outlets like Junior Achievement where, in 2005, he was honored as Volunteer of the Half Century and nationally as a Champion of Champions. He points to mentors in his own life – PEMCO’s Stanley O. McNaughton, Phil Smart, Wade Carter, Al Courter, Bob Byers, Jack Carroll, Biff Brotherton, Pam Nelson and many more – who inspired him to inspire others. That’s what he intends to do. And then, there’s his garden. “I’ve been digging in the dirt since I was a tot,” he says. “I built my first formal garden when I was 12, and my gardens have been featured in national magazines and books. One of the highlights of my life was to be part of the planning and design board that created the Bellevue Botanical Garden.” “Horticulture and plants are to me one of God’s greatest creations.” Indeed, Jim’s faith is at the core of his being, guiding and correcting his course along a path that seems very much like that of a renaissance man. A children’s pastor for 14 years, he’s shared Biblical principles to young people, occasionally using his talents as a puppeteer to enhance his teaching. In the 1990’s he co-led several mission trips to Central America. “I’m proud to say I’m a Christian – that God is the chairman of my board,” he says. “I believe He has been with me throughout this journey.” With the journey far from over, Jim Hammond dreams of the future the way he believes Walt Disney might – with bold optimism and purpose. The auto industry has been his Disneyland – fun, unforgettable, and filled with wonder. “I have more great memories than any one person should be allowed to have.”

By Craig Chastain

THE 2014 AUTO

A granddad shows his grandson the kind of car he once drove. A businesswoman weighs the merits of the best vehicles for business. A family selects by committee their new family workhorse.

Dreamers of all ages fantasize about driving a 600-horsepower supercar. Once a year, under one roof, it all comes together: the Seattle Auto Show presented by State Farm and sponsored by AutoTrader.com, BECU, Seattle Met and the Seattle Times. The 2014 edition arrived as the industry was experiencing some robust and encouraging growth. Manufacturers were reporting substantial, sometimes record-setting sales increases as a combination of lowering gas prices, accessible financing and

pent-up demand created an environment where consumers had a renewed interest in cars and trucks. With over 500 vehicles on display, the Seattle Auto Show was the place to see what’s hot and what’s new…to save time… to see everything under one roof. From the exotics and supercars on Luxury Row to the best from 40+ manufacturers, committed shoppers and casual tire-kickers alike had plenty to see and do. Valued sponsors State Farm, BECU, AutoTrader.com, Seattle Met and the Seattle Times enhanced the show experience with helpful information and engaging exhibits. Adding to the new car and truck showcase were both new and refreshed components for 2014. The expanded North Hall hosted the Special Features facility that included a stunning collection of auto classics from LeMay – America’s Car Museum; the Official Customizing Center presented by AutoFX displayed customized vehicles from the bold to the beautiful; the Xbox One Tour offered hands-on gaming experiences with the newest auto-oriented video games. In the West Hall, car care product icon Griot’s Garage had a spectacular display highlighted by a McLaren supercar. Test drives have developed into a centerpiece for the event, with no less than fifteen (15) auto makers offering test drives of some of their most popular vehicles. The logistical challenges of staging such an operation made its successful execution one of the highlights of the show. Building on a solid marketing mix of television, radio and online, the marketing and publicity campaign accelerated the involvement with social media with the addition of a Social Media Manager. An aggressive pursuit of support through Facebook, Twitter, Instagram and Pinterest gathered more than 1.1 million combined followers in just a ten-day period. The youth market was targeted via a discounted ticket program tied to high school newspapers, and the burgeoning Hispanic

