MSADA, One McKinley Square, Sixth Floor, Boston, MA 02109
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FIRST CLASS MAIL US POSTAGE PAID BOSTON, MA PERMIT NO. 216
September 2018 • Vol. 30 No. 9
The official publication of the Massachusetts State Automobile Dealers Association, Inc
Bringing the Issues Home
Ma s s a c h u s e t t s
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S ta f f D i r e c t o r y Robert O’Koniewski, Esq. Executive Vice President rokoniewski@msada.org Jean Fabrizio Director of Administration jfabrizio@msada.org Peter Brennan, Esq. Staff Attorney pbrennan@msada.org Auto Dealer MAgazine Robert O’Koniewski, Esq. Executive Editor Tom Nash Editorial Coordinator nashtc@gmail.com Subscriptions provided annually to Massachusetts member dealers. All address changes should be submitted to MSADA by e-mail: jfabrizio@msada.org Postmaster: Send address change to: One McKinley Square, Sixth Floor Boston, MA 02109 Auto Dealer is published by the Massachusetts State Automobile Dealers Association, Inc. to provide information about the Bay State auto retail industry and news of MSADA and its membership.
Ad Directory Bellavia Blatt & Crossett, P.C., 23 BlumShapiro, 22 Boston Herald, 32 Ethos Group, 2 Lynnway Auto Auction, 24 O’Connor & Drew, P.C., 31 R.E.D Alert, 21 Southern Auto Auction, 20
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The official publication of the Massachusetts State Automobile Dealers Association, Inc
Table of Contents
4 5 6 9 10 11 12
From the President: Holding Our Own ASSOCIATE MEMBERS DIRECTORY THE ROUNDUP: Dealers Convene in Nation’s Capital TROUBLESHOOTNG: Wage Deductions: Do it Right or Pay the Price Sound Off: Lead with Speed LEGAL: Good Documentation is Key to Defeating Retaliation Claims AUTO OUTLOOK
16 Cover Story: Bringing the Issues Home
20 25
NEWS From Around the Horn LEGAL: When the AG’s Office
Decides to Knock at the Dealer’s Door
26 28 29
nada Market Beat TRUCK CORNER: ATD Show 2019: You Asked and We Listened nada update: Gathering the Masses
ADVERTISING RATES Inquire for multiple-insertion discounts or full Media Kit. E-mail jfabrizio@msada.org Quarter Page: $450 Half Page: $700 Full Page: $1,400
Back Cover: $1,800 Inside Front: $1,700 Inside Back: $1,600
Join us on Twitter at @MassAutoDealers www.msada.org
Massachusetts Auto Dealer
SEPTEMBER 2018
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From the President
MSADA
Holding Our Own We can never take temporary victories for granted on Capitol Hill
By Chris Connolly, MSADA President
Msada Board
As your MSADA delegation to the NADA Washington Conference returns from its trip, I have noticed that, while so much of DC and national politics is constantly in flux, much remains the same. We dealers will always be between a rock and a hard place when it comes to issues regarding the manufacturers we work with and the factors that affect our bottom line. The much discussed tariffs, for example, have repercussions down the line of our industry. Making our lawmakers and the public understand the connections between a steel tariff and Main Street America can seem difficult. We dealers can pay lobbyists to do the work. We can put out as much information through groups such as your Association and NADA as we can. But the most valuable resource we have is ourselves and our own stories. Each year our delegation brings the story of our member dealers to the halls of power. I want to thank our MSADA Directors Jay Dillon and Don Sudbay, our NADA Director Scott Dube, ATD Director Kevin Holmes, and Next Gen attendees Chad Bouchard, Michael Gaughran, and Jim Helgerson for joining me, Executive Vice President Robert O’Koniewski, and staff attorney Peter Brennan to make the strong case for the future of the franchise dealer model. For more details on the issues we brought to the table this year, check out the cover story on page 16. As we begin to round out the year, I encourage you to pencil in the third week of September as a time that you should try to make it down to Washington with MSADA and NADA. While you may worry that time spent with legislators who may seem less than sympathetic is wasted, nothing could be further from the truth. When we do not make our presence felt, we lose by default.
Making Plans Your Association is charging head first into the Fall with our inaugural Hall of Fame ceremony next month and planning for our annual New England International Auto Show Summit and Gala in January. In addition to the battles fought and the battles ahead in DC and on Beacon Hill, I look forward to some quality time celebrating the best of our community: our illustrious past and our exciting future. It can be easy to only see the doom and gloom, given the headlines and the prospects for new legislative problems. We do, however, need to remember the bright spots of being in this business. We come from, and work with, some of the best employees and competitors around. And the technology we are putting into people’s hands continues to amaze, especially considering how far it has come in 100 years. Please make sure to take time to join us in October and January. I look forward to seeing you. t SEPTEMBER 2018
Massachusetts Auto Dealer www.msada.org
Barnstable County
Brad Tracy, Tracy Volkswagen
Berkshire County
Brian Bedard, Bedard Brothers Auto Sales
Bristol County
Richard Mastria, Mastria Auto Group
Essex County
William DeLuca III, Woodworth Motors Don Sudbay, Sudbay Motors
Franklin County
Jay Dillon, Dillon Chevrolet
Hampden County
Jeb Balise, Balise Auto Group
Hampshire County
Bryan Burke, Burke Chevrolet
Middlesex County
Chris Connolly, Jr., Herb Connolly Motors Frank Hanenberger, MetroWest Subaru
Norfolk County
Jack Madden, Jr., Jack Madden Ford Charles Tufankjian, Toyota Scion of Braintree
Plymouth County
Christine Alicandro, Marty’s Buick GMC Isuzu
Suffolk County
Robert Boch, Expressway Toyota
Worcester County
Steven Sewell, Westboro Mitsubishi Steve Salvadore, Salvadore Auto
Medium/Heavy-Duty Truck Dealer Director-at-Large [Open]
Immediate Past President [Open]
NADA Director
Scott Dube, Bill Dube Hyundai
Officers
President, Chris Connolly, Jr. Vice President, Charles Tufankjian Treasurer, Jack Madden, Jr. Clerk, Steve Sewell
Associate Members MSADA A ssociate M ember D irectory ACV Auctions Will Morris (860) 670-7867 ADESA Jack Neshe (508) 626-7000 Albin, Randall & Bennett Barton D. Haag (207) 772-1981 American Fidelity Assurance Co. Dan Clements (616) 450-1871 American Tire Distributors Pamela LaFleur (774) 307-0707 Armatus Dealer Uplift Joe Jankowski (410) 391-5701 AutoAlert Jessica Gates (816) 506-0515 Auto Auction of New England Steven DeLuca (603) 437-5700 Auto/Mate Dealership Systems Troy Potter (877) 340-2677 Automotive Search Group Howard Weisberg (508) 620-6300 Bank of America Merrill Lynch Dan Duda and Nancy Price (781) 534-8543 Bellavia Blatt & Crossett, PC Leonard A. Bellavia, Esq (516) 873-3000 Bernstein Shur PA Ned Sackman (603) 623-8700 Blum Shapiro John D. Spatcher (860) 561-4000 BMO Harris Bank Chris Peck (508) 314-1283 Boston Globe Anthony Merullo (617) 929-2337 Broadway Equipment Company Fred Bauer (860) 798-5869 Burns & Levinson LLP Paul Marshall Harris (617) 345-3854 C-4 Analytics LLC Rob Stoesser (617) 250-8888 Capital Automotive Real Estate Services Daniel Garces (703) 394-1313 CDK Global Chris Wong (847) 407-3187 Construction Management & Builders, Inc. Nicole Mitsakis (781) 246-9400 Cox Automotive Ernest Lattimer (516) 547-2242 CVR John Alviggi (267) 419-3261 Dealer Creative Mike Otis (315) 382-3675 Dealerdocx Brad Bass (978) 766-9000 Dealermine Inc. Jane Webb (800) 304-3341
DealerSocket Shelly Del Rosario (949) 900-0300 Downey & Company Paul McGovern (781) 849-3100 Eastern Bank David Sawyer (617) 897-1125 Eastern Insurance Group William Gross (508) 620-3349 EasyCare New England Greg Gomer (617) 967-0303 Ethos Group, Inc. Drew Spring (617) 694-9761 F & I Resources Jason Bayko (508) 624-4344 Federated Insurance Matt Johnson (606) 923-6350 First Citizens Federal Credit Union Joe Ender (508) 979-4728 Fisher Phillips LLP John Donovan (404) 240-4236 Joe Ambash (617) 532-9320 Gatehouse Auto Jay Pelland (508) 626-4334 Gulf State Financial Services Tom Foster (832) 628-1916 GW Marketing Services Gordon Wisbach (857) 404-0226 Hireology Kevin Baumgart (773) 220-6035 Hub International Insurance Brokerage Jim Walsh (603) 494-9016 Huntington National Bank John J. Marchand (781) 326-0823 JM&A Group Jose Ruiz (617) 259-0527 John W. Furrh Associates Inc. Kristin Perkins (508) 824-4939 JP Morgan Chase Bank Alex Khademi (404) 375-4504 Key Bank Mark Flibotte (617) 385-6232 KPA Tim Whelan (303) 802-3019 Leader Auto Resources, Inc. Curt Murray (978) 201-4797 Lynnway Auto Auction Jim Lamb (781) 596-8500 M & T Bank John Federici (508) 699-3576 Management Developers, Inc. Dale Boch (617) 312-2100 Micorp Dealer Services Robert Calhoun 617-285-4833 Mid-State Insurance Agency James Pietro (508) 791-5566
