4. d. It has long been the law that lending fees charged by subprime credit sources may not be passed along to the customer directly or indirectly. Any attempt to do so that can be identified — such as listing the fee for the customer to pay on the buyer’s order, increasing the price of a vehicle to pay for the fee, or even telling the customer the vehicle could not be further discounted because of the fee the dealer had to cover — can lead to a claim for violation of the Truth in Lending Act. 5. False. As we have previously written about, spot delivery is a hot topic and is under attack by the FTC. The FTC and consumer groups often want to conflate lawful spot deliveries with “yo-yo” sales in an attempt to outlaw the practice of spot delivering vehicles. Protecting spot deliveries through lawful practices is of the utmost importance. Having decided that you can rescind the purchase contract, but the recovery service could not locate the vehicle, what do you do? The wrong reaction is to have the person arrested, which is often a decision made out of frustration. Even if the customer was not candid when he bought the car, he has not been cooperative in working with the dealership, or he appears to be hiding the vehicle, an arrest is the wrong reaction. The car was not stolen. You gave the customer possession of the vehicle under