SHOW -

Photos by Ernie Sapiro

What’s New, What’s Hot

market was embraced through a partnership with the region’s largest Latino media group. The media team continued to utilize proven media resources combined with an aggressive social media and media relations effort. Purposed with maintaining and improving on the Seattle Auto Show’s legacy of world-class execution, extensive media exposure and solid attendance, the 2014 marketing and publicity campaign focused on a comprehensive scope of work, including manufacturer relations and communications; content and supervision of the social media campaign; content for the event website and blog, the Official SAS Guide, and other publications; media relations with local, regional and national press; co-management of Media Day; and the support of SAS corporate sponsors. News coverage was extensive, with network affiliates KCPQ/ Fox, KOMO/ABC, KING/NBC, Northwest Cable News, and KONG TV broadcasting no less than 50 stories. Popular local TV programs including KIRO’s “Seattle Insider” and KING’s “Evening Magazine” produced special features. Media Day was attended by close to 200 working press. A special surprise was a 90-second time-lapse video of the 2-day load-in, from bare floor to final show presentation, created by KIRO7’s Michael Fox. The 2014 welcomed a new media partner – Seattle Met Magazine – who created a high-quality, glossy edition of the Official Program that was inserted in their October publication (40,000+ circulation) the Seattle Times Sunday edition (200,000+ circulation) and distributed on-site during the show. With the magazine’s upscale demographics, the project reached a high percentage of intentional car buyers. The major daily – the Seattle Times – expanded on their longstanding Auto Show support by creating a “Buyer’s Guide” feature showcasing a host of featured vehicles. The pieces, which ran each day of the show, including advertising from local dealers who, in most cases, were offering the featured vehicles at the dealerships. In addition, two longtime media partners – the Everett Herald and Auto News – ran extensive stories about the show.

The show’s valued presenting sponsor – State Farm – again provided an engaging display that included interactive games, prizes and information. Their carry bags have been a welcome gift for attendees for years. AutoTrader.com and its affiliate Kelley Blue Book reinforced their market positions as the premier online marketplaces for cars and trucks. Their interactive technologies allowed visitors to check on availability for vehicles they saw at the show and to find the value of their intended trade-in. Lemay-America’s Car Museum, surpassed their extensive display of the previous year with a stunning collection of classics covering almost a century of motoring. The expansive use of the North Hall allowed for an uncluttered look at their unmatched collection. In the West Hall, one of the most respected and successful retailers of quality car care products - Griot’s Garage – presented a dazzling array of their products with a jaw-dropping McLaren MP4-12C Spider supercar as the centerpiece. Part of the upswing in vehicle sales as been the accessibility of quality auto financing. No one does it better than BECU, and they had a number of opportunities to tell their story. Their display included their own loan specialists offering advice and a chance to get auto loan pre-approval. On the show website, there were links to their online loan calculator where car shoppers could “do the math” and determine how much vehicle was possible within their budgets. A new feature called “Revving Up” is a blog offering information on trends, new vehicles and technologies, and advice for the car buyer. Topics ranged from tips on car financing to fuel savings to the newest tech gadgets. The 2014 Seattle Auto Show attracted a broad range of car enthusiasts and provided an opportunity to view nearly everything available in today’s car and truck markets. Add in the “wow” factor of today’s latest designs and features and you have one of the most entertaining and informative events of the year.

MANAGING BY THE NUMBERS DAYS’ SUPPLY-UNITS

VS.

DAYS’ SUPPLY-DOLLARS

There are two easy calculations that are very important when analyzing vehicle inventories that will directly help any store increase vehicle turnover. One is touted to be very well understood by managers and is used by most stores. That one is days’ supply –units. The more important calculation and the one that is not commonly used (most don’t even know how to calculate it) is days’ supply – dollars. DAYS’ SUPPLY-UNITS As units travel into and out of our vehicle inventories it is easy to determine our sales rate of these units and compare the travel rate to the inventory and determine days’ supply of vehicles. The formula is straight-forward and simply is: inventory units divided by unit sales (per month) times 30 equals days’ supply of units. Example: Inventory units = 50 Monthly sales = 25 Calculation: 50/25 x 30 = 60 days supply of units In any inventory management system you set up, (and I strongly advocate some sort of inventory management system) you need to know this calculation by each and every individual model within each sales category. Chevrolet Silverado’s, for example, may calculate to an acceptable days’ supply in total but when the calculation is applied to the 12 (or more) individual model numbers of all Silverado’s you may stock, large differences can exist that would go unseen if not calculated individually. The same concept holds true for used vehicle inventories. If we just calculate the days’ supply for used car and used trucks we will not see the true picture. You need to look at each category of used cars and trucks and then each model year within each category. I use the following 10 sales categories and the 8 most recent model years within each category. Small Cars, Sporty Cars, Mid-size Cars, Full-size Cars, Small Trucks, Small Sport Utilities, Full-size Trucks, Large Sport Utilities, Mini Vans and Regular Vans. DAYS’ SUPPLY-DOLLARS Dollars are also traveling into and out of our inventories and I have found it to be very revealing to not only calculate the days’ supply of dollars, but also compare the unit days’ supply to the dollar days’