www.msada.org
Mintz Levin Kurt Steinkrauss (617) 542-6000 Murtha Cullina Thomas Vangel (617) 457-4000 Nancy Phillips Associates, Inc. Nancy Phillips (603) 658-0004 Northeast Dealer Services Jim Schaffer (781) 255-6399 O’Connor & Drew, P.C. Kevin Carnes (617) 471-1120 Performance Management Group, Inc. Mark Puccio (508) 393-1400 PreOwned Auto Logistics Anthony Parente (877) 542-1955 R.L. Tennant Insurance Agency, Inc. Walter F. Tennant (617) 969-1300 Reflex Lighting Daryl Swanson (617) 269-4510 Resources Management Group J. Gregory Hoffman (800) 761-4546 Reynolds & Reynolds Mike O’Connor (860) 462-7958 Robinson Donovan Madden & Barry, P.C. James F. Martin, Esq. (413) 732-2301 Samet & Company John J. Czyzewski (617) 731-1222 Santander Bank Richard Anderson (401) 432-0749 Schlossberg & Associates, LLC Michael O’Neil, Esq. (781) 848-5028 Sentry Insurance Company Eric Stiles (715) 346-7096 Shepherd & Goldstein CPA Ron Masiello (508) 757-3311 Southern Auto Auction Joe Derohanian (860) 292-7500 Sprague Energy Robert Savary (603) 430-7254 SunPower Christie McCarthy (408) 457-2357 Kristin Hodges (707) 694-7759 SunTrust Bank Michael Walsh (617) 345-6567 Target Dealer Services Andrew Boli (508) 564-5050 TD Auto Finance Marc Gerhart (781) 697-1525 TrueCar Pat Watson (803) 360-6094 US Bank Vincent Gaglia (716) 649-0581 Wells Fargo Dealer Services Deb Hogan (508) 951-8334 Zurich American Insurance Company Steven Megee (774) 210-0092
Massachusetts Auto Dealer
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The Roundup
Dealers Convene in Nation’s Capital By Robert O’Koniewski, Esq. MSADA Executive Vice President rokoniewski@msada.org Follow us on Twitter • @MassAutoDealers
Washington, DC – our Nation’s Capital – the home of our federal government. There is surely no place on Earth like it. We are now into the second year of the Trump Administration and GOP control of both chambers of Congress as well as the levers of executive power. As a result, we see more positive economic developments each day, especially after the passage of the major tax reform bill in December and the implementation of various regulatory initiatives by the administration. On the down side, hyper-partisanship is at its highest levels, as the Congressional Democrats engage in a strategy of total “resist” to anything President Trump proposes. We also now witness the fevered pitch of advocacy for and opposition to the Judge Kavanaugh nomination to the Supreme Court. Interesting times indeed. Despite all the political emotions on display by politicians and protesters of all stripes, when in DC, it is always important for dealers to remember why they are there and to stay in their own lane regarding those issues important to our industry. We have been successful over the years by avoiding the very fights everyone else seems to want to jump into, regardless of the relevancy to their own industries. When in DC, we step gingerly into the sandbox others use as a WWF smack down pit. This year your MSADA delegation, along with over 500 franchised car and truck dealers and dealer association executives from across the country, hit our nation’s capital to attend policy briefings and meet with Members of Congress SEPTEMBER 2018
Massachusetts Auto Dealer www.msada.org
to discuss key legislative and regulatory issues during NADA’s 43rd annual Washington Conference. This year’s MSADA delegation included MSADA President Chris Connolly (Herb Connolly Motor Group); our state NADA director Scott Dube (Bill Dube Hyundai); MSADA Board Member from Franklin County, director Jay Dillon (Dillon Chevrolet); Essex County Director Don Sudbay (Sudbay Auto Group); ATD Board member Kevin Holmes (Tri State Truck Center); our three Next Gen reps this year – Chad Bouchard (Bouchard Auto Group), Michael Gaughran (Village Audi of Norwell), and Jim Helgerson (Tracy VW); MSADA staff attorney Peter Brennan; and me. Dealers from across the country use the annual Washington Conference to meet with their Senators and Representatives to discuss various legislative and regulatory issues affecting dealership operations. This is also a chance for dealers to see their legislators in the halls of power where they conduct their business, in contrast to the usual district functions like chamber of commerce rubber-chicken luncheons and ribbon cuttings. NADA, as part of the festivities, in addition to policy briefings and other NADA related materials, schedules politicians and commentators to provide attendees with a flavor of the current situation in Washington and what may be in store for us prospectively, especially as the mid-term elections loom on the horizon. This year’s crop of speakers included Sen. Pat Toomey (R-Pennsylvania); Rep. Kurt Schrader (D-Oregon), a blue
MSADA dog (code word for moderate) Democrat fighting to replace Nancy Pelosi as the leader of their caucus; Rep. Mike Gallagher (R-Wisconsin), a 34-year-old firstterm congressman who addressed the Next Gen attendees; Rep. John Delaney (D-Maryland); Office of Management and Budget Director Mick Mulvaney; and election prognosticator Charlie Cook. Once on Capitol Hill, we engaged our Congressional members and their staffers in dealer dialogue on such issues as mandatory stop-sales of used vehicles with open recalls; protecting state franchise laws in the federal autonomous vehicle legislation; the effect of trade tariffs on vehicle manufacturing, costs, and sales; and repeal of the federal excise tax on the sale of heavy-duty trucks. During our two days of meetings in DC we conferred with Rep. Stephen Lynch (D-South Boston) and Rep. William Keating (D-Bourne), and staff for Reps. Jim McGovern (D-Worcester), Joseph Kennedy III (D-Brookline), Rep. Katherine Clark (D-Melrose), Rep. Niki Tsongas (D-Lowell), Rep. Seth Moulton (D-Peabody), and Richard Neal (D-Springfield), and Sen. Ed Markey (D-Malden). We are familiar faces for them all, as we make the effort to sit down with them regularly back home in Massachusetts as well. The interesting thing to keep in mind as it relates to many of these individuals in the House: should the Democrats take over the House after the November mid-term elections, several will move up to take over prominent roles in the next Congress – Rep. Neal will become chair of the powerful Ways and Means Committee, and Rep. McGovern will become chair of the Rules Committee, which controls the flow of legislation and amendments to bills. Moving forward, we need to keep in mind that for two days we were a half a score of people going door to door to visit our elected representatives in Washington. We were a group of small businessmen who, on behalf of their fellow dealers back home, gave up time from
their dealerships and families to fly to Washington to discuss issues important to their stores and making sure the economy remains progressing in a positive direction. Back home, however, we are an association of 427 members, whose dealerships employ on average 60 men and women, and who are responsible for almost 20 percent of the Commonwealth’s retail economy. As we ask dealers to get more engaged in contacting their Congressmen and local legislators, we ask that you not be shy and let others carry the load. All dealers - big and small, domestic makes and foreign are in the same boat. If we give the members of Congress a free ride and do not engage them on the issues, they will think we have no problems. The same is true when we are fighting for or against certain laws on Beacon Hill. In the future, please heed the call from your Association to contact your elected officials when such an issue arises. Even with a more pro-Main Street, small business attitude as put forth by a ruling Republican Party, there exists a great need to go before our elected officials and inform them of our concerns and desires. Without our input, our esteemed members of Congress, if left to their own devices, could find a way to pour more gasoline on the fire.
