CALIFORNIA ISSUE 1, 2023 Official Publication of the California New Car Dealers Association The Secret to Controlling Dealership Expenses
• Business Transactions • Buy-Sell Agreements • DMV, BAR and other governmental approvals • Lender flooring and capital loan agreements • Entity formation and structure • Shareholder Agreements • Manufacturer approvals and relations • NMV non-profit association representation Estate Planning • Succession planning for business continuation • Family estate planning (wills and trusts) Tax • Property tax planning, audits and appeals • Federal estate and gift tax controversies with IRS • EDD audits BUSINESS LAW | LITIGATION | ESTATE PLANNING | REAL ESTATE | TAX | EMPLOYMENT PRACTICES FERRUZZO & FERRUZZO, LLP | A Limited Liability Partnership, including Professional Corporations 3737 Birch Street, Suite 400, Newport Beach, California 92660 | PH: (949) 608-6900 | ferruzzo.com Business Litigation • Consumer Legal Remedies Act lawsuits • Sales and Service Agreements • Disputes before the CA New Motor Vehicle Board • Consumer claims regarding the sale/lease of autos • Manufacturer audit disputes • Hearings before the AQMD, RWQC and OSHA Real Estate • Dealership site acquisitions and lease agreements • Lender opinion letters • Relocations Employment Practices • Arbitration agreements • Wage and hour class action lawsuits • Private Attorneys General Act (PAGA) claims Ferruzzo & Ferruzzo, LLP began providing legal representation to new car and truck dealers nearly four decades ago. Over the course of that time, one of the central goals of the firm has been to remain rooted in our client relationships. With the strength of over 20 attorneys, we provide a spectrum of legal services to support every aspect of running and owning your new car and/or truck dealership. Each member of our team is available to service the needs of you and your dealership.
1067 Park View Drive | Covina, CA 91724 | (626) 858-5100 | Fax (626) 332-7012 YOUR SUCCESS... IS OUR SUCCESS ➢ Committed to our Dealer Clients for over 40 Years ➢ Helping to Optimize your Business Operations ➢ Providing the Highest Quality Tax and Accounting Services ➢ Consulting & Management Support ➢ Estate Planning & Dealer Succession Opportunities George R. Applebaum, CPA Shareholder (626) 858-5100, ext. 215 gapplebaum@rogersclem.com Scott M. Biehl, CPA Managing Shareholder (626) 858-5100, ext. 229 sbiehl@rogersclem.com Andy R. Jones, CPA Shareholder (626) 858-5100, ext. 237 ajones@rogersclem.com
4 California New Car Dealer Quarterly ©2023 California New Car Dealers Association (CNCDA) | The newsLINK Group, LLC. All rights reserved. The California New Car Dealer Quarterly is published four times each year by The newsLINK Group, LLC for the CNCDA and is the official publication for this association. The information contained in this publication is intended to provide general information for review, consideration and dealer education. The contents do not constitute legal advice and should not be relied on as such. If you need legal advice or assistance, it is strongly recommended that you contact an attorney as to your specific circumstances. The statements and opinions expressed in this publication are those of the individual authors and do not necessarily represent the views of the CNCDA, its board of directors, or the publisher. Likewise, the appearance of advertisements within this publication does not constitute an endorsement or recommendation of any product or service advertised. The California New Car Dealer Quarterly is a collective work, and as such, some articles are submitted by authors who are independent of the CNCDA. While the California New Car Dealer Quarterly encourages a first-print policy, in cases where this is not possible, every effort has been made to comply with any known reprint guidelines or restrictions. Content may not be reproduced or reprinted without prior written permission. For further information, please contact the publisher at 855.747.4003. 21 CONTENTS 11 16 ISSUE 1, 2023 6 President’s Message Protecting Our Franchised Car Dealers 8 2023 Officers and Directors 11 California Regulatory Update 14 Taking Care of Your Out-Of-State Buyers’ Title & Reg. Doesn’t Have to Be a Nightmare 16 The Secret to Controlling Dealership Expenses 20 You Are Invited to Join Us at CNCDA's Annual Convention! 21 Over-Sharing in the Workplace? Why Your Company May Need a TikTok and BeReal Policy 26 Thank You 2023 Sponsors 27 California Auto Outlook
6 California New Car Dealer Quarterly Brian Maas President California New Car Dealers Association PRESIDENT’S MESSAGE Protecting Our Franchised Car Dealers An important step you can take is attending CNCDA’s Dealer Day in Sacramento. On this day, dealers like you communicate directly with members of the state legislature to explain how YOUR business functions and to share your unique industry perspective. It’s a busy, but very effective, day of advocacy for CNCDA and our members. We highly encourage you to register for Dealer Day as the more members we have present, the more successful we are in delivering a strong, face-toface message directly to California’s lawmakers. Visit CNCDA.org for more information. Thank you in advance for helping us continue to protect your franchise. Brian Maas Your participation and involvement in reaching this goal to protect the franchise model will help secure the future careers and lives of so many Californians. CNCDA members are rightfully concerned that (based on conflicting public statements) auto manufacturers may have their eyes set on direct-to-consumer sales. More than ever (and especially this year), our mission critical is to protect the franchised auto dealer model. That is why we have introduced AB 473 to the California State Legislature this year, aimed to modernize California’s New Motor Vehicle Law in order to create a stronger, more equitable vehicle franchise system. We know manufacturers make great cars and vehicles that consumers want (whether it’s ZEV or ICE), but it’s car DEALERS that make great relationships. Our dealers are the people behind the technology. They are experts in helping families find the perfect vehicle that meets the demands of kids’ busy schedules. Dealers help firsttime car buyers choose a reliable vehicle within their budget. They provide the insight and knowledge to answer questions for the executive looking to upgrade to a luxury vehicle or truck. Car dealers truly understand the wants and needs of California’s motoring public. Beyond these relationships, let’s talk numbers. In 2022, new car dealers provided over 135,000 jobs to hard-working Californians. Further, 97% of these dealerships provide access to health insurance for their employees. Dealers also play a vital role in California’s economy (now the fourth largest in the world), paying $12.9 billion dollars in tax revenue in 2022. Last year, new car dealers gave $62.84 million in charitable and civic donations to further help those Californians in need. The proof is here; California can’t afford to lose the franchised dealer model. We hope you join us, and participate in the way you feel most comfortable, to help us advocate for new car dealers in the year ahead. Your participation and involvement in reaching this goal to protect the franchise model will help secure the future careers and lives of so many Californians.