By Scott Dreisbach

supply. The closer these two numbers are to each other, the more active your inventory will be. First the formula: Inventory dollars divided by average month cost of sales dollars times 30 equals days supply of dollars. Example: Inventory dollars = 500,000 Cost of sales = 200,000 Calculation: 500,000/200,000 x 30 = 75 days supply of dollars Now for the comparison: In this particular “unit days VS dollar days” example, we see that overall, we have a 60 days’ supply of units and a 75 days’ supply of dollars. Since we have a fairly sizeable gap between unit days and dollar days, what does it mean? Stated simply, we are stocking a vehicle too highly priced for our market. Here is how that is determined and verified. Inventory dollars = 500,000 Inventory units = 50 Average investment per unit in inventory = 10,000 Cost of sales = 200,000 (sales minus gross = cost of sales) Units sold = 25 Average cost of sales that have been delivered = 8,000 Conclusions: In the above example, when we compare unit days to dollar days, we can see that our customers are taking out of our inventory on average, $8,000 pieces. We are stocking, on average, $10,000 pieces. The wider the gap between what our customers want (those units we are delivering) and what we are stocking, the slower the turnover rate will be (not to mention gross per piece and future wholesale pain). Conversely, the smaller the gap between what we have and what the customers want, the greater the rate of turn will be. As stated above, both of these calculations need to be made by individual models within each sales category. If you take the time to do this, you will be amazed at what you will find. The sample below is a before and after picture represented in a visual display of unit days VS dollar days by sales category. This data is real, representing one of my clients who was trying to grow his retail used vehicle business.

REV UP YOUR

FINANCIAL OPERATIONS

2015 WORKSHOP FOR CFOS AND CONTROLLERS DATE

June 18–19

Learning from your peers: It’s what you do in your 20 groups.

LOCATION

Couldn’t your accounting team benefit from a similar event? Our

Planet Hollywood Las Vegas

tenth annual workshop is designed to help CFOs and controllers at

For more information or to register, visit: www.regonline.com/2015DSWorkshop

auto, truck, RV, and heavy equipment dealerships nationwide share best practices, learn about vital accounting and tax issues, and much more. Space is limited—reserve a spot soon.

CPE credit available upon request.

W W W.M O S S A DA M S .C O M /AU T O M O T I V E

First, this store was stocking, on average, a total of 100 units and was retailing between 50 and 60 units per month. This was too many units, and, as it turned out, too many of the wrong price-class vehicles. They were experiencing wholesale “pain” month after month and had a policy of no units over 60 days old in place. They couldn’t understand why they just didn’t seem to be able to grow their used vehicle business. When we looked at the “unit days VS dollars days” chart above, things started to come into focus. The gaps between the unit days and dollar days were not only too wide, but also the totals invested in each sales category were too high. They discovered they were stocking units that they thought the customers would like and that the management perceived to be good values. In fact, with the exception of the van category, the vehicles they were stocking were less expensive within each of the vehicle categories that the customers were actually taking out of the inventory. They not only had too many, but more importantly, too many of the wrong ones. Cheaper vehicles did not equate to more sales. The differences between the unit days and the dollar days quickly revealed this discrepancy. We then put into place a stocking guide by category and model year (sample included below) to show exactly how many and at what ACV our inventory needed to look like to be more closely aligned to the actual market demands. Over the next 90 days, on a daily basis, (and ever since), we compared what we wanted (by category and model year) to what we had and made adjustments. On every potential trade and appraisal, the stocking guide was reviewed to see how the vehicle would fit the “ideal inventory matrix.” At the end of 90 days, this is what their picture looked like. We still had a small situation in the Small Truck category, but overall, the inventory was much more active and “fresh.” The wholesale pain problem was eliminated, the inventory of units dropped to between 75 and 80, over $250,000 in frozen cash was freed up, gross per piece increased by nearly $200 per unit and retail sales went up from the 50 to 60 they were averaging to 75+ retail units every month since. This store is now effectively turning inventory 12 times a year on a 30 days’ supply. You probably know how many days’ worth of units you have, but do you know how many days’ worth of dollars you have? I have included a worksheet at the end of this article for you to find out. 18