Mass. TIME Dealer of the Year, Don Sudbay MSADA proudly announces that Don Sudbay of Sudbay Auto Group in Gloucester has been selected as the Massachusetts 2019 TIME Dealer of the Year Award winner. The TIME DOY award recognizes new vehicle dealers across the country for exceptional performance in their dealerships, combined with distinguished community service. Don will represent Massachusetts in the National competition, which will take place at the upcoming NADA Convention in San Francisco, January 24-27, 2019. It is the highest honor bestowed on a dealer each year at the NADA Convention. Congratwww.msada.org
ulations to Don, and good luck on the national stage next year!
Recent Mass. Attorney General Announcement Warrants Review of Uniform Policies and Wage Deductions [We covered this issue in great detail in Bulletin #49 (9/11/18) with the assistance of attorney Jeff Fritz at Fisher Phillips LLP.] A recent action conducted by the Massachusetts Attorney General against a Massachusetts franchised new-car dealer group serves as a good opportunity to review the law on uniforms and wage deductions to better enhance your compliance on this matter. On September 7, 2018, the Massachusetts Attorney General announced that a franchised auto dealer group agreed to pay almost $117,000 in restitution to some 358 current and former employees and penalties for deducting $5 each week from employee paychecks for laundry services. The Attorney General took issue with the deductions, because the dealer group’s “Uniform Deduction Authorization,” which was distributed to each employee, failed to indicate deductions for laundry services were voluntary. Accordingly, the Attorney General concluded they were improper and resulted in an underpayment of wages. Uniforms: If an employees’ uniforms require dry-cleaning, commercial laundering, or other special treatment, Massachusetts law requires the employer to reimburse his or her employees for the cost of those services. (If, however, the employees’ uniforms are made of “wash and wear” materials that are routinely washed and dried with other personal garments, no such reimbursement is required.) Massachusetts law also requires employers to reimburse employees (or prospective employees) for the cost to purchase or rent any required uniform. And finally, absent special permission from the Director of the Department of Labor Standards, Massachusetts law prohibits employers
Massachusetts Auto Dealer
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The Roundup from requiring employees to pay a deposit for a uniform. Wage Deductions: Wage deductions can be a very tricky area and risk significant exposure for wage-and-hour violations, which automatically result in treble damages. Over and above the specific reduction at issue, improper wage deductions can jeopardize white collar exemptions (i.e., executive, administrative, and professional) and expose your dealership to significant overtime liability with respect to otherwise-exempt employees. Except those deductions required or allowed by law (such as state and federal taxes, social security, garnishments, child support orders, etc.), no deduction may be made that would cut into an employee’s receipt of minimum wage or required overtime pay. Whether an employee consents to such a deduction will not matter; the employer would still be on the hook for a violation. Whether a deduction that does not cut into an employee’s receipt of minimum wage or required overtime pay is valid will depend on the facts and circumstances and, largely, on whether a valid set-off exists. A valid set-off must involve a clear and established debt owed by the employee to the employer. The Attorney General based her conclusion on the fact that the dealer group did not give its employees the choice as to whether to use (and pay for) the laundry services it provided. Accordingly, the Attorney General ordered the dealer group to revise its “Uniform Deduction Authorization” to make clear that such deductions are completely voluntary. In any event, wage deductions are a very thorny issue. Consult legal counsel to assess whether you are making wage deductions properly. Moreover, our Guide to Wage and Hour Compliance (a new edition is expected shortly) contains a brief overview, and it should be consulted as necessary.
Columbus Day Work Rules The Columbus Day holiday, celebrated this year on Monday, October 8, is conSEPTEMBER 2018
sidered a restricted holiday and has certain permit and premium pay rules: • A dealership that operates on Columbus Day is required to pay most employees at time and one-half their regular rate so long as work is actually performed on the holiday. • An employer may not require an employee to work on this holiday nor may it punish or penalize an employee for choosing not to work. • If the dealership is going to be open prior to Noon on the day, a local permit is required. Massachusetts law does not recognize “paid holidays.” In other words, if an employee does not work on a legal holiday, there is no requirement that he or she be paid for the holiday. If, however, an employee does work on certain legal holidays, Massachusetts law requires that the employee be paid at least time and onehalf his or her regular rate. In addition to complying with the Massachusetts holiday laws, a dealer must also comply with his or her own policies. If your Employee Handbook or past practice says that the day is a “paid holiday,” then you are required to pay employees for that day even if it is not a regularly scheduled workday. Further, if an employee works on one of these days, the employee would be entitled to holiday pay for the day plus the additional premium pay for the hours worked on the holiday, or another day off with pay, if the handbook so provides. As a result, dealers are urged to review their holiday pay policies carefully to ensure that they accurately reflect their actual practices.
Change to Summary of Consumer Rights Notice Under Fair Credit Reporting Act Took Effect Sept. 21 The Fair Credit Reporting Act requires users of credit reports to provide a “Summary of Consumer Rights” notice to consumers in certain limited circumstances, such as before taking adverse action based on a credit report for employment purpos-
Massachusetts Auto Dealer www.msada.org
MSADA es. The Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 amended the Fair Credit Reporting Act to require, among other changes, that certain language be added to the Summary of Consumer Rights notice regarding a new security freeze right that the law provides to consumers. The new change took effect September 21, 2018. Dealers should consult with their legal counsel concerning the requirement to issue the Summary of Consumer Rights notice and should also consult with their provider of this notice to ensure it includes the changes brought about by the new law. The duties of employers who use credit reports for employment purposes is further explained in the FTC publication Using Consumer Reports: What Employers Need to Know, which contains a link to a Summary of Rights notice. Check out our Bulletin #50 (9/25/18) for more information on this issue.
New Credit Freeze Law Took Effect Sept. 21: Is Your Business Ready? Thanks to a new federal law, free credit freezes and year-long fraud alerts are here, starting September 21. What does that mean for your customers and employees? Security freezes, also known as credit freezes, restrict access to a consumer’s credit file, making it harder for identity thieves to open new accounts in the consumer’s name. Starting September 21, consumers can freeze and unfreeze their credit file for free. They also can get free freezes for their children. Check out our Bulletin #50 (9/25/18) for more information on this issue.
Reminder – Dealer Hall of Fame, October 3-5 Your Association will be honoring five inductees at our Inaugural Hall of Fame Celebration: Paul Balise, Ernie Boch, Sr., Herb Connolly, Jr., Ray Ciccolo, and Alvan Fuller. We look forward to seeing you there. t
Troubleshooting
Wage Deductions: Do it Right or Pay the Price By Peter Brennan, Esq. MSADA
Staff Attorney Making deductions from employee wages is a tricky proposition in Massachusetts, and one that has beguiled many dealers over the years. Recent anecdotal evidence suggests that litigation concerning improper wage deductions is on the uptick in the state, with an increase in actions by the Attorney General and lawsuits brought by members of the plaintiffs’ bar representing dealership employees. If you are currently making automatic deductions from your employees’ paychecks for any but a few basic reasons or have a policy in place that requires a deduction under certain circumstances, such as when an employee causes damage to dealership property, it may be time to review your policy to ensure that you are not making what can be a very expensive mistake. Under the Massachusetts Department of Labor Standards Minimum Wage Regulations, employers may not make any deduction that would prevent the employee from receiving at least minimum wage on all hours worked, unless the deduction is allowed by law or required by law. Deductions that are required by law include state and federal income tax withholdings, social security, and Medicare, as well as child support payment and court-ordered garnishments. Deductions allowed under Massachusetts law include, but are not limited to, the employee’s health care premium, union dues, and the purchase of stock pursuant to an employee stock purchase
plan, so long as these deductions are authorized by the employee. Most dealerships do an adequate job in applying the law as it pertains to deductions that are legally required. Where some run into trouble is when the dealership begins making deductions that, even if approved by the employee, may run afoul of the law. One area where many dealers have experienced confusion is on dealership-mandated uniforms, especially since a law change that went into effect in 2015. Importantly, a dealership may not charge employees for uniforms without a special waiver from the Department of Labor Standards. Additionally, a dealership must reimburse an employee that is required to purchase or rent a uniform for the actual purchase or rental cost of the uniform. [454 C.M.R. § 27.05(4) (c)]. If your current uniform policy requires employees to pay for some or all of the cost of their uniforms, we advise that you change the policy to comply with the regulations. The regulations also provide that if a uniform requires dry-cleaning, commercial laundering, or other special treatment, the employer must reimburse the employee for the actual cost of such service, even if it does not result in an employee receiving less than the minimum wage. If the uniforms are made of “wash and wear” materials that do not require special treatment and are routinely washed and dried with other personal garments, the employer need not reimburse the employee for uniform maintenance costs. [454 C.M.R. § 27.05(4).] Consequently, a dealership should not, without a valid waiver and the employee’s written agreement, make any deductions from an employee’s wages for the purchase of or deposit on a uniform, and should not make any deductions for care of the uniform. If an employee is terminated or resigns and does not return their company-owned uniform, the dealership cannot, with few exceptions, deduct the cost www.msada.org
of the uniform from the employee’s final paycheck. Another situation where it might occur to you to make a deduction from an employee’s paycheck is where the employee is terminated for stealing dealership funds and the dealer wishes to recover some or all of the loss through a deduction on the employee’s final paycheck. However, this is inadvisable. While withholding an employee’s final paycheck after dismissing the employee for theft might seem like a reasonable and fair action in light of the circumstances, the Massachusetts Supreme Court ruled that such a measure is prohibited under a 2011 decision. Under Camara v. Attorney General, an employer cannot deduct from an employee’s wages without a “valid set off,” which requires a clear and established debt, determined by an impartial third party, such as a court. Even if an employer has a specific policy requiring the employee to reimburse the company for lost money, the policy would be ruled invalid in court, and the deduction would not be permitted. If an employer wishes to seek reimbursement under similar circumstances, the employer must get a judgment against the employee in court. Without the valid set off, the employer would be liable for treble damages under the law: three times the amount of any invalid deduction. In addition to obtaining a judgment, the dealer should also notify their insurance carrier because employee dishonesty may be covered under the dealership policy. t If you have questions regarding the topics covered here, or any other issue, please contact Robert O’Koniewski, MSADA Executive Vice President, at rokoniewski@ msada.org, or Peter Brennan, MSADA Staff Attorney, at pbrennan@msada.org, or by phone at (617) 451-1051.