We have the road map. Arent Fox’s Automotive Group drives innovative strategies forward. Our cutting-edge, national practice advises automotive leaders as the industry faces a dizzying array of competitive and regulatory hurdles. Key Contacts Aaron H. Jacoby Automotive Practice Leader, LA 213.443.7568 aaron.jacoby@arentfox.com Russell P. McRory Partner, NY 212.484.3942 russell.mcrory@arentfox.com Victor P. Danhi Partner, SF 415.757.5505 victor.danhi@arentfox.com Smart In Your World arentfox.com
8 California New Car Dealer Quarterly 2023 Officers and Directors EXECUTIVE COMMITTEE Tony Toohey Chairman Auburn Toyota Hilary Haron Vice Chairman Haron Jaguar Land Rover Volvo David Simpson Secretary-Treasurer GMC Cadillac of Buena Park John Oh Immediate Past Chairman Lexus of Westminster Rick Niello Region 1 Vice President The Niello Company Jessie Dosanjh Region 2 Vice President Dublin Buick GMC Cheryl Bedford Region 3 Vice President Sunset Auto Center Bruce Hamlin Region 4 Vice President Guaranty Chevrolet Motors, Inc. Robb Hernandez Region 5 Vice President Camino Real Chevrolet
9 Issue 1, 2023 DIRECTORS Randy Denham SJ Denham, Inc. Taz Harvey Dublin Mazda Matthew Hall AutoNation Western Region Rick Niello The Niello Company Tony Toohey Auburn Toyota Jessie Dosanjh Stevens Creek Chevrolet Ryan Fitzpatrick Coliseum Lexus of Oakland Dave Moeller City Toyota Mark Normandin Normandin Chrysler Jeep Dodge Ram Cheryl Bedford Sunset Auto Center Cliff Cummings Toyota of San Bernardino Bill Hatfield Hatfield Buick GMC Hilary Haron Haron Jaguar Land Rover Volvo Ellena Sweet Fresno Acura Gary Fenelli Frank Toyota Bruce Hamlin Guaranty Chevrolet Motors, Inc. Greg Kaminsky Toyota of El Cajon John Oh Lexus of Westminster David Simpson Simpson Chevrolet of Irvine Anne Boland Bob Smith BMW Matt Browning Browning Automotive Group Ron Charron Boulevard Cadillac Buick GMC Sal Gonzales Culver City Volvo Robb Hernandez Camino Real Chevrolet Devinder Singh Bains Turlock Chrysler Dodge Jeep Ram Region 1 Region 2 Region 3 Region 4 Region 5
LOS ANGELES | ONTARIO | SAN DIEGO | SACRAMENTO | OAKLAND | scalirasmussen.com Avoiding litigation when it’s possible. Protecting you when it isn’t. •Franchise Advice & Litigation •Labor & Employment •Regulatory & Licensing •Complex Litigation •General Counsel Services •Mergers & Acquisitions AV® and AV Preeminent® are Certification Marks used under license in accordance with the Martindale-Hubbell® certification procedures, standards and policies.
11 Issue 1, 2023 California Regulatory Update By Les Swizer, CNCDA Legal & Regulatory Affairs Counsel Last year proved to be a robust regulatory season, and this year is shaping up to be a busy one for California Agencies as well. Below is a summary of some notable regulatory actions already proposed this year or expected to find their way through the Office of Administrative Law (OAL) in the coming months. Also, keep an eye out for our webinar offerings and monthly bulletins to stay abreast of updates in the legal and regulatory landscape affecting dealers. Bureau of Automotive Repair The Bureau of Automotive Repair (BAR) is the agency that enforces the Automotive Repair Act, providing consumer protection from Automotive Repair Dealers (ARDs) not following the law. For more information on ARD compliance issues, login to CNCDA Comply by scanning the QR code below. https://www.cncda.org/publications/comply-dashboard Citation and Remedial Training Programs for Automotive Repair Dealers Under existing law, BAR may cite and fine ARDs in violation of the Automotive Repair Act. AB 471 (2021), authorizing BAR to create an informal citation review program for ARD licensees.