The above stocking guide example shows what the ideal inventory needs to be by unit count and average ready to go ACV in the Mid Size Car category. It is then compared to the actual inventory unit counts and ACV. In this example, we have determined that ideally we would like to stock 4 units (# units ideal) in the 2013 model year with a ready-to-go ACV of $11,000. The actual inventory (#units actual) in this model year is 1 at $10,490. The money is not far off but we definitely need to acquire some of these or “lost sales” will be the result. The action required to balance is then easy to determine and a “game plan” is then developed. One of my favorite sayings is, “without a map, any road will do.” Please take the time to develop and implement your own “map” and the journey will be a lot more fun and profitable. If you would like to see what our “map” looks like, simply drop me a line and we can talk. WORKSHEET

Scott Dreisbach Valuinsight, Inc. 561 368 7810 X 108 www.valuinsight.com sdrize@valuinsight.com

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Taxberg Ahead: Beware of These Hidden

By Bob Hinton, Moss Adams, LLP

When you’re buying or selling a dealership, it can be easy to miss critical tax problems before the sale—especially when you’re moving full steam ahead toward closing. And these tax icebergs (or “taxbergs”) can often, unfortunately, become deal killers. Even if you’re watching carefully, taxbergs can sneak up on you, since the fog of LLCs and S corporations make it difficult to spot them without a trained eye. We’ll share some general information about hidden taxbergs that could help you change these deal killers into opportunities.

BACKGROUND Over the last 25 years LLCs and S corporations have gained popularity as a way to own dealerships and related facilities. They’re popular because they offer flexibility in structuring ownership interests and generally don’t pay federal income tax. Instead they’re pass-through entities, which pass taxable income or losses through to the ownership group. The owners then include these amounts on their personal tax returns. Simple, right? This flexibility has been a good way for dealers to take advantage of a number of great tax strategies (often tax deferrals) that are very beneficial in the high-tax environments common today. By deferring taxes into the future, more cash flow can be immediately reinvested into the dealership. For example, current tax law generally allows for different ways to compute revenue and deduct expenses. In early years these tax rules often generate positive timing differences that build up and reverse over time. Since depreciation for tax purposes is generally accelerated (or taken at a faster rate) than the methods the same company would use for its financial reporting, it creates a depreciation difference between the company’s book and tax methods. By accelerating tax depreciation, the company creates a favorable short-term tax benefit, paying less income tax in early years—but the same treatment becomes unfavorable in later years. As you can see, this can get complicated. What does this mean? Who’s keeping track? As timing

differences add up over a given period, they need to be managed very carefully. What’s interesting is the IRS does not require LLCs or S corporations to report the total amount of the cumulative timing differences on their LLC or S corporation tax return. Therefore, most owners of LLCs and S corporations don’t focus on whether they owe a future tax liability or own a future tax asset at any given time. These taxbergs, favorable or unfavorable, are usually lurking hidden under the water and don’t become an issue until the dealership is sold or an interest is transferred. And by then it’s too late. For example, if you were purchasing a company where the timing differences were reversing, you wouldn’t be getting the benefits of the accelerated deductions as the new owner—which would be unfavorable. But if you purchased a company where the accelerated depreciation was not reversing, you’d be getting additional deductions after you purchased the company, a favorable situation. This is important to note, because when you’re selling your interest (or transferring it via a gift), you may be passing this liability or asset on along with it. A well-informed investor will want to understand the amount of tax assets or liabilities they’re purchasing as part of the transaction. This doesn’t come into play when you’re purchasing the assets of the dealership, but it may affect you if you’re directly buying an interest in an LLC or an S corporation.