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MSADA
Sound Off
Lead with Speed By Nate Blevins Ethos Group
MSADA
In today’s automotive industry, change is happening at the speed of light. The ability of an organization to adapt and change quickly to the needs of their customers will determine the long-term viability of any dealership in today’s retail environment. Accomplishing this is largely determined by the leader’s ability to inspire their employees to challenge the status quo, evolve, and execute the changes needed to remain relevant. Leaders who have the trust and confidence of their organization are able to inspire their team to take the necessary actions required to grow through change. Trust is the foundation of leadership. It is impossible to lead any team or organization, whether large or small, without trust. High levels of trust in the leader enables organizations to change with speed. When organizations have to make changes, it is not the size of the change that determines if it will be successful; it is the size of the trust employees have in the leader. If people trust in the leader, the change will happen. If they do not believe in the leader, the implementation of change will be slow. The ability of any leader to have a high level of trust with their team members is based on the answers to five fundamental questions. COMPASSION - “Do you care for me?” The first key to gaining trust as a leader is to let your followers know they are valued. As a leader, you have to care about the success of others. Your employees do not care about how much you know until they know how much you care. Once people know and feel the leader values them, they stay engaged and are more productive. Great leaders understand the relationship between being “others” focused and the multiplying effect it has on employee satisfaction and high performance. THE COMPETENCE QUESTION - “Can you help me?” Great leaders can step in and show people the way. For the leader to demonstrate competence, they must act like a tour guide and take the team to places they have never been before and help them grow in their abilities. Every transformational leader effectively demonstrates their ability to show the way and help their team realize new levels of personal and professional growth on the road to reaching their full potential.
communicate the organization’s vision, core values, and how achieving this vision is more significant than any one person, but they must live the vision and core values so they become the standard within the culture. Great leaders know if they want to gain commitment to their vision and achieve the high standards in their respective industry they must live the values and actions they will demand of others. World-renowned leadership expert and author John C Maxwell says, “A Pint of Example is worth a Gallon of Advice”, and exemplary leaders know they must model the way. THE CHARISMA QUESTION - “Should I listen?” A leader with charisma is able to influence their people at a deep emotional level, which builds loyalty and strong interpersonal connections. Great leaders use charisma to inspire others to buy into the bold vision that is bigger than any one individual. Not only are they able to encourage others to buy into this vision, but their strong connections allow them to convince the team that the role they perform for the organization is crucial to the overall execution of the company’s vision. THE COMMUNICATION QUESTION - “How do I fit into the Vision?” Great leaders have the uncanny ability to speak to the heart of their organization and help the team feel they are participating in the successful execution of a bold Vision. Great communicators can speak directly to the hearts of their followers in a way that inspires them to become part of something bigger than themselves and to achieve results the average person would not feel was possible. Communication is the key to human connection and by doing so effectively inspires others to act and succeed. One of the most significant traits of a transformational leader is to recognize, communicate, and inspire the untapped potential in others. The effectiveness of the leader to transform an organization with speed relies on their ability to demonstrate compassion, competence, character, charisma, and communication. Are you prepared to lead with speed? t
THE CHARACTER QUESTION - “Can I trust you?” Leaders must set the example by living their vision and core values every day. Great leaders must not only regularly
Nate Blevins is a recognized industry leader and representative of Ethos Group, a consulting service company that provides franchised automotive dealerships across the nation with an integrated program of resultsdriven income-development services, comprehensive training, robust recruiting, and innovative products. To explore how Ethos Group can help maximize the potential of your business contact us at (972) 331-1000.
Have an opinion you want to share? Email rokoniewski@msada.org. SEPTEMBER 2018
Massachusetts Auto Dealer www.msada.org
MSADA
Legal By Joseph W. Ambash and Jeffrey A. Fritz
Good Documentation is Key to Defeating Retaliation Claims In 1997, less than 23% of the 80,680 charges filed with the United States Equal Employment Opportunities Commission (EEOC) claimed retaliation. That percentage has grown steadily in the years since, climbing to a record-high almost 49% of the 84,254 charges filed in 2017. What explains this sharp increase? That more employers retaliate against their employees? Hardly. Given the news reports that seem to pop up every few months of significant monetary awards to employees in discrimination and retaliation claims standing as warnings to other employers, and given that today’s employers, on the whole, are more educated as to the law’s parameters on these issues, and are more likely to have appropriately-trained managers, the opposite most likely is true. In reality, the increase of retaliation claims most likely is due, in large part, to a workforce exposed to these same things. Your employees see the same news reports, and the same sizeable awards, you do. And, more and more, employees may see retaliation claims as either a way to preserve their jobs or a way to make a quick buck, or both. How can you protect your dealership from retaliation claims? Good documentation is the key. Consider two scenarios. The first involves one of your salesmen. He has been with your dealership for three years. His sales always have been decent, right there in the middle of the pack. But he has had problems over the years with both attendance and getting along with a number of his coworkers. In his first year, he received a written warning for excessive tardiness and another for unprofessional conduct toward a coworker stemming from a dispute they had over a sale. That said, while his attendance and interpersonal problems persisted thereafter to some degree or another, they only were addressed verbally by his (now prior) manager, and no further
discipline was issued. In the last month, he was late for work four times and had a major disagreement with a coworker during which he was extremely disrespectful. He suspects he is about to be fired (and he is right), so he reports a “safety issue” to his manager. The next day, his employment is terminated based on his attendance and interpersonal problems. The second scenario involves one of your finance managers. She has been with your dealership for two years. Her job performance was mixed during the first six months of her employment, but declined during the next six months. She was placed on a performance improvement plan at the beginning of her second year, and her performance improved for a period of time. In the latter part of the year, however, it deteriorated again, such that she was issued a written warning, outlining the performance deficiencies that remained and the steps she needed to take to correct them. Unfortunately, notwithstanding that warning, and continued coaching by her manager, her performance remained deficient and she was issued a final written warning, calling for immediate improvement or termination. Several weeks later, she thinks she is about to be fired (and, like your salesman, she is right—only here, her supervisor timely emails the general manager to inform her of his decision when he makes it), so she reports (falsely) that her supervisor made derogatory remarks to her about her race and gender. The next day, her employment is terminated based on her deficient performance (and, of course, her allegation about derogatory remarks is investigated). To be clear, retaliation is the taking of an adverse employment action against an employee because s/he engaged in “protected activity.” And, to be sure, in neither scenario above did the employer actually retaliate against the employee. The employee’s story nonetheless is the same in both instancwww.msada.org
es, relying on temporal proximity to try to establish causation: “I engaged in protected activity, and the next day my employment was terminated.” However, one scenario (the second, obviously) is markedly less difficult to defend (for obvious reason). Unfortunately, far too often, we get calls from employers seeking advice (or representation in a charge or lawsuit) where the facts are much closer to the first. Given the prevalence of retaliation claims these days, it is imperative that you train your managers to (1) properly manage their subordinates, including identifying deficient performance in a timely manner, and appropriately (and promptly) documenting performance deficiencies and the discipline they mete out; and (2) recognize when employees engage in activity the law protects (such as reports of discrimination, harassment, wage and hour concerns, safety issues, etc.) and to inform appropriate personnel such as human resources for guidance. It also is imperative that you take all such reports seriously, that you promptly and appropriately investigate them, and that you take appropriate remedial steps, if any are warranted, to address them. Not only is it the right thing to do, it can also minimize risk for your dealership. t
Joe Ambash is the Managing Partner and Jeff Fritz is a partner at Fisher Phillips, LLP, a national labor and employment firm representing hundreds of dealerships in Massachusetts and nationally. They can be reached at (617) 722-0044.