12 California New Car Dealer Quarterly The program contemplated by the most recent proposed regulations would be in addition to the existing formal system of citations and fines and creates a remedial education program, allowing ARDs with minor violations to complete the program to avoid having the citation posted on BAR’s licensing website. Qualification for this program requires the violation to be related to documentation or recordkeeping, or another type of violation the Bureau determines to be minor in nature. The informal citation conference option begins on July 1, 2023, and is scheduled to end on July 1, 2026. AB 471 also specifies that unregistered ARDs may not enjoy the benefit of any lien for labor or materials, including the ability to charge storage fees. The proposed regs are reasonable and likely to be beneficial to dealers by providing an avenue for avoiding a published citation where the violation is minor. There is also quite a bit of transparency required from BAR. BAR has always been a reasonable agency with a collegial approach to enforcement and has been very transparent and cooperative during the rulemaking process. Further, this regulation may provide BAR with more ability to eliminate unlicensed actors. Automotive Repair Dealer Registration Application Requirements Currently, the application components to become a licensed Automotive Repair Dealer (ARD) are not set forth in regulation. Rather, 16 CCR 3351 simply states the applicant must provide whatever is required by the application. The regulations put forth by BAR (if approved as is) codify the current requirements and add a few things: • More contact information: phone number, email, and license plate number if conducting mobile repairs • BAR is now required to accept “nationally recognized and industry-accepted educational certifications” and “any Bureau-approved educational certifications” as part of the ARD application. ◦ This prompted the need to define “Bureauapproved educational certifications” and create a pathway for providers of educational certifications to have their programs deemed Bureau-approved. ◦ The definition is very reasonable and inclusive of most automotive education programs and also includes manufacturer-provided educational material. ◦ To be clear, it is not requiring applicants to submit, but rather requires BAR to accept these certifications on the application. • Requires identifying information if the business has a fictitious name, is a corporation or LLC, etc. • Adds a notification requirement if an ARD is cited for egregious behavior such as charging without performing repairs, misrepresentation, gross negligence, etc. Overall, the regulations are very reasonable and BAR has had a robust and transparent interaction with stakeholders and the public in crafting these rules that they are mandated to promulgate under AB 471 (Low — 2021). California Privacy Protection Agency The California Privacy Protection Agency (CPPA) was created in 2020 by the California Privacy Rights Act (CPRA) to promulgate rules and enforce the California Consumer Privacy Act (CCPA) and the subsequent CPRA. To learn more about the CPPA or to follow their rulemaking efforts, visit them at cppa.ca.gov. Login to CNCDA Comply by scanning the QR code below to view our most recent CCPA compliance manual, along with other helpful manuals on various topics affecting dealerships. https://www.cncda.org/publications/comply-dashboard California Consumer Privacy Act Regulations The first round of regulations put forth by the CPPA was submitted in February with an anticipated effective date of July 1, 2023. Some highlights of the regulations include: • Changes to “Authorized Agent” registration requirements • Eliminates the business-to-business and employee data exemption • Enhanced disclosure requirements • Adds “Disproportionate effort” to reasons a business can decline some requests CNCDA and ComplyAuto put on a webinar on the changes from CCPA to CPRA, covering the evolution into the CPRA, modifications of existing laws and regulations, new laws and regulations, fines and
13 Issue 1, 2023 Better. Faster. Stronger. New Certified DMS Integration Options One Click Coverage Extensions • • Flexible Customized Plans $1,000 and $500 Deductibles Available • • Approved by CDOI Meets all Current Privacy Rules & Regulations Including the New CCPA Requirements • • National AM Best "A" Rated Carriers Multi-Billion Dollar Insurance Backing • • EASY COMPLIANT AFFORDABLE SAFE Guaranteed Insurance Solutions for Uninsured Buyers Built to Protect Dealers penalties, and more. You can access that and other helpful webinars on CNCDA’s events website at www.cncda.org/events. Cybersecurity Audits, Risk Assessments, and Automated Decision-Making The CPPA’s next round of rulemaking is underway in its nascent stages. The CPPA has invited stakeholders and the public to comment on a list of questions regarding cybersecurity audits, risk assessments, and automated decision-making. This round could have implications for dealership programming and finance departments. CNCDA will be monitoring this next round of rulemaking and will keep dealers updated as the process continues. Office of Environmental Health Hazard Assessment The Office of Environmental Health Hazard Assessment (OEHHA) is adding to the list of chemicals known to the State of California to cause cancer for purposes of Proposition 65. Scan the QR code for a complete, updated Prop 65 chemical list on the OEHHA website. A https://oehha.ca.gov/proposition-65/proposition-65-list www.insureexpress.com Contact us today 888-200-9970
14 California New Car Dealer Quarterly Taking Care of Your Out-Of-State Buyers’ Title & Reg. Doesn’t Have to Be a Nightmare BESIDES ACCURATE FEES, PRE-FILLED FORMS AND NATIONAL EXPERTISE, CHANCES ARE YOU ARE LOOKING FOR A TRUE PARTNER. By Mike Platteter, Vitu You read the headline correctly. It really doesn’t have to be a nightmare. Think of how you currently take care of your out-ofstate buyers. You either a) have a service take care of it all, b) place the burden on your staff to research and facilitate your out-of-state buyer’s title and registration process, or c) have your buyer take care of it themselves. It doesn’t matter which option you choose, it’s all a nightmare. Worst of all, if you are currently using an existing service, how often are you or your buyers left in the dark? How Complex is National Title and Registration? Short answer — very complex. Think about it. When a vehicle is purchased, it always has an origin — the state it’s being sold from. Your buyer may or may not be living in that same origin state, but either way, the title and registration are needed for the buyer’s state. This process involves a wide variety of rules, requirements and fees from state to state, not to mention the specific circumstances for each vehicle and buyer. It’s clearly evident that a comprehensive national title and registration solution is a necessity. What Do You Really Need When Selling to an Out-of-State Buyer? When you are selling a vehicle to an out-of-state buyer, you need details — and fast. How much do the registration fees cost for the vehicle in the buyer’s state? What forms do they need? How do I get these forms? And, maybe most importantly, “Can’t someone complete the title and registration — we’re busy selling cars?” Give Me the Estimated Fees Of course, one of the most important questions your buyer may have is, “How much is it going to cost to register the vehicle in my home state?” This is where fee estimates come in. With some basic information about the vehicle, the buyer and the selling and destination states, a detailed fee estimate is needed. State registration and title fees, county fees, taxes — you need all of this information to present to your buyer. With a comprehensive set of fee estimates, you and your buyer have a good idea of just how much titling and registering the vehicle is. Being able to provide an in-depth breakdown of fee estimates is a great way to provide a complete picture of the complete cost of a vehicle sale. A Checklist of Necessary Documents Titling and registering a vehicle always requires specific paperwork — either state forms or ancillary items such as a driver’s license or proof of insurance, to name a few. Wouldn’t it be nice if all of those required items were on a single, easy-to-read checklist? The vehicle title or MSO, bill of sale, title application, odometer disclosure, power of attorney — the list goes on as you all know. And when dealing with out-of-state transactions, the scenarios and possible permutations number in the millions. As a dealer, you expect a checklist that is easy to follow and in plain English — especially if you ever needed to present this type of information to your buyer. All of the paperwork and documentation needed for a smooth title and registration process is listed and needed for eventual submission to your buyer’s home state. Having