COMMON TAXBERGS LIFO Last in, first out inventory management (LIFO) is a common example of a taxberg. Although LIFO is recorded on most dealerships’ balance sheets, its tax effect is not. If you’re acquiring a partial interest in an LLC (though there are planning exceptions available in these cases) or S corporation that has significant LIFO reserves, then you’ll be the proud owner of those reserves. This means you’ll be paying the tax on the portion of the reserve you purchase and the seller will not. However, if you’re aware of the situation before you enter into the purchase, it might be possible to negotiate. LIFO is also tricky because if you purchase a controlling

interest in the store, you may inadvertently create a tax event whereby the entire LIFO reserve becomes taxable at the time of transfer. Keep this in mind when you’re selling as well. Accelerated Depreciation Accelerated tax methods are often used when depreciating assets, and the bonus depreciation offered in the past several years has made the tax savings especially rich. Over time accelerated depreciation builds up and then reverses. Used Car Write-Downs Some dealerships write down used car inventory on their books using approved (and sometimes not approved) methods. This write-down is an annual computation that accelerates deductions into the current year and reduces taxable income in the current year. This onetime benefit reverses in the next year. In many cases these write-downs are done on the tax return only, and they’re accounted for as a timing difference in the current year. Unfortunately, only the change between last year’s writedown and this year’s write-down flows through the tax return. The cumulative write-down is not reported anywhere. This makes the tax burden especially difficult to see coming, and it means that—in many cases—this taxberg is going to be yours if you’re buying into the entity. Factory Incentives The tax treatment of advertising credits, interest credits, and other incentives may also create similar types of tax timing differences. Accruals Owners’ bonuses, vacation payable, and various other reserves can sneak up on you when they reverse. BUYER BEWARE These common examples of taxbergs are just the beginning, and they’re why so many sellers want to sell an interest in their entity rather than make an asset sale. Additionally, most entity sales qualify for capital gains treatment. Most buyers are keenly aware of the tax benefits and detriments of buying assets versus buying the entity. However, when the buyer is computing the net tax effect to the seller, these hidden taxbergs are often missed. Understanding the true value of the taxbergs transferred to you at closing will make you a savvy buyer—and should give you more power to negotiate. To learn more about how buying and selling dealership ownership interests may impact your taxes, contact a tax professional with dealership experience. Bob Hinton has been in public accounting since 1988. In addition to tax and assurance services, he provides management, systems, operations, and profitability consulting as well as succession planning, due diligence, and witness testimony services. You can reach him at (253) 284-5232 or bob.hinton@ mossadams.com. 22

LEARN MORE. EARN MORE. Looking for research, insights about online marketing or merchandising best practices? Find all this information and more at DealerLearningCenter.com. 23

By Jeff Kent Business Development Manager Comcast Spotlight – NW Region

TV Advertising in Seattle:

Live Sports…. Still the Place to Be!!!

Back in 2012 I wrote an article about the changing landscape of televised sports on television and how impactful advertising in those sports programs can be for automotive dealers. Upon reflection, I realize that I didn’t really go into the detail that the shift deserves. March Madness is right upon us and now is the time to make sure your 2015 TV advertising strategies align with the ever-changing and impactful media landscape, specifically live sports on TV. As I write this in December 2014, I’m hoping that we will celebrate a college football national championship in the Northwest for the Pac 12 Conference, as well as a repeat Super Bowl Championship for the Seattle Seahawks. Whether or not we have both to celebrate or not, I can assure you that’s where the eyeballs were and that’s where your dealership’s advertising message would have been seen by more people than on any other program or network. What’s the last big game you watched on TV? That’s a question almost everyone can answer. Sports programming consistently draws huge television audiences, especially when fans are rooting for their local professional or college teams. Nowhere is this more apparent than on cable TV, where entire networks are committed to sports programming – all day, every day. As an auto dealer, these legions of sports fans are a prime target for your advertising message.

The Transformation of Live Sports on TV The sports television landscape has changed rapidly over the past decade making cable the home for the most and best sports on television. Here is a brief overview of the major shifts: • The majority of NBA Playoff games moved from broadcast to ESPN/TNT in 2003. • Monday Night Football moved from ABC to ESPN in 2006. • The majority of MLB Playoff games moved from FOX to TBS in 2008 (On TBS, FS1 and ESPN in 2015). • The majority of NASCAR Sprint Cup races moved from FOX/ABC to ESPN/TNT in 2010 (on NBCS/ FS1 in 2015). • The majority of NCAA Basketball Tournament (aka March Madness) games moved from CBS to TNT/ TBS/TRU in 2011, including the Final Four in 2014. • In 2011, for the first time ever, ALL four rounds of a major golf tournament aired on Cable, and the British Open moved exclusively to ESPN (Final two rounds previously on ABC). • In 2012, for the first time ever, Wimbledon was aired exclusively on ESPN (weekends and Men’s and Women’s Finals previously on NBC).

