The COVID-19 pandemic and the related economic shutdown and quarantine orders continue to weigh heavily on businesses across California, and auto dealerships are certainly no exception. During such trying times, it is only natural for dealers to begin thinking about creative ways to operate as efficiently as possible. One idea that dealers have considered is converting relationships with salespeople from one of employment to one more akin to an independent-contractor relationship, where commissions are paid to salespeople. Dealers considering such an idea must be mindful, however, of their continuing legal duties under such circumstances.

Scali Rasmussen’s Chris Scali, Bert Rasmussen and Monica Baumann examine Tesla’s direct-sales model in their article Tesla, franchising and the bottom line, published today in Wards Auto.

As we noted in our July 13, 2020 alert, Governor Newsom has taken steps to reverse some of the reopening rules across the state, focusing on indoor activities. Now local governments, in particular those in Southern California, are modifying local reopening guidance in response to the increase in COVID-19 cases across the state. We have also received word of stepped-up enforcement by local regulators. Due to these changes and increased enforcement activity, every dealer should continue to evaluate their written protocols or adopt them for the first time, if not already completed.

Scali Rasmussen has discovered trends in recent cases filed against dealers. This article—written by the firm's partners for the CNCDA Bulletin—highlights these trends to help dealers identify, review, revise and/or adopt compliance policies and procedures to protect against costly litigation or defend one of these suits.

Governor Newsom issued a new order closing down certain indoor and outdoor activities as part of an effort to slow the growth in new COVID-19 infections across the state.

In two class action cases that have been consolidated in federal court, pilots and flight attendants are alleging, among other things, that their airline employers failed to provide them with compliant wage statements under California law. In both Ward v. United Airlines, Inc. and Omar v. Delta Airlines, Inc., the Ninth Circuit asked the California Supreme Court to decide a couple questions of state law that were unsettled. One question that was common to both cases was whether employers are required to provide wage statements (pursuant to California law) to employees who perform work both in California and other locations.

Last year, we discussed the California Supreme Court’s ruling in the case of One Toyota of Oakland v. Kho (“OTO”), which seemingly went against federal law favoring arbitration and the use of mandatory arbitration agreements in employment. In OTO, a dealership service technician brought a claim for unpaid wages in front of the Labor Commissioner. The dealership attempted to move the case to arbitration under the technician’s arbitration agreement, but the trial court found that the arbitration agreement was unenforceable as procedurally unconscionable.

Effective July 1, 2020, several California cities will implement minimum wage increases. Generally, employees who perform at least two hours of work in a city are covered by the minimum wage provisions of that city, which would be at or above the California minimum wage rate.

As employers settle into their protocols for employee health screenings and other preventative measures to lower the risk of Coronavirus spread in the workplace, questions still remain as to what they can ask employees about their health. Government agencies continue to provide further clarification and guidance. Two agencies recently provided updates...

California has seen a recent increase in the number of diagnosed cases of COVID-19. While there are currently no indications that state or local governments plan to scale back the reopening of businesses, this spike will likely lead to increased enforcement of current prevention mandates. Every dealership in the state should therefore ask whether it is in compliance with state and local requirements, including recent modifications to those requirements.

Last month Governor Newsom’s office released the Phase 2 guidance of the California Resilience Roadmap for “lower-risk workplaces” detailing the steps businesses in specific industries must take to reopen. The guidance includes dealership opening protocols and requires that dealerships do all of following...

On May 21, 2020, the Federal Trade Commission filed a complaint in the Southern District of New York citing multiple violations of the FTC Act, the Truth in Lending Act (TILA), and the Equal Credit Opportunity Act (ECOA) against Defendants Liberty Chevrolet (d/b/a Bronx Honda) and its general manager, Carlo Fittanto. In its complaint, the FTC alleges that the Defendants not only engaged in unlawfully misleading and deceptive businesses practices but also discriminated against its African-American and Hispanic car buyers by targeting them with higher financing markup rates compared to those offered to non-Hispanic, white car buyers. These charges are a reminder that the federal government remains a strong enforcer of federal consumer protection laws and will pursue cases for discriminatory practices.

As California reopens amidst the COVID-19 pandemic, employers should take extra care to ensure that they are following all health and safety protocols, whether they are legally mandated or just recommended by the government. There are various organizations to look to for guidance regarding safe COVID-19 practices, but the number of guidelines out there may be overwhelming. To assist, here is a list of some agencies and guidelines with which you should be familiar, as well as where to find them.

In response to the COVID-19 pandemic, many local and national guidelines now recommend taking employees’ temperatures before allowing them to work/interact with customers and goods. But since such “medical tests” were usually off-limits, employers have many questions about how to implement them.

Scali Rasmussen is proud to participate in the Adopt-A-Family program. We maintain open lines of communication with the families we sponsor so we can be of assistance all year round, not just during Christmas.

Today, May 7, 2020, Governor Newsom’s office released Phase 2 guidance of the California Resilience Roadmap for “lower-risk workplaces” detailing the steps businesses in specific industries must take to reopen. This guidance becomes effective May 8, the same day when designated lower-risk workplaces may open across the state with modification. The auto dealer guidance includes some specific requirements, but largely shifts to dealers the burden of assessing risk and developing plans to mitigate risk.

On May 6, 2020, the County of Los Angeles announced that car dealers will be able to resume sales on May 8 from their dealerships with appropriate social distancing procedures. The County has not released any details regarding what specific procedures car dealers will need to follow, if any, though the Los Angeles Times is reporting that retailers that are allowed to resume business on May 8 must provide curb-side pickup. It is unclear if this restriction will apply to car dealers.

Today the California DMV issued an Occupational Licensing Industry News addressing how dealers may legally offer vehicles for sale online and perform off-site delivery of the vehicles. While the guidance states it “clarifies the requirements” during the “outbreak period,” it should be read to extend beyond the present. This is the first guidance from the DMV acknowledging that new car dealers may legally offer online sales.

Last year, we reported on the California Supreme Court decision in One Toyota of Oakland v. Kho, which struck a blow to employers seeking to enforce arbitration agreements. In March 2020, OTO, L.L.C. asked the United States Supreme Court (“SCOTUS”) to let it appeal the California Supreme Court’s decision, which is done by way of a Petition for a Writ of Certiorari (“Writ”). Though Mr. Kho waived his right to file a response to OTO’s Writ, SCOTUS requested that he file one. On April 29, 2020, Mr. Kho filed an Opposition to OTO’s Writ. The California Labor Commissioner also filed a brief in opposition.

Jennifer Woo Burns, partner and chair of Scali Rasmussen's Labor and Employment practice, has been selected as an honoree in the Los Angeles Business Journal special supplement recognizing the city’s most influential women attorneys. The Journal’s Publisher and CEO Josh Schimmels writes, “during this challenging time battling the coronavirus, we are relying on our trusted advisers more than ever. In times of uncertainty, lawyers … are particularly needed to help our businesses respond and react to issues at hand.”

One of the key benefits to the Families First Coronavirus Response Act is the employer’s ability to promptly recover the amounts expended for paid leave under this Act through credits against certain payroll taxes and health plan benefits. The IRS has issued some specifics on how employers go about offsetting their tax liabilities for such expenses.