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Bringing the
NADA’s annual Washi in keeping As the world of Washington turns, the only certainty is that nothing is certain. As a ten-person-strong MSADA delegation [see inset] prepared to visit Capitol Hill for NADA’s annual Washington Conference, talk of tariffs, recalls, autonomous vehicles, and taxes loomed larger over local dealerships than the Capitol dome. The disconnect between the intent and effects of policy decisions on Main Street business continues to be the number one issue that longtime delegation members saw as they began their journey. “The attitude that we get from some who regard us as just rich car dealers has been a challenge for us to sometimes even get a meeting with them,” MSADA President Chris Connolly says. “They need to look at us as employers again, like they did decades ago. They need to remember how much we donate to local causes in our communities. Some of them are changing their attitudes, while some, though, still will not give us the time of day.” Engagement is the solution, Connolly adds. “These are the ones we need to especially reach out to, to get to know and de-
“We hope that our member dealers will feel more empowered to make their voice heard, and join us in our mission to protect the franchised dealer community for future generations.” –Robert O’Koniewski, MSADA Executive Vice President
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Issues Home
ington Conference plays a crucial role g dealers first on Capitol Hill velop a good relationship with, to change their perspective.” NADA Director Scott Dube has seen positive results when dealers continue their efforts. “I have seen that, as we spend more time with these people, they know our issues and receive us, listen, and sometimes even act in a way consistent with moving us forward,” Dube says. Dube’s predecessor in the role, Don Sudbay, added that the past ten years have given some representatives a more open mind to Main Street realities. “After the GM and Chrysler bankruptcies and how it affected so many of our dealers, they have a better understanding of our sometimes difficult relationship with our manufacturers.” The delegation met with Congressional members and staff from nine of the 11 legislators from across the Commonwealth, including Rep. Steve Lynch (D-South Boston), Rep. William Keating (D-Bourne), and staff for Reps. Niki Tsongas (D-Lowell), Richard Neal (D-Springfield), Jim McGovern (D-Worcester), Seth Moulton (D-Peabody), Joe Kennedy (D-Brookline), Katherine Clark (D-Melrose), and Sen. Ed Markey. The delegation discussed a number of issues, including:
Washington Conference MSADA Delegation Chad Bouchard | Bouchard Auto Group Chris Connolly | MSADA President, Herb Connolly Motors Jay Dillon | MSADA Director, Dillon Chevrolet Scott Dube | NADA Director, Bill Dube Hyundai Michael Gaughran | Village Audi of Norwell Jim Helgerson | Tracy Volkswagen Kevin Holmes | ATD Director, Tri State Truck Center Donald Sudbay | MSADA Director, Sudbay Auto Group Robert O’Koniewski | MSADA Executive Vice President Peter Brennan | MSADA Staff Attorney
New Auto Tariffs Will Threaten U.S. Jobs and Hurt Consumers The auto industry has serious concerns over trade as the Trump Administration considers imposing additional tariffs of up to 25 percent on imported automobiles and auto parts. While NADA supports President Trump’s goals of modernizing our trade agreements and moving toward freer and fairer trade, steep new tariffs on autos and auto parts would hurt the auto industry and consumers. As no vehicle is 100 percent domestic and the average vehicle assembled in the United States has an international parts content of 40 percent, new auto tariffs would impact all automobile dealers due to increased prices, stifled demand for new vehicles, and lost jobs. Key points: • Increased tariffs on automobiles and auto parts will increase the price of both domestic and international brands. Even domestically assembled cars have a significant amount of imported content. According to estimates, the price of domestic vehicles would rise by an average of $2,270, while the price of imported vehicles would rise by an average of $6,875. • Price increases due to tariffs will cost dealership jobs and damage the economy. According to the CAR Study, price increases due to tariffs would result in a decline of up to 2 million units in vehicle sales. Weakening sales would result in 715,000 American jobs lost, and new-car dealerships would lose 117,000 employees out of the 1.1 million jobs currently at franchised dealerships—roughly 10 percent of jobs per franchised dealership. • NADA supports leveling the playing field for American workers, but the negative and unintended consequences of imposing broad tariffs outweigh potential gains.
Self-Driving Cars Legislation Must Preserve State Vehicle Franchise Laws Congress may pass legislation this year to advance self-driving vehicles. To ensure automakers are not forced to build different self-driving vehicles for different states, the legislation would preempt certain state laws that are related to the operation of a vehicle. www.msada.org Massachusetts Auto Dealer SEPTEMBER 2018
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RACE TO THE FINISH BRINGING THE ISSUES HOME Historically, the federal government has preempted only state laws that impact vehicle design, construction, and safety. NADA agrees that state laws related to vehicle design should be regulated at the federal level to ensure uniformity, while also strongly urging Congress to preserve the states’ traditional role to license and regulate vehicle commerce as applied to self-driving vehicles. The Senate Commerce, Science, and Transportation Committee approved S.1885, the AV START Act, by voice vote in October 2017. While the bill clarifies that state laws regarding the sale, distribution, repair, or service of AVs remain intact and
are not preempted, a technical amendment is needed to fully ensure that state license and franchise laws are preserved. The bill’s sponsors have committed to correct the technical issue before full Senate consideration, which may occur later this year. In September 2017, the House passed H.R.3388, the SELF DRIVE Act, with NADA-backed language clarifying that the bill does not preempt state vehicle licensing/franchise laws. Dealers from across the country had contacted members of the House Energy and Commerce Committee, including MSADA reaching out to Rep. Joe Kennedy, to successfully advocate for the pro-franchise law language when the factories were pushing for anti-dealer provisions. Key points: • Congress should enact a balanced federal preemption (as in H.R.3388/S.1885) that enables states to continue to exercise their right to license and regulate the distribution of vehicles. • H.R.3388/S.1885 properly clarify that state laws regarding the sale, distribution, repair or service of AVs are not preempted to preserve state vehicle franchise laws protecting the rights of SEPTEMBER 2018
dealers and consumers. • S.1885 should include a technical “conforming” amendment before Senate consideration to fully ensure that state vehicle licensing and franchise laws are not preempted.
Oppose Overbroad Recall Bills Sen. Richard Blumenthal (D-Connecticut) and Rep. Jan Schakowsky (D-Illinois) have introduced bills (S.1634/H.R.3449) that could cripple the used-car market by halting the dealer sale or wholesale of any used car under open recall, even though most vehicle recalls do not require the drastic step of grounding. These bills would create a “trade-in tax” that would instantly devalue a car buyer’s trade-in by grounding recalled vehicles for minor matters such as a peeling sticker. Because of a shortage of recall parts, it often takes months to repair recalled vehicles. A 2015 study by J.D. Power found that enactment of these overbroad recall bills would result in an average “trade-in tax” of $1,210, and some consumers’ trade-in values would decline by $4,000 to $5,000. The Senate Commerce Committee rejected an amendment
nearly identical to S.1634 in 2015. Congress should support initiatives to increase recall completion rates and oppose S.1634/ H.R.3449, which would create a consumer “trade-in tax.” Key points: • These bills would make it difficult for car buyers to trade in vehicles with open recalls and harder for consumers to afford a newer, safer vehicle. Due to a lack of replacement auto parts, it can take months for recalled vehicles to be repaired. Since a used vehicle depreciates, on average, 2 percent a month sitting idle on a dealer’s lot, this bill would force dealerships to pay
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Next Gen Dealers Attend
consumers significantly less for trade-ins with open recalls or not accept them at all. • During the Obama Administration, the National Highway Traffic Safety Administration admitted that not every recall warrants the vehicle’s immediate grounding, yet these bills would diminish a recalled vehicle’s trade-in value by an average of $1,210. This would harm many car buyers who rely on their trade-in value for a down payment on their newer vehicle. • Unrepaired vehicles will be pushed into the unregulated private market. Faced with devalued trade-ins, vehicle owners will have an incentive to sell their vehicles in the private market, making it even less likely that recall work will be done in a timely manner, if at all.