Every dealership has a story.

Tell yours. Comcast Spotlight reaches more people, in more ways, on more screens. Partner with Comcast Spotlight and engage buyers by combining great programming with state of the art targeting technology. The result is that your message is heard by the exact customers you want to reach. Put Comcast Spotlight to work telling your story.

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In 2012, the Pac-12 Conference announced a new 12-year, $3 Billion television/media deal with Fox and ESPN as well as the launch of the new Pac-12 Network. Beginning in August 2013, FOX Sports entered the ring with the launch of Fox Sports 1. Right off the bat, Fox Sports 1 included some of most premier properties in all of sports. In 2014, ALL 162 Seattle Mariners games were on ROOT Sports. ESPN had exclusive coverage of the new College Football Playoff in January 2015 (National Championship Game, two Semi-Finals, four other Major Bowl Games). And for the first time ever, an NFL Playoff Game aired on ESPN in January 2015.

Clearly, this transformation has changed the landscape of television advertising, and automotive dealers need to adjust their strategy to ensure that all of the right eyeballs are being captured. What Sports Fans Are Watching Sports programming consistently plays well in the Seattle television market, which makes it a popular place to advertise. Nearly 3.3 million Seattleites have watched sports on TV in the last year, and more than 80 of the top 100 cable TV programs each year are sporting events. Sports are not only popular, they are also unique – because they are one of the last forms of appointment TV. Viewers, including auto buyers, still schedule their time to sit in front of the television and watch these events live, rather than using a DVR to delay viewing. That means your ads are far more likely to be watched in real-time, within the framework of your advertising strategy and inside the promotional incentive periods you chose. Auto buyers see your commercials live, along with the event itself. Sports Fans Are Buying Cars Sports viewers are not just fans – they’re car shoppers. There is a very close relationship between watching sports and buying automobiles. Sports viewers are consistently more likely to purchase cars, especially higher-end models. This trend can be seen nationally, and it’s even more prevalent in the Puget Sound region. Here, 93% of new vehicle buyers watch sports, which is 12% higher than the national market average. When you break down those numbers by sports genre, you can see not only the impulse to buy, but also a willingness to spend top dollar. In Seattle, college sports TV viewers are 13% more likely to be purchasing a new vehicle in the next year, and 41% more likely to spend more than $30,000 on that new car or truck. For auto dealers, advertising in cable television sports programming just makes sense. It’s like having a courtside seat – you put yourself there because that’s where all the action takes place. 26

MARCH MADNESS…. BE THERE, WHERE THE ACTION IS

The success of the Washington Huskies and Gonzaga Bulldogs this season has the region buzzing going into the final month of the college basketball season and into the NCAA Tournament. And, this Spring there is no better place to be in getting your dealership’s advertising message out to engaged and interested car buyers. The 2015 NCAA Men’s Division I Basketball Tournament will involve 68 teams playing to determine the national champion of men’s NCAA Division I college basketball. It is scheduled to begin on March 17, 2015, and will conclude with the championship game on April 6 at Lucas Oil Stadium in Indianapolis, Indiana. The television coverage will begin with the First Four on truTV, followed by the Second and Third Rounds on CBS, TBS, TNT, and truTV. The action then heats up with the Regional Semifinals and Finals (Sweet Sixteen and Elite Eight) – on CBS and TBS followed by the National Semifinals (Final Four) on TBS and the National Championship on CBS. The games will be exciting throughout with unprecedented local audiences tuning in. These programs are now more readily available and useful to you as an advertiser – especially when you consider cable’s ability to target your message to a specific local geography. You have the ability to reach car buyers and college basketball fans all across the Seattle DMA, or just in the specific geographic zones where most of your fans live – and where most of your new vehicle registrations originate. Get in the Game to Reach Auto Buyers The most effective game plan in TV advertising is to have a consistent, geographically targeted sports advertising strategy. Given the quantity and variety of sports programming available on cable, auto dealers have many options for reaching local customers. As we’ve seen, Seattleites are watching sports religiously, so they will see your advertisement. They are ready and willing to buy a new vehicle, so they will pay attention to your commercial. Most importantly, they are motivated, so they will act on your message. Use the power of television, and particularly cable TV sports programming, to score your next sale. 1 Nielsen Scarborough, Seattle, 2014 Release. Base A18+ Sports watched on broadcast or cable past year: Any. HH plans to purchase a new / used vehicle in the next year: Yes. 2 Nielsen Scarborough, Seattle, 2014 Release. Base A18+ Sports watched on broadcast or cable past year: Any. HH plans to purchase a new / used vehicle in the next year: Yes 3 Nielsen Scarborough, Seattle, 2014 Release 2. Base: Seattle DMA, A18+; College Sports Viewers = sports viewed on cable past year: any college sports, Pro Sports Viewers = sports viewed on cable past yr: any sports minus college sports. $ HH Plans Pay New Vehicle Next 12 Months.