15 Issue 1, 2023 all required paperwork listed in one place makes for a smooth title and registration process once all is said and done. Go through the list and check each item off — that’s how it should be. Pre-Populated and Ready-to-Sign State Forms Think about all of the title and registration forms we have here in California — the REG 397, REG 51, REG 227 and on and on. Now, imagine trying to get a hold of the forms needed for your buyer’s home state. Sometimes it’s as easy as downloading them off of the internet, but then you have to fill it out. When your buyer is there and finalizing the sale, who has time to hunt around the web or call other states to track down specific forms? What you really need for a smooth vehicle sale are state forms pre-populated with all of the information about the vehicle, buyer and the selling and destination states. Full-Service Title and Registration If you sell to many out-of-state buyers, chances are you would want to work with a service or partner that “just takes care of it all.” Time is money and if your staff is spending hours on the phone or hunting down fees and forms, you’d probably rather have them selling or servicing customers. Choosing a trusted partner with the complexities of out-of-state title and registration for your buyers is important. And if you currently use a service, are you getting all of the fees, checklists, forms and customer service you are hoping for? It’s that last part — customer service — that might be non-existent. Once you send all your paperwork to be processed, wouldn’t you like to ask questions and get answers? How about knowing exactly where in the title and registration process things are? Looking for a True Partner There are several providers that might offer some of the above, but CNCDA recommends Vitu Interstate for that complete toolbox you need when selling to out-of-state buyers. Did you know that each day, we here at Vitu processes thousands and thousands of transactions across the nation? Our partners rely on and trust our expertise in providing accurate title and registration fee estimates, pre-filled forms and, when requested, offering that “over the finish line” service where plates and indicia are delivered directly to you or your buyers. A
16 California New Car Dealer Quarterly The Secret to Controlling Dealership Expenses By Sharon Kitzman, VUE DMS One of the significant challenges of running any automotive dealership is moderating expenses. General managers and dealer principals are responsible for controlling many costs, including payroll, vehicle inventory, floorplan, and parts inventory. Monthly bills add up, and there is less revenue to put toward necessary resources. A major opportunity for expense control may be the dealership’s software stack. According to the 2022 DMS Market Report by the Dealer Tech Nerd, the average franchise dealership spends $30,000 a month on software. With a mindset shift and careful evaluation, those costs can be reduced. A Breakdown of Dealership Software Costs Dealership software can be broken down into 29 categories. Here is an outline of the most expensive and necessary solutions for a typical franchise dealership: • The Dealer Management System or DMS is the core hub that connects all dealership data between departments and even multiple stores within a dealership group. The average monthly cost is $6,300. • Many areas of a business use Customer Relationship Management (CRM) tools to execute, track and analyze communications with customers
17 Issue 1, 2023 and prospects, and maintain a historical profile of these interactions to help grow relationships. This software costs $2,000 per month. • Equity Mining software helps a dealer use customer information from a CRM and evaluate the revenue potential of a customer, considering trade-ins, future potential services, and more. This tool costs $2,000 per month. • Vehicle Inventory Management is software that holds the details for each vehicle on the lot, including owner history, the going market value, photos, and more. This software averages $1,700 per month. Amounts vary by category, but all tools contribute to this significant monthly cost. Knowing the value of each tool will allow you to evaluate your needs and consider how you might reduce costs. How to Evaluate Your Software Integrations Take stock of the software vendors you use. Gather your contracts, invoices, and any other information. The tools are likely integrated with your DMS. Here are some suggestions on how to evaluate them: • Take Note of Redundant Services: As tools evolve and update, the features between some of them can become similar. After several enhancements, the CRM you originally purchased to manage communications with your contacts may now be able to manage your website. This may no longer be necessary if you are also paying for a website maintenance tool. Do not immediately cut out every duplicative resource. Make sure any tool you decide to remove from your stack can be sufficiently replaced. Consider how much longer you have on individual product contracts. It may be financially beneficial to wait before ending your relationship with one or more of them. • Tie The Value of Each Vendor to Historical Revenue: Some software in your dealership may play a significant role in the success of your business, and others may have less of an impact. If you find some tools fall into the latter category, you may want to consider eliminating them. Beyond expense control at your dealership, consider why a particular tool is not benefiting your business. Is it not doing its intended job, or has your business changed in ways that make the tool no longer a good fit? This is a great opportunity to involve your staff by discussing their usage of the software and how well they like it. Hit your target market Get more exposure • Increase revenue To advertise in this magazine, contact us today. 801.676.9722 | 855.747.4003 thenewslinkgroup.org sales@thenewslinkgroup.com If the general purpose of the software is valuable, but the current product does not provide a good experience for your staff, consider replacing the software with another vendor rather than removing it altogether. Replacing a key tool that the staff does not value with a better one could increase your revenue. • Consider How Efficiently the Software Works Together: Dealership software should be integrated in a way that can share data efficiently. Data typically flows through the DMS, so consider this during your evaluation. If your tools are not communicating with each other, that means some of your staff may need to log into different interfaces and move data manually. It could also mean you are not getting the complete picture of what is happening in your dealership. Your staff may spend more time dealing with the tools and less time bringing in revenue. Putting a focus on the integration of your software with your DMS can increase the efficiency of your dealership and offset costs. • Reduce Your Software Costs but Not the Value: Now that you have evaluated your software stack, chosen what software can be removed, and have a better picture of how your tools tie to overall revenue, it is time to take action. Talk to selected software vendors about finishing but not renewing contracts. Make sure your chosen tools integrate
18 California New Car Dealer Quarterly well with your DMS. This should not only reduce costs but make the combination of your chosen tools more valuable to the dealership. Consider what you can do with these savings to benefit your dealership even further. Can you upgrade any software that would increase productivity? Perhaps somewhere else in the dealership needs an increase in budget. Can these savings go towards increasing customer satisfaction? These are all possibilities that may not have been an option before. Good luck reducing your costs and increasing your profits! A Sharon Kitzman leads the launch and long-term growth of VUE DMS. Her expertise in DMS technology is key to helping VUE clients to optimize their operations with innovative solutions. Previously, Sharon managed the strategic direction and product development for Reynolds & Reynolds and Dealertrack. Her experience spans every area of dealership software development including sales, marketing, product lifecycle management, process re-engineering, OEM management, professional services and customer service. Sharon is a recognized leader in the automotive industry and has received many accolades including Automotive News Top 100 Leading Women 2015 and 2020, Auto Remarketing Women in Retail 2021, and AutoSuccess Women at the Wheel 2021. She has a Bachelor of Business Administration from Ohio State University. EPIC is proud of its partnership with more than 300 California dealerships and is the CNCDA’s only licensed broker for Health Insurance and Workers’ Compensation. As the dealers’ consultant, experience what EPIC can do for you today, including: • A team producing real results and decades of experience with dealerships and their specific needs • Proprietary Workers’ Compensation and specific insurance products tailored for dealerships • Full compliance, along with audit and claims management EPICBROKERS.COM ©2023 Edgewood Partners Insurance Center. All rights reserved. | CA License: 0B29370 LEARN MORE ABOUT OUR SERVICES BY CONTACTING: Alison McCallum (949) 422-6431 alison.mccallum@epicbrokers.com Eric Kitei (949) 228-2779 eric.kitei@epicbrokers.com Beyond expense control at your dealership, consider why a particular tool is not benefiting your business. Is it not doing its intended job, or has your business changed in ways that make the tool no longer a good fit?
