A quarterly newsletter from The Scali Law Firm, designed to keep our clients and friends ahead of the compliance curve.
The Scali Law Firm, Ahead of the Curve: navigating dealer compliance in a changing industry

What’s happening at Scalilaw?

We're growing! This February The Scali Law Firm expanded to the Inland Empire, with an office in Ontario, CA, managed by Robert Mizar. That same month we welcomed litigator Jade Jurdi to our team. Jurdi has a stellar track record defending companies against consumer protection class actions.

We are extremely proud to have again been chosen by the CNCDA to revise it's Advertising Law Manual for 2017. In conjunction with the manual's publication, The Scali Law Firm’s Christian J. Scali and Monica J. Baumann will offer several Advertising Compliance Seminars across the state, presenting the new material and answering any questions dealers may have. See the website for seminar dates and times.

In addition to the CNCDA seminars, don't miss The Scali Law Firm giving presentations at these events:  

The FTC Sage settlement

What we can learn from the misfortune of others

As many of you have read, last month The Sage Automotive Group, a California dealer group, reached a settlement agreement with the Federal Trade Commission for charges that the dealership group used deceptive and unfair sales and financing practices, deceptive advertising, and deceptive online reviews. The FTC described the charges as the first in the nation brought by the FTC for so-called “yo-yo financing.” Now that the dust has settled, this brief article looks at the allegations and discusses some best practices to avoid suffering a similar fate.

Read more.


What’s in your FCRA disclosure form?

A recent court case serves as a warning to employers

Under the federal Fair Credit Reporting Act (“FCRA”) employers who use background checks (such as criminal history or credit reports) of applicants or employees are required to provide clear and conspicuous written disclosure of the applicant/employee’s rights under the FCRA. The written disclosure must be provided in a document that consists solely of the disclosure. The third-parties doing the background checks often provide employers their own disclosure forms to give to applicants, and the employers might assume that these forms are legally compliant.

Read more.


Workplace investigations

Important tips for planning and implementing them

When you become aware of a potential violation of law or Company policy, as a conscientious Human Resources professional or Company manager you want to promptly and appropriately address the situation and more forward. However, managers often jump to focus on the corrective measures they think will appropriately address the situation before stopping to consider that there may be other sides to the story of which they are not aware. Moreover, should your corrective action result in some adverse employment action, such as discipline, demotion or termination, your process of determining the appropriate corrective action will be subject to second-guessing and scrutiny should the employee later challenge the action. While your corrective process may be correct and may have been the fair and appropriate response, you can save your employer the time and expense of proving that point in court or before an arbitrator if you focus on conducting a fair and effective investigation instead of worrying about the result.

Read more.


DMV to adopt new proposed regulations for highly autonomous vehicles

On April 25, 2017 the Department of Motor Vehicles will hold a public hearing in Sacramento for comments on its new proposed regulations for testing and deployment of highly autonomous vehicles (“HAV”) on California roadways. The hearing will happen just one month before the National Highway Safety Administration holds its workshop on June 28, 2017, in Washington D.C., to examine the consumer privacy and security issues posed by automated and “connected” vehicles. The DMV’s new proposed regulations include a requirement that HAVs without a driver be monitored remotely by a person able to take control of the car in case of an emergency. NHTSA’s June workshop should provide insight on the extent to which California’s proposal for “remote” control capabilities of HAV test vehicles lines up with the NHTSA’s vision for the driverless car future.

Read more.


Dealers continue to successfully fight terminations

On March 15, 2017, the California New Motor Vehicle Board unanimously adopted a proposed decision sustaining the consolidated protests by Dependable Dodge to notices of termination of its franchises. The administrative law judge found, among other findings, that FCA’s use of a generic Minimum Sales Responsibility was not “tailored and nuanced enough to measure how well a dealer is performing given those unique aspects of the environment and market that are outside its control.” (Proposed Decision ¶ 142.) This is the second of two recent cases challenging OEM’s reliance on statewide standards to terminate California franchises, and part of what could be a bigger trend nationally.

Read more.

Complying with the New Buyer’s Guide

Dealers continue to have questions on implementation

As you have probably read, the Federal Trade Commission (FTC)’s new version of the Buyers Guide took effect on January 27, 2017. We recommend upgrading to the new version and here are a few main issues to consider regarding its use.

Read more.


Complying with California wage and hour law for commissioned employees in the aftermath of Vaquero v. Stoneledge Furniture LLC

Dealerships are taking another look at their commission pay plans in light of the recent California Court of Appeal case of Vaquero v. Stoneledge Furniture, LLC., which we featured in our March 1, 2017 Alert article. The Vaquero Court held that commission pay plans providing base pay covering time spent on rest breaks that could be “clawed-back” subject to future earnings was invalid under California law. Specifically, the Court held that employees who earn only commissions must be paid separately for rest breaks (since the commissions do not cover time spent resting), and that employers who pay employees both hourly wages and some form of incentive pay, including commissions, violate the rest period pay requirement if they claw back any part of the employees’ base hourly pay as a draw or advance against commissions.

Read more.


Buyer’s conditions to closing in purchasing an auto dealership

Review them carefully before committing

This article addresses a buyer’s conditions to closing in a dealership asset purchase agreement. Buyers should carefully review and negotiate these provisions, which can materially affect whether they should or will commit to a purchase. If one or more buyer conditions are not satisfied or waived before the closing, the buyer typically has the right to walk away from the deal, without having any remaining liability (unless a separate provision of the agreement creates such liability).

Read more.


Individual PAGA claims can be arbitrated, says the Ninth Circuit

Review them carefully before committing

In an unpublished decision in March, the Ninth Circuit (the federal circuit court governing California, Oregon, Washington, Nevada, Arizona, Hawaii, Alaska, Montana and Idaho) permitted arbitration of a worker's Private Attorneys General Act (PAGA) claim, holding that an individual employee contract can bind government parties. The California Supreme Court's Iskanian v. CLS Transportation Los Angeles decision "does not require that a PAGA claim be pursued in a judicial forum," the court said, and "clearly contemplate[d] that an individual employee can pursue a PAGA claim in arbitration, and thus that individual employees can bind the state to an arbitral forum."

Read more.
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Scali Rasmussen, PC, All rights reserved.

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