By J. Hagood Tighe and Karen Luchka, Fisher & Phillips, LLP

Best Employment Practices for Handling

M The New Dilemma: Technology can be a great asset, but it can present new challenges and potential legal landmines for employers. As of June 2013, Facebook, the reigning social media giant, had 1.15 billion monthly active users who spent an average of 8.3 hours a month on Facebook. During roughly the same period of time, Facebook users “liked” a Facebook posting 4.5 billion times a day and uploaded an average of 350 million pictures a day. These statistics demonstrate that Facebook and other social media platforms have become the new water cooler in the office. 28

Facebook Follies

Many employers have tried to keep up with their employees’ use of technology. There are those who are increasingly inclined to post their every thought and move on Facebook and other social networking sites. The same individual who posts about being annoyed by the long wait at the doctor’s office is an employee who will post a complaint about a workplace rule she finds oppressive. Similarly, the individual who gripes about the refereeing of his kid’s soccer game on Facebook is an employee who will vent about a new stricter manager. With all this information available online, many employers are tempted to access the information. However, an unwary employer may find that this use of the technology may get them in legal troubles. Managers are being increasingly challenged to find a balance between employee privacy rights and enforcing workplace standards. A recent case underscores the importance of understanding privacy laws before taking any disciplinary action. Employee’s Problematic Post An employee of Monmouth-Ocean Hospital Service Corp. (MONOC) was a registered nurse and paramedic. During her employment with MONOC, the employee maintained a Facebook page and became Facebook friends with several of her co-workers. She set her privacy settings so that only Facebook friends (and not the general public) could see content she posted. Unbeknownst to her, however, one of her co-workers and Facebook friends was taking screen shots of her Facebook page and providing them to a manager. On June 8, 2009, she posted a statement on her Facebook page about a shooting that had taken place at the D.C. Holocaust museum. Her status update noted that the shooter had been shot by guards, but survived. The employee wrote: “I blame the DC paramedics. I want to say 2 things to the DC medics 1. WHAT WERE YOU THINKING? And 2. This was your opportunity to really make a difference!” The employee’s Facebook friend took a screen shot of her page and provided them to a manager. The Hospital suspended the employee based on concerns that her posts reflected a “deliberate disregard for patient safety.” The employee sued alleging, among other things, that the Hospital violated the federal Stored Communications Act by accessing her Facebook posts. The Court ruled that while the federal law did apply to certain Facebook content, the Hospital did not improperly access her post by viewing the screenshot taken by her co-worker.