20 California New Car Dealer Quarterly RS18001-CarDealerAd-jy04-final3-outlines.indd 1 12/11/18 1:28 PM
21 Issue 1, 2023 Over-Sharing in the Workplace? WHY YOUR COMPANY MAY NEED A TIKTOK AND BEREAL POLICY By Fisher Phillips By now, many of us have seen a TikTok video filmed at someone’s workplace — a “day in the life” video, someone complaining about their coworkers, supervisors, or customers, or someone talking about an unrelated subject while at the office. And a relatively new platform, BeReal, goes a step further by encouraging users to provide an unfiltered view into their “real” everyday life at random moments throughout the day. Of course, such organic social media clips can be a valuable tool that helps market your brand and build stronger employee relationships — but where do you draw the line? These posts might include employees performing their duties during a meeting with co-workers or at a workstation, which raises privacy and confidentiality concerns. Moreover, employees flocking to social media to discuss their bosses and general work experiences — positive or negative — could lead to other troubles. When these videos go viral, employees may become unofficial spokespersons for your organizations, influencing the conversation about work norms and creating trends that impact employers globally. With these changing dynamics, you may want to set new guidelines for social media use while ensuring your policies don’t run afoul of employment and labor laws. Here are four tips for updating your social media policies to reflect this modern era and stay on top of the latest developments: 1. Ensure Policies Reflect Recent Trends In the early days of widespread social media use, your policies may have simply prohibited employees from using company equipment to post non-work-related content online and required work posts to be business appropriate. But social media use is rapidly evolving in new ways that you may not have anticipated when your policies were first drafted. What should you know about current trends as you consider policy changes? For one thing, TikTok has quickly grown in popularity over the past two years with more than a billion monthly active users — which means your employees are likely using the platform and are probably doing so during work hours. The app allows users to upload videos from five seconds to 10 minutes. TikTok then filters videos through their feed using an algorithm and shares them with other users. These videos may receive millions of views, comments, likes, and shares. While TikTok is popular, it’s obviously not the only platform featuring employees on the job. Unlike TikTok — where users are hoping to
22 California New Car Dealer Quarterly earlier survey reported using social media regardless of whether their employer had a policy in place. While not every company can allow on-the-job posts, those with flexibility might want to dedicate resources to creating a mutually beneficial, collaborative policy around social media use in the workplace. For example, allowing employees to share their experiences with your company through social media may promote transparency and provide job seekers with credible information on what it’s really like to work for your business. 3. Address the Potential Pitfalls While employers may benefit from employees’ on-the-job social media posts, you should address potential dangers, including legal and business concerns. Of the many legal concerns, the most glaring are privacy protections and confidentiality. As employees capture authentic moments during the workday for BeReal or post TikTok “day in the life” videos, they frequently walk around the workplace, recording offices, conference rooms, common spaces, the cafeteria, and more. The videos may inadvertently capture confidential information, such as audio of an internal meeting, the image of a client’s name, or a trade secret. Confidentiality issues also arise with employees who work remotely. For example, employees may take a video of their innovative at-home workspace while a Zoom meeting is in progress or while their computer screen displays proprietary information. You should also be cognizant of how allowing employees to post on the job can potentially harm your organization’s reputation. TikTok and BeReal attract users who go viral — the BeReal app takes a less sensational approach. BeReal doesn’t have filters, hashtags, or even followers. To view someone’s BeReal, you have to request to be their friend. The app encourages users to provide an unfiltered view into their “real” everyday life. Each day at a different time, the app simultaneously notifies all users to “BeReal” and share a photo within two minutes, regardless of their location. The camera on the app will then take a photo of the user with the front-facing camera while also taking a photo on the back camera, creating a BeReal snapshot to share with friends. This app can be potentially problematic for employers. Many times, BeReal alerts occur during work hours, so users end up taking pictures of their workplace or work area. Because BeReal is shared among friends, the app may create a sense of safety, and users might forget to censor confidential information. Moreover, while BeReal doesn’t have the same “viral” nature as TikTok, that doesn’t stop users from sharing their posts beyond the app on other platforms. This trend illustrates that the new generation of workers values the transparency these apps provide, with many not considering that their candid photos may also reveal company information. 2. Strike a Balance Before you decide to curb all TikTok and BeReal posts from the workplace, you should recognize that such posts can pay dividends. Employees who are active on social media may be more equipped to understand the social pulse of the company’s customer base. Additionally, allowing employees to contribute to company-sponsored social media posts shows that the company trusts them, which can increase confidence and make employees feel valued. Furthermore, social media networking may help employees collaborate, share ideas, and solve problems. This can lead to better employee engagement and retention. Moreover, utilizing social media in the workplace can make the company more desirable to potential applicants, particularly Gen Z and millennial job seekers. Social media is here to stay, and employers should recognize that policies barring all forms of social media use in the workplace may be unrealistic. In fact, about 72% of respondents to a 2021 Pew Research Center survey said they use some form of social media and 77% of respondents to an Employees who are active on social media may be more equipped to understand the social pulse of the company’s customer base. continued on page 24
We’re more than a financial partner. We’re an invested one. True relationships matter. We don’t take this lightly. The best are built on a deep understanding of your short- and long-term goals and always backed by thoughtful, strategic advice in support of your vision. With full-service financial solutions and a deep bench of industry expertise, we’ll build a team around your organization to focus on your success. So, let’s drive further—together. To learn more, contact Jason W. Smith, head of Dealer Commercial Services, 407-237-4011 or Jason.w.smith@truist.com. Truist.com/DealerServices © 2022 Truist Financial Corporation, Truist, Truist purple and the Truist logo are service marks of Truist Financial Corporation. All rights reserved. Truist Securities is the trade name for the corporate and investment banking services of Truist Financial Corporation and its subsidiaries. Securities and strategic advisory services are provided by Truist Securities, Inc., member FINRA and SIPC. | Lending, financial risk management, and treasury and payment solutions are offered by Truist Bank. | Deposit products are offered by Truist Bank, Member FDIC.