Repeal the Federal Excise Tax on New Heavy-Duty Trucks Federal law imposes a 12 percent federal excise tax (FET) on the retail sale of most new heavy-duty trucks. The tax was originally set over 100 years ago to fund the U.S. effort in World War I. The FET depresses new heavy-duty truck sales and delays the purchase of cleaner, safer, and more fuel-efficient trucks. This tax is in addition to the nearly $40,000 in recent federal emissions and fuel-economy mandates that will make it harder for small businesses to afford a new heavy-duty truck. Congress should include legislation to repeal the FET, such as H.R. 2946/S.3052, in a potential infrastructure package to end this onerous tax and promote economic growth and job creation. • The 12 percent FET on heavy-duty trucks is the highest percentage rate of any federal excise tax. Congress should repeal this tax to ensure quicker deployment of cleaner and more fuel-efficient trucks. • The FET hurts heavy-duty truck sales and inhibits job growth, directly impacting the 7.4 million Americans employed in trucking-related jobs.
For several years now NADA has operated a Next Gen program to get younger dealers and GMs more involved in the political process. This year MSADA brought three Next Gens: Chad Bouchard, Bouchard Auto Group; Mike Gaughran, Village Audi of Norwell; and Jim Helgerson, Tracy VW. “It was a great experience, we learned a lot from Bob O’Koniewski, Peter Brennan and the rest of our dealer group about how to convey the issues facing our auto industry to our legislators,” Bouchard said. “I did not understand the magnitude of some of the issues we face across our industry until we saw how important they were to our legislators.” “I became very aware from NADA, MSADA, and my peers how important a role grass roots efforts play on the decisions our legislators make,” he added. “Taking a few moments to explain how changes could affect customers, tax revenue, and our entire industry really shed light on the situation for our legislators.”
Front and Center As your Association’s delegation returns from the conference, MSADA Director Jay Dillon reflected on the differences between his second trip and his first last year. The experience has helped inform how he views his own business and its role in the larger economic ecosystem. “Usually, I go to work every day in the same place, and I see things from a local view,” he says. “It is so much more broad when you go up on the Hill, you see things from a different perspective. MSADA Executive Vice President Robert O’Koniewski said the most important aspect of the event is to show up in force each year, no matter what is happening politically. “It can feel difficult to make our case on the issues when we feel as though a certain lawmaker may not have the right information about our industry,” O’Koniewski says. “That wrong information often leads to bias on their end. We have to make sure, however, that when we leave their offices they know that these are problems faced at home, not in their halls.” O’Koniewski joined Connolly in thanking the delegation for taking the time to make the trip. “This is one of our largest delegations in recent memory, and the numbers count,” he adds. “We hope that our member dealers will feel more empowered to make their voice heard, and join us in our mission to protect the franchised dealer community for future generations.” t
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The Boston Globe Analyzes Statewide Vehicle Ownership Data Culling together 4.6 millions records, The Boston Globe offered an analysis of vehicle ownership data across manufacturers, localities, and politics. “We all know a car is more than just a car. It’s an expression of who we are, of our aspirations and wants — a fact demonstrated recently by a rusty old Dodge Caravan sputtering along Route 128 with a bumper sticker that read, ‘My car is a status symbol. A symbol of me being poor.’” The Globe asks: “Is there something even larger to be learned from our vehicle choices? Collectively, do they reveal patterns and a little something about the places we live?” A few items of interest: The Honda Accord is the most popular car in Boston. And the popularity of the Chevrolet Silverado or Subaru Foresters were an indicator of whether a Western Mass. town went for Clinton or Trump in the 2016 election.
The full analysis is available here: http://apps.bostonglobe. com/metro/graphics/2018/09/cars-by-town/
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‘Right to Repair’ Group Sets Sights on Wireless Tech The ‘Right to Repair’ lobbying group has resurrected its campaign, using emerging wireless technology in vehicles as a way to push the fight forward from its efforts six years ago. According to a State House News Service story, Rep. Paul McMurtry (D-Dedham) intended to file legislation with the support of Reps. Joan Meschino (D-Hull) and John Lawn (D-Watertown) that “would protect independent auto repair shops against vehicle manufacturers using wireless technology to get around the current right-to-repair information sharing laws.” The legislation, according to McMurtry and a member of the coalition, is intended to renew the discussion around right-torepair and refresh legislators ahead of the next two-year session that starts in January. “What I am hoping by filing legislation before we begin next session is an opportunity to engage in conversation, and it will be a priority piece of mine should I be able to return after the fall,” McMurtry told the News Service. The story offered an example of a Cadillac with a check engine light that used OnStar to alert local dealers, “cutting the in-
dependent repairer out of the equation,” according to McMurtry. MSADA Executive Vice President Robert O’Koniewski told The State House News Service that the Cadillac example sounds more like effective advertising by the automakers. “Certainly if the ‘right to repair’ folks have some legitimate complaints of the factory’s inability or lack of commitment to compliance, I would love to hear what they have to say, but we have not heard any. And on the dealers’ end, it is hard to write a law to chase hypotheticals,” he said. WEYMOUTH
Thieves Steal, Leave Behind Dozens of Tires from Dealership Weymouth Police say someone tried to steal dozens of tires from Ocean Honda. Police were called to Ocean Honda late one evening in September and found around 48 tires had been removed from 12 cars. The Patriot Ledger reports that several rims were also stolen and four cars had rear windows smashed. continued on next page
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NEWS from Around the Horn from previous page Police recovered 44 tires and returned them to the dealership. A witness told police they saw the suspect run off on foot. The officers discovered several tires in a nearby minivan, as well as tires stacked at the dealership in what police believe was in preparation for them to be stolen. The van had a bent license plate in an attempt to obscure the plate number. The incident is still under investigation. AUBURN
Emerging Automile Profiled in Worcester Telegram & Gazette
“This guy steals one from you, that guy down the street steals another from you. So it is hard to survive,” he told the paper. “I have been here the longest, but who cares? Nobody.” The recent projects have included Lundgren Honda’s $12-million dealership, opened in 2012, as well as expansions underway at Herb Chambers Toyota of Auburn and Prime Ford. “We had to rebuild because our business had grown so much,” Herb Chambers Toyota General Manager Dan Bortolussi (captured below) said, noting that the dealer services about 3,000 cars a month and sells around 300 a month. This year, he told the paper, has been one of the best for sales, despite a car market he described as “stagnant.”
The Worcester Telegram & Gazette recently analyzed the growth of auto dealerships in Auburn, noting one used car dealer now competes with franchises from across the spectrum. Mike Perro of Perro’s Auto Sales was a lonely outpost a decade ago. The T&G reports that during the last ten years, Auburn officials have approved more than 10 car dealer-related projects. “It shows that this is a healthy industry here,” Auburn Town Manager Julie Jacobson said. “Many of these dealers have been established here for years, and they are finding they are expanding, purchasing new land.” Perro sees it differently.
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MSADA Prime Ford Auburn also has outgrown its showroom, which dates to the 1970s. When Prime bought its Auburn dealership at 780 Washington Street from Langway in 2014, Ford Motor Co. mandated that the dealer build a new showroom. The roughly $10 million project, including a new 12car showroom, service lane, and parking lot, will be done next Summer. “I am anticipating at least another 30 to 35 percent growth in the first year – in all business,” General Manager Scott Webber said of the impact. “People like to come to a nice new facility.” Webber added that competition should be welcomed, as a rising tide lifts all boats. “Dealerships like to go where other dealerships are. It is healthy competition,” he said. “Customers like the ease of shopping. They can go on their computer and shop in a matter of minutes five different brands. So, for them to come and visit five different brands in a stretch of a half-mile is perfect.”