The Stored Communications Act The MONOC employee sued under the federal Stored Communications Act (“SCA”), which is a law passed in 1986 to protect the privacy rights of individuals in electronic stored communications. The law prohibits intentional access without authorization to nonpublic electronic communications. The court closely analyzed the law and concluded that Facebook posts are electronic communications within the meaning of the law. Additionally, the court concluded that because the employee had adjusted her privacy settings so that only friends could see her posts, her Facebook postings were non-public and therefore fell within the protections of the Stored Communications Act. Accordingly, her employer was prohibited from intentionally accessing her posts without authorization. Voluntary Authorized Access After finding the SCA protects the privacy of Facebook posts when individuals utilize privacy settings, the court next considered whether the access to the posting was unauthorized. In particular, the SCA contains an “authorized user” exception that permits access by individuals who were both authorized users of the communication service and who were intended recipients of the communication. The court found that the authorized user exception applied to MONOC’s viewing of the paramedic’s postings and its rationale provide insight for employers on how to handle reports of Facebook or other online misconduct by employees. The basis for the court’s finding that the access to the paramedic’s page was authorized was two-fold. First, her posting was accessed by someone that was a Facebook friend of hers and as a result had rights to view her postings. Second, the co-worker was not coerced or pressured to turn over the postings. In particular, the court found that the access to her Facebook posting was done by an authorized user because her Facebook friend viewed and copied the postings voluntarily and not based on any pressure or request by his employer. The court inferred that had the employer or one of its managers pressured the co-worker to provide copies of the paramedic’s Facebook posts the access would have been unlawful. The rationale behind the court’s finding was that if access to the Facebook postings had been made because of pressure from the employer, the employer would be the real entity accessing the postings and not an authorized recipient of the communication. When, however, a Facebook friend voluntarily turns over the information, he or she is an authorized user and intended recipient of the communication, and there are no restraints on his ability to share the communication with others. The law, according to the court, presumes that a Facebook user assumes the risk that what happens on Facebook does not stay on Facebook and that their Facebook friends can voluntarily share their postings with others. In the case of MONOC’s paramedic, the court ruled that the employer’s actions were lawful because access was made by an authorized user, her Facebook friend, and turned over to the Company voluntarily. Accordingly, it was permissible for the Hospital to review the postings and take lawful disciplinary action against the paramedic. 30

Supervisor “Requested” Access is Not Authorized The MONOC case is contrasted with a 2009 decision wherein a court found that a restaurant violated the Stored Communications Act by viewing employees’ posts on a password-protected social networking website. In that case, a supervisor learned that employees had been posting negative comments on the website. The supervisor directed one of the employees to log-in and allow him to view the content. The employee did as requested, and the employer terminated two employees based on the online content. The terminated employees sued alleging, in part, that the employer violated the Stored Communications Act. The court agreed with the employees and found that voluntary access had not been given by an authorized user. Instead, the employer gained access through duress and pressure on the employee, and therefore violated the SCA. Best Practices for Handling Facebook Follies The MONOC case is a good reminder that it is important for employers to pause before taking any action based upon content posted on a social networking site and ensure that its access to the information is lawful. If an employer becomes aware of a concerning post on a social media site, the first question it should ask is whether the post is accessible to the general public. If it is generally accessible to the public, then the employer can lawfully view it. If the posting is not generally accessible to the public, then the employer should consider how it learned about the posting and whether any copies of the posting were voluntarily provided by someone who was authorized to see it. If access to the postings was made by someone who was not an authorized user, such as a supervisor or manager who “requested” an employee to provide access to the posting, then the employer should not view the posting or take any action based on it. As always, before taking any disciplinary action, employers should consider whether disciplinary action is consistent and lawful. The protections of Title VII and other anti-discrimination laws against discrimination and retaliation apply to disciplinary action taken based on online misconduct. Therefore, any disciplinary action taken should be consistent with employer’s policies and past practices. Finally, the National Labor Relations Act protects non-supervisory employees’ rights to discuss the terms and conditions of their employment in a concerted manner. Accordingly, if an employee is posting comments or concerns about topics such as his or her wages, hours or treatment by a supervisor (even if unflattering), those postings may be protected in some circumstances and disciplinary action would be unlawful. If you have questions about handling apparent online misconduct by an employee or would like to discuss implementing or updating a social media policy, please contact the authors. Hagood Tighe and Karen Luchka, attorneys with Fisher & Phillips, concentrate their law practice exclusively in the labor and employment area. Hagood Tighe can be reached at htighe@laborlawyers.com or (803) 255-0000. Karen Luchka can be reached at kluchka@laborlawyers.com of (803) 255-0000. Fisher & Phillips, founded in 1943, is one of the oldest and largest labor and employment law firms. Visit their website at www.laborlayers.com.