24 California New Car Dealer Quarterly want to be authentic rather than staged, heavily filtered, or otherwise unauthentic. Thus, employees who choose to post on these platforms do not shy away from capturing the “realness” of their job. This, in turn, can lead to your employees sharing information that negatively affects the company, such as human resources concerns (including allegations of unprofessional comments made by colleagues), complaints about working conditions, and products liability issues. All of these discussions raise reputational and legal concerns that you should consider. 4. Set Realistic Parameters With these benefits, risks, and (pop) cultural considerations in mind, what should your modern social media policy include? If you already have a solid employee handbook, a good place to start is by reminding employees that your existing policies still apply when using social media platforms. For example, an equal employment and harassment-prevention policy would cover discriminatory or bullying behavior towards colleagues whether online or in person. You should remind employees whom they should contact when they have a workplace concern. Additionally, let employees know that confidentiality policies apply when sharing content, so their computer screens and documents should not be visible in the background. However, depending on the nature of your business and your employees’ roles, you may want to create a more targeted policy on social media use. For instance, you may have different risks to manage if you encourage employees to engage with your brand, employ a younger workforce, or otherwise have a strong social media presence. As you likely know, your policy should be in writing and followed consistently. Where to go from there is more complicated. The explosion in social media use has only highlighted how regulating employee speech is difficult, nuanced, and occasionally backfires. But, of course, there are still some best practices: • Develop policies in collaboration with legal counsel, HR, technology, communications, and diversity, equity, and inclusion (DEI) teams. Be sure the policy matches the company’s voice and recognize that this is not a one-templatefits-all exercise. • Use plain language and examples. “Do not share client information, even if their name is covered” is more helpful than “Posting client information will subject employees to discipline up to and including termination.”* • Keep up with guidance from the National Labor Relations Board (NLRB) — which is subject to change. Note that blanket bans on discussing wages or complaining about supervisors or working conditions are not permissible under federal labor law. The Trump administration issued an employer-friendly rule to evaluate whether a policy interferes with employees’ rights to organize and engage in protected concerted activity. However, that ruling is potentially on the chopping block in a pending NLRB case. If the NLRB reverts to the prior, more restrictive evaluation, policies currently compliant could suddenly run afoul of the National Labor Relations Act (even in non-unionized work settings). This includes seemingly benign provisions about “respectful” content and limits on who is authorized to speak to the media. • Confirm applicable state laws. There is a legislative trend to prohibit employers from requiring employees to engage with social media as a condition of employment or even to ask for their social media usernames as part of a job application. • Develop a plan for consistently responding to policy violations. Two employees violating the same rule, in the same way, should not be treated differently based on whether they tripped the algorithm and went viral. Relatedly, consider the reputational risk of a too-harsh response — someone fired for social media content may likely use the same platforms to discuss their termination. Conclusion If you have questions regarding your social media policy, contact your Fisher Phillips attorney, the authors of this Insight, or any attorney on our Data Security and Workplace Privacy Team. We will continue to monitor developments in this area, so ensure you are subscribed to Fisher Phillips’ Insight System to get the most upto-date information. A The authors wish to thank Law Clerks Taric Mansour and Jazmin Luna for their work coauthoring this Insight. * This section has been edited to reflect the automotive industry. To see the original post, please visit: https://www.fisherphillips.com/news-insights/ over-sharing-iworkplace-company-mayneed-tiktok-bereal-policy.html continued from page 22