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State Spent $6 Million Last Year on Leased, Rented Vehicles Leasing and renting vehicles for state workers cost taxpayers nearly $6 million this past fiscal year so everyone from UMass chancellors to gaming inspectors could get around, a Boston Herald analysis shows. The state Executive Office of Education topped the list of departments who rented or leased vehicles, with the University of Massachusetts’ system spending a lion’s share of the total $4.55 million, state comptroller records show. In all, there are 2,348 “active vehicles” across 36 agencies available to state employees, according to the Executive Office of Administration and Finance. Those rentals and leases fall under the Office of Vehicle Management. That tally does not include state police cruisers, MassDOT vehicles, or sheriffs cars.
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The All New Woburn Toyota Opens in Grand Style On September 13, 2018, the Albrecht Family welcomed executives from Toyota Corporation, government officials, employees, friends, and supporters to the Grand Opening Celebration of the new Woburn Toyota. George Albrecht, Sr., and George Albrecht, Jr., kicked off the festivities with a ribbon cutting ceremony in front of the new building, which was the culmination of over six years of planning and construction. Participating in the ceremony from Toyota were Senior Vice President Bill Fay and Boston Region General Manager George Brenner. Woburn Mayor Scott Galvin was among other special guest participants. Fay presented the Albrechts with a samurai sword, also known as a Katana, which he explained, signifies the Toyota values of “strength, integrity and partnership.” The 400 Grand Opening guests were invited to enjoy cocktails, hors d’oeuvres, and live music, and to explore the impressive building, which is the largest dealership in New England. The celebration took place on all three floors of the new dealership, which encompasses 153,000 square feet of space, 46 new service bays, 400 indoor display vehicles, a delicious café, a media wall,
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guest lounges, and more. Harry Cicma, Sports Anchor for WNBC, served as emcee. He welcomed guests, including legendary Boston television anchor Natalie Jacobson, who set the tone by giving a very moving tribute to her dear friend, George Albrecht, Sr.. Concluding the tributes, George Jr. dedicated the building to his father, noting, “The George Albrecht Building has been built on the foundation of one customer for life at a time.” t
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By Sara Decatur Judge
When the AG’s Office Knocks at the Dealer’s Door
Last year, I was at an event where I was introduced to an attorney who works in the Office of Attorney General in Massachusetts (AGO). When I mentioned that I represent motor vehicle dealers throughout the Commonwealth, the AGO attorney made a passing comment that stayed with me: “you’re going to be busy.” I wasn’t surprised. For several years now, the AGO has focused on various aspects of the automotive industry, including the subprime auto lending industry. In recent months, our office has also seen an uptick in AGO investigations directly involving Massachusetts motor vehicle dealers.
Understanding the AGO Investigation Process The Attorney General (AG) is authorized by state law to conduct investigations whenever the AG believes a person or business has engaged in unfair and deceptive conduct that violated Chapter 93A of the Massachusetts General Laws, which is the state’s unfair and deceptive trade practices act. The AG is authorized by Section 6 of Chapter 93A to issue a civil investigative demand (CID), which is similar to a subpoena. As part of the investigation, Chapter 93A allows the AG to examine the books and records of any person or business doing business within the Commonwealth. It allows the AG to compel a deposition with respect to the alleged unfair and deceptive acts. When the AGO issues a CID, it typically requests the production of business records and may request that the business owner produce a witness for deposition. Massachusetts courts have held that the AG’s power to issue CIDs is very broad. Although the CID must generally identify the alleged unfair and deceptive conduct being investigated, the AGO is allowed to describe such conduct in very general terms, such as “alleged unfair and deceptive acts with respect to the sale and finance of motor vehicles”. Currently, our office is involved in several ongoing AGO investigations involving subprime lending, as well as the sale of extended warranties
and other F&I products. A business receiving a CID does not have to be the target of the AGO’s investigation. For example, if the AG is investigating a subprime lender, the AG will issue CIDs to dealerships who work with that lender to obtain documents concerning the disputed dealers. The AGO can issue the CID to any person or entity who may have records or knowledge as to the alleged wrongful acts. This leaves many CID recipients unsure as to exactly why they received the CID and questioning whether or not they are the actual target of the investigation. The stakes are high. If the AGO’s investigation uncovers evidence of unfair or deceptive conduct, the AGO can file a lawsuit seeking to enforce monetary fines against a perpetrator of the wrongful acts. Many targets of these investigations will settle with the AGO in an effort to minimize exposure. But the settlements can be expensive, and they are always announced publicly by the AGO. As a matter of the AGO’s policy, no settlement can be done confidentially.
Responding to a CID
A dealer receiving a CID should not respond without first contacting legal counsel. When a dealer receives a CID, the clock begins on the time in which a dealer must respond. Typically, a CID will arrive with a cover letter requesting that a large amount of documents be produced within a relatively short time period (30 days). However, unless the dealer takes certain steps to preserve his or her rights to object to the scope of the CID, the dealer will have waived the right to do so in the future, even if that dealer has cooperated with the AGO. Preserving a dealership’s rights to object to the scope of the CID is extremely important, especially if the dealership turns out to be the target of the investigation. Counsel can actually save the dealership money because counsel can on many occasions reduce the scope of the CID. We’ve seen dealerships receive www.msada.org
CID requesting the production of thousands of deal jackets spanning the course of many years. The AGO often requests that dealerships turn over large amounts of electronic data (including DMS databases), which usually contain highly sensitive customer information. Legal counsel can guide the dealer through this process and can push back aggressively when producing data will be burdensome and expensive. Counsel can also negotiate the terms of any deposition or push back when a deposition would be unduly burdensome. How your dealership should respond to a CID is very individualized depending on the scope of the CID and the alleged wrongful conduct. Experienced counsel who handle many CID responses will be able to provide guidance as to where you can reasonably push back, which in turn will save your dealership money. Finally, an ounce of prevention is worth a pound of cure. All dealers should be proactive in making sure that their sales and F&I employees are properly trained and that they are properly documenting deals. Using overly aggressive sales tactics in your F&I department is a sure fire way to attract trouble. Training on compliance issues is the key to avoiding trouble.
Summary If the AGO comes knocking at your dealership’s door with a CID, do not panic and do not ignore it. You need the assistance of legal counsel with experience handling CIDs. There is a short window to preserve your right to object to the CID or its scope. Your legal counsel will work with you to develop a strategic plan to respond to the CID. t Sara D. Judge (sjudge@burnslev.com; 617.345.3211) and Paul Marshall Harris (pharris@burnslev.com; 617.345.3854) are partners at Burns & Levinson in Boston. Their practice is devoted to representing motor vehicle dealers in trade regulatory matters throughout Massachusetts and New England.
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Patrick Manzi
NADA Senior Economist
Boyi Xu
Economist
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NADA MARKET BEAT
JANUARY 2016
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TRUCK CORNER
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ATD Show 2019: You Asked and We Listened Our members are our customers, and they are always right
By Jodie Teuton Chairwoman, American Truck Dealers ATD Chairwoman Jodie Teuton is vice president of Kenworth of Louisiana and Southland Truck Leasing in Gray, Louisiana.
Each year the American Truck Dealers (ATD) offers its members the best products and presentations on a large stage. We will deliver again at ATD Show 2019 in San Francisco from January 24-27. ATD listens to our members like dealers listen to our customers. And based on feedback from the 2018 show attendees, we have made sure that our events are tailored to your needs and even more convenient to attend. All show events will take place under one roof at the Marriott Marquis, which is ATD’s headquarters hotel. This will allow for easier access to make meetings, workshops, exhibits, general sessions, and networking events while giving attendees the added benefit of attending NADA Show 2019 programs at the nearby newly-renovated Moscone Center. ATD will present timely workshops and an in-
chief executive officer of PACCAR, will speak at the opening general session on Friday, January 25. As PACCAR’s CEO for the past four years, Armstrong will share his expansive knowledge gained during a 25-year career with a global truck manufacturer. And we are bringing back the highly-acclaimed Washington Update on Saturday, January 26. Hear directly from the ATD leadership who advocate on your behalf. You will get an in-depth view of the current and future challenges coming out of the nation’s capital. At the opening ATD Industry Roundtable on Thursday, January 24, truck purchasers will share what they look for in dealerships. And of course, as ATD chair I look forward to welcoming you to the opening general session on Friday, January 25.
Despite the highly-technological world we live in, there is no substitute for in-person and face-to-face meetings. creased number of educational sessions. These sessions are designed to increase your success in a rapidly evolving truck dealer business. We will cover hot topics such as cyber-criminal prevention and employee recruitment and retention. The ATD Exchange offers valuable peer-to-peer involvement. And you will have the opportunity to learn how industry leaders are facing today’s challenges in the market and how you can apply these same tools in your stores. When it comes to industry leaders, we listened and are proud to announce that Ron Armstrong, SEPTEMBER 2018
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We are so proud to bring you a show that connects all members of our industry—dealership personnel, OEM senior management, exhibitors, suppliers, and, most of all, my fellow commercial-truck dealers. Despite the highly-technological world we live in, there is no substitute for in-person and face-to-face meetings. We look forward to seeing you in San Francisco next January for ATD Show 2019, the truck dealer industry event of the year! t
NADA Update
By Scott Dube
Gathering the Masses
NADA’s Washington Conference is a crucial show of strength.
Scott Dube, President of Bill Dube Hyundai and MSADA Immediate Past President, represents NADA’s Massachusetts members on the NADA Board of Directors. He can be reached at scott@dubecars.com. I write this as we return from another successful NADA Washington Conference, where I and fellow Massachusetts dealers hit the pavement in the name of all the principles our community shares. It is always a fun, exhausting time. Please take a moment to thank the crew who made the trip when you see them at the upcoming Hall of Fame ceremony on the Cape, where we will honor pillars of our community who have helped build the industry up to where it is today. The work is never finished, however. As you hear us say time and time again, it is up to you to do your part to make sure our lawmakers know where we stand on the issues. The stakes continue to rise. Whether it is our own manufacturers or the newly awakened “Right to Repair” folks, the first time a legislator hears of your dealership should not be when you are asking for their favor. Make the call today.
Local Dealerships and President Trump’s Workforce Initiative Wes Lutz, NADA Chairman
In July President Trump announced an executive order establishing the President’s National Council for the American Worker and the American Workforce Policy Advisory Board. The council is developing a national strategy to address urgent workforce issues, including a national campaign to raise awareness of the job skills crisis. NADA applauds the President’s efforts since America’s auto dealerships are facing our own crisis with a shortage of automotive service technicians. Improving our employment numbers with skilled workers is a top priority, and I’m proud that NADA leadership has been meeting with White House officials to examine how we can be involved in this vital initiative. Earlier in August, NADA President & CEO Peter Welch and NADA Foundation Chairman Annette Sykora met with White House officials who are overseeing the President’s new workforce initiative. We presented our own plans for the NADA Foundation’s Workforce Initiative – which will launch in early 2019 – to promote the value of careers at new-
car and -truck dealerships. For an industry that is part of Main Street, we know that we can successfully tackle this skills crisis head-on. Dealerships nationwide provide more than 1 million jobs in sales, management and service, and service departments are especially critical in a time when thousands of cars are still in need of repairs following recalls and scheduled maintenance and warranty. The U.S. Bureau of Labor Statistics estimates that 750,000 auto techs and mechanics are currently employed across the industry. New-vehicle dealerships alone employ around 317,000 service techs. But to meet future demand from retired workers and others leaving the industry, the U.S. Bureau of Labor Statistics says an average of 76,000 technicians are needed each year from now to 2026. A lack of dealership workers means that thousands of good-paying local jobs remain unfilled, and we will have difficulty getting the necessary people – and skill sets—to service and repair vehicles on the road. Without the service operations at local dealerships – and our technicians staffing those operations – the entire economy would grind to a halt. The future of the auto business rests in the employees who work with us day-in and day-out, and we must retain the best ones out there. Dealership jobs are among the last jobs in America where individuals without a four-year college education can make an excellent living and have opportunities to advance into management careers. NADA has proudly espoused the benefits of local dealerships via our own national campaign: mydealership.org. If you haven’t already, I urge you to share a particular section called “my dealership creates jobs.” Share this on your own websites and social media pages. The average dealership job pays $70,000 per year with benefits. And tech jobs are particularly vital to providing safe transportation to all Americans. And we encourage all interested dealers to engage with the White House and consider joining the President’s Workforce Initiative. If your dealership would like to make a pledge to increase career opportunities for students and workers, including apprenticeships, work-based learning programs, continuing education, on-the-job training, or re-skilling, go to mydealership.org for the information you need to sign up. NADA—along with industry allies—must take action now to narrow the work gap at our dealerships and other American industries. We look forward to working with the White House in any way we can so that more people take advantage of the good-paying careers dealers offer and discover the benefits of employment at our new-car dealerships.
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NADA Update Managers: Get Your Dealer’s Approval to Attend NADA Show 2019 The NADA Show (January 24–27, 2019) is not just for dealers or dealership owners. This annual auto industry event provides the education, business solutions, and networking opportunities to help managers drive success in each dealership department. Managers of all kinds attend NADA Show to find real solutions for the issues they face in every department, including employee hiring, retention and training, digital and traditional marketing, legal and regulatory updates, parts and service, and sales management, including: ● General managers ● Sales managers ● Marketing directors ● e-Commerce and internet sales managers ● Social media managers ● CRM managers ● BDC managers ● Pre-owned managers ● Fixed-operations managers ● Finance and insurance managers Dealers are sending their managers to the show to find solutions for them to bring back and share with other employees. More than 100 workshops and education sessions will cover the latest trends and legislation affecting your business and provide management training and best practices to guide both dealers and managers on the path to dealership success. In response to the lightning-fast rise in digital marketing re-shaping the way dealers sell cars each day, at the 2019 Show we will host more digital marketing-related education sessions than ever before. There will also be legislative and regulatory updates, and workshops on the new, important tax topics that are affecting dealerships today.
NADA Show Discounts Offered As you make plans to join us in San Francisco for our upcoming show, we know that estimating expenses can be a big determining factor in your decision to attend, as well as crucial in determining your dealership’s ROI for attending. Remember that NADA members enjoy exclusive discounts for travel and transportation. In addition to our NADA Show 2019 negotiated hotel discounts, with which you can save up to $200 per night over advertised web hotel rates for the same dates, NADA has also negotiated special discounts for: • Airfare – Delta Airlines and United Airlines • Car rental – Avis Rental Car • Airport Shuttle – SuperShuttle San Francisco • and more! You can also learn information about BART (Bay Area Rapid Transit), the fast, easy, low-cost way to get to San Francisco or other nearby cities from San Francisco International Airport (SFO) and Oakland International Airport (OAK) on SEPTEMBER 2018
MSADA our NADA Show Travel & Transportation web page. Maximize your company’s investment by getting the best possible rates for your trip to the automotive industry event of the year. Learn more about how to access these special discounts on the NADA Show website: https://show.nada.org/2019/TravelTransportation/.
NADA Refutes NPR Story On Monday, August 13, National Public Radio (NPR) aired a story about the Military Lending Act that was riddled with inaccuracies, false statements, and misleading claims about the voluntary protection products that millions of consumers have chosen to purchase at franchised new-car dealerships. Even more astounding than the sheer number of inaccuracies in a single story is the fact every single one was wholly avoidable. On Friday, August 10, NADA Vice President of Regulatory Affairs Paul Metrey and Tim Meenan, the executive director of Guaranteed Asset Protection Alliance (GAPA), conducted a 60-minute, on-the-record interview with NPR correspondent Chris Arnold, in which they explained in great detail: • Why changes to the Military Lending Act (MLA) initiated by the Department of Defense during the Obama Administration have resulted in active-duty service members no longer being able to purchase GAP waiver as part of their new-vehicle finance contracts; • How the DOD has acted far outside the bounds of the normal federal rulemaking process that calls for providing notice and allowing public comment before initiating changes that have significant ramifications in the market; • Why franchised dealers and the auto lending industry believe this change has put active-duty service members at a distinct disadvantage compared to their civilian counterparts in terms of being able to adequately protect themselves against financial harm in the event of the total loss of a new vehicle; • The tremendous value that GAP coverage provides; • The extensive differences between GAP waiver, which is available through dealer-assisted financing, and GAP insurance, which is traditionally offered as a “bolt-on” to an auto insurance policy; • The superior coverage and protection that GAP waiver provides over GAP insurance; and • How the changes to the MLA initiated by the DOD are inconsistent with the will of Congress. Regrettably, none of these points was included in the NPR story. Instead, NPR quoted at length so-called “consumer advocates” who push their own agenda through narratives that distort the truth. The result was a slanted story that contained far more questionable and outright false claims than it did actual facts. t
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