Celly Services, Inc. • Sam Celly, BChE MChE JD • Certified Safety Professional • sam@cellyservices.com • (562) 716-6100 WHY CHOOSE US We provide specific solutions for dealerships through comprehensive site analysis, employee training, and newsletters. We are available online, onsite and on the phone to answer questions and solve problems. We provide perspective and experience that is unmatched in the industry. ABOUT CSI CSI is an employee-owned EHS consulting firm based in California with Certified Safety Professionals on staff. Today, we have hundreds of satisfied auto dealership clients in California, Arizona, Hawaii, Nevada, Idaho, Texas and Washington. WE HELP DEALERSHIPS NAVIGATE COMPLIANCE With over 35 years in the automotive EHS business, we understand compliance in California. From proactive management to oil rebates, we can help you stay ahead of ever-changing regulations and keep your employees safe. OUR SERVICES • Illness and Injury Prevention • Safety Inspection and Training • Spill Prevention Control and Countermeasures Plan • Newsletters on Emerging EPA/OSHA Issues • Hazardous Waste Management • Hazardous Waste Cost Recovery • Haz Mat Release Response • Respiratory Protection • Representation in OSHA Enforcement Cases • Phase I Environmental Assessment • Regulatory Permits and Reporting
27 Issue 1, 2023 California Auto Outlook Comprehensive Information on the California Vehicle Market Volume 19, Number 1 Released February 2023 Covering Fourth Quarter 2022 TM Publication Sponsored By: Positives Outweigh Negatives for 2023 Sales Outlook; New Vehicle Market Predicted to Improve California New Light Vehicle Registrations and U.S. New Vehicle Sales 2021 and 2022 Annual Totals TWO YEAR PERSPECTIVE Historical data source: AutoCount data from Experian. *2023 forecast by Auto Outlook. California Annual New Light Vehicle Registrations - 2008 thru 2023 ANNUAL TRENDS Supply chain issues persisted last year and vehicle production cutbacks were significantly higher than projected at the beginning of the year. New light vehicle registrations in the state declined 10.2 percent from 2021 to 2022. National new vehicle sales fell 7.9 percent. State registrations are predicted to approach 1.76 million units this year, a 5.5 percent improvement from 2022. Here is a review of key positives for the market in 2023. Pentup demand is accumulating as new vehicle sales remain below baseline levels. Auto Outlook estimates that approximately 770,000 new vehicle purchases will be postponed since the onset of the pandemic in 2020 through the end of this year, about 43 percent of sales in an average year. In addition, vehicle transaction prices will move lower as supplies become more in-line with demand. These two factors will give a boost to the market that should offset the negatives listed next. Here are the primary negatives for the 2023 outlook. Supply chain issues are lingering and new vehicle affordability is weakening due to high inflation, increasing interest rates, slower economic growth, and falling trade-in values. Household incomes are increasing, but not fast enough to keep pace with inflation. The stimulative impact resulting from pent-up demand will be tempered due to softer economic conditions, but sales rates should still recover from current levels. QUARTERLY RESULTS California Quarterly New Light Vehicle Registrations Percent Change vs. Year Earlier Data source: AutoCount data from Experian. 1.45 1.04 1.17 1.29 1.62 1.80 1.93 2.16 2.21 2.202.152.09 1.64 1.86 1.67 1.76 0.0 0.5 1.0 1.5 2.0 2.5 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23* New vehicle regs. (millions) Years California U.S. 2021 2022 Change 2021 2022 Change Registrations TOTAL 1,856,391 1,667,831 -10.2% 15,059,846 13,865,892 -7.9% Car 624,625 525,008 -15.9% 3,371,420 2,923,551 -13.3% Light Truck 1,231,766 1,142,823 -7.2% 11,688,426 10,942,341 -6.4% Domestic 584,936 605,520 3.5% 6,182,382 6,151,484 -0.5% European 281,524 250,074 -11.2% 1,593,212 1,481,573 -7.0% Japanese 833,993 658,934 -21.0% 5,795,134 4,758,611 -17.9% Korean 155,938 153,303 -1.7% 1,489,118 1,474,224 -1.0% Market Share Car 33.6 31.5 -2.1 22.4 21.1 -1.3 Light Truck 66.4 68.5 2.1 77.6 78.9 1.3 Domestic 31.5 36.3 4.8 41.1 44.4 3.3 European 15.2 15.0 -0.2 10.6 10.7 0.1 Japanese 45.0 39.5 -5.5 38.5 34.3 -4.2 Korean 8.4 9.2 0.8 9.9 10.6 0.7 Source for California new vehicle registrations: AutoCount data from Experian. Source for U.S. sales: Automotive News. 7.8% -15.5% -13.8% -21.6% -11.9% 13.6% 3Q '21 vs. 3Q '20 4Q '21 vs. 4Q '20 1Q '22 vs. 1Q '21 2Q '22 vs. 2Q '21 3Q '22 vs. 3Q '21 4Q '22 vs. 4Q '21 % change vs. year earlier KEY TRENDS IN NEW VEHICLE MARKET
Page 2 California Auto Outlook Non-Luxury SUVs, 34% Luxury SUVs, 17% Pickups and Vans, 17% Small Cars, 12% Luxury & Sports Cars, 11% Non-Luxury MidSize & Large Cars, 9% Non-Luxury SUVs, 34% Luxury SUVs, 15% Pickups and Vans, 17% Small Cars, 15% Luxury & Sports Cars, 10% Non-Luxury MidSize & Large Cars, 9% SEGMENT MARKET SHARE TRENDS Market Share for Luxury Vehicles Increased by Three Market Share Points HYBRID AND ELECTRIC VEHICLES Estimated Electric Vehicle Market Share Increased to 17.1 Percent in 2022 Segment Market Shares in California 2021 Annual Total Segment Market Shares in California 2022 Annual Total The two graphs above show market shares for primary segments in 2021 and 2022. Data Source: AutoCount data from Experian. Data Source: AutoCount data from Experian. Non-Luxury SUV Share 2021: 34% Hybrid/electric vehicle market share in 2022: 31.1% Up from 23.4% in 2021 Estimated Hybrid and Electric Vehicle Market Share The graph above shows the estimated hybrid powertrain and electric vehicle market share in the state. Registrations by powertrain for vehicles equipped with multiple engine types were estimated by Auto Outlook. The estimates are based on model registrations compiled by Experian, and engine installation rates collected from other sources. Non-Luxury SUV Share 2022: 34% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 2016 2017 2018 2019 2020 2021 2022 Market Share Electric Hybrid (excl. plug ins) Plug in Hybrid Estimated Hybrid and Electric New Vehicle Registrations and Market Share 2018 2019 2020 2021 2022 Electric registrations 99121 106752 101628 176357 285199 Electric share 4.6% 5.1% 6.2% 9.5% 17.1% Hybrid regs. (excl. plug ins) 92658 117218 113103 196777 183461 Hybrid share (excl. plug ins) 4.3% 5.6% 6.9% 10.6% 11.0% Plug in hybrid regs. 64644 52329 31144 61261 50035 Plug in hybrid share 3.0% 2.5% 1.9% 3.3% 3.0%
29 Issue 1, 2023 Covering Fourth Quarter 2022 Page 3 The table below shows the top five selling models in 2022 in 18 segments. In addition to unit registrations, it also shows each model’s market share in its respective segment. Sales results in 2022 were primarily determined by vehicle production and availability. New registrations of the Honda Civic and Toyota Camry, two perennial top-sellers in the state, were impacted by diminished inventories. MODEL RANKINGS Tesla Model Y Was Top-Selling Model in California During 2022 BEST SELLERS IN PRIMARY SEGMENTS Small Cars: Toyota Corolla Full Size Pickup: Ford F-Series Mid-Size and Large Cars: Toyota Camry Compact SUV: Toyota RAV4 Near Luxury Cars: Tesla Model 3 3 Row Mid-Size SUV: Toyota Highlander Comp./Mid Size Pickup: Toyota Tacoma Luxury Mid Size SUV: Lexus RX Data Source: AutoCount data from Experian. Figures for Prius include Prius Prime. Model Regs. Share Model Regs. Share Model Regs. Share Model Regs. Share Toyota Corolla 39865 23.3 Toyota Camry 55967 39.2 Ford Mustang 6989 33.3 Tesla Model 3 78934 55.1 Honda Civic 31867 18.6 Honda Accord 32605 22.8 Dodge Challenger 5560 26.5 Lexus ES 9888 6.9 Kia Forte 20618 12.1 Nissan Altima 17156 12.0 Chevrolet Camaro 2592 12.4 BMW 3-Series 7720 5.4 Hyundai Elantra 11415 6.7 Dodge Charger 10273 7.2 Toyota 86 2541 12.1 Mercedes C-Class 5985 4.2 Chevrolet Bolt 11114 6.5 Chevrolet Malibu 9566 6.7 Toyota Supra 1053 5.0 BMW 4-Series 5911 4.1 Model Regs. Share Model Regs. Share Model Regs. Share Model Regs. Share Tesla Model S 9234 19.7 Toyota Tacoma 38306 46.2 Ford F-Series 40232 28.7 Toyota Sienna 10940 42.9 BMW 5-Series 4898 10.4 Ford Maverick 8530 10.3 Chevrolet Silverado 38601 27.5 Chrysler Pacifica 7883 30.9 Mercedes E-Class 4482 9.6 Nissan Frontier 7742 9.3 Ram Pickup 31600 22.5 Honda Odyssey 4401 17.3 Mercedes S-Class 4444 9.5 Chevrolet Colorado 7482 9.0 GMC Sierra 17418 12.4 Kia Carnival 1280 5.0 Mercedes EQS 3331 7.1 Ford Ranger 6624 8.0 Toyota Tundra 10065 7.2 Chrysler Voyager 978 3.8 Model Regs. Share Model Regs. Share Model Regs. Share Model Regs. Share Ford Transit Connect 10587 33.8 Subaru Crosstrek 20590 18.5 Toyota RAV4 59794 25.8 Subaru Outback 15353 20.9 Mercedes Sprinter 7937 25.4 Honda HR-V 16468 14.8 Honda CR-V 27401 11.8 Toyota 4Runner 12136 16.5 Ram Promaster 6198 19.8 Toyota Corolla Cross 8510 7.7 Jeep Wrangler 17582 7.6 Ford Mustang Mach-E 9788 13.3 Chevrolet Express 2564 8.2 Kia Soul 7914 7.1 Mazda CX-5 16267 7.0 Hyundai Santa Fe 8386 11.4 Ford E-Series 2230 7.1 Kia Niro 7655 6.9 Subaru Forester 12434 5.4 Ford Edge 6775 9.2 Model Regs. Share Model Regs. Share Model Regs. Share Model Regs. Share Toyota Highlander 26191 22.7 Ford Bronco 10898 27.5 Audi Q3 4474 27.0 Tesla Model Y 87257 53.5 Ford Explorer 15682 13.6 Chevrolet Tahoe 7292 18.4 Mercedes GLA-Class 2938 17.7 Mercedes GLC-Class 14627 9.0 Honda Pilot 10005 8.7 Chevrolet Suburban 4183 10.6 Lexus UX 2840 17.1 BMW X3 10615 6.5 Kia Sorento 9182 8.0 Jeep Grand Wagoneer 3934 9.9 Volvo XC40 2008 12.1 Audi Q5 10210 6.3 Kia Telluride 8295 7.2 Ford Expedition 3642 9.2 BMW X1 1264 7.6 Lexus NX 9996 6.1 Model Regs. Share Model Regs. Share Model Regs. Share Model Regs. Share Lexus RX 15993 17.4 Cadillac Escalade 4765 24.1 Tesla Model 3 78934 15.0 Tesla Model Y 87257 7.6 BMW X5 12639 13.8 BMW X7 4063 20.5 Toyota Camry 55967 10.7 Toyota RAV4 59794 5.2 Mercedes GLE-Class 11689 12.7 Mercedes GLS-Class 3851 19.5 Toyota Corolla 39865 7.6 Ford F-Series 40232 3.5 Tesla Model X 11273 12.3 Land Rover Range Rover 2388 12.1 Honda Accord 32605 6.2 Chevrolet Silverado 38601 3.4 Acura MDX 4760 5.2 Mercedes G-Class 1894 9.6 Honda Civic 31867 6.1 Toyota Tacoma 38306 3.4 Luxury and High End Sports Cars Compact/Mid Size Pickup Full Size Pickup Mini Van Top Selling Models in Each Segment - New Retail Light Vehicle Registrations (2022 Annual Totals) Small Cars Mid Size and Large Cars Sports/Pony Cars Near Luxury Cars Luxury Mid Size SUV Luxury Large SUV Top Selling Passenger Cars Top Selling Light Trucks Large Van Subcompact SUV Compact SUV 2 Row Mid Size SUV 3 Row Mid Size SUV Large SUV Luxury Subcompact SUV Luxury Compact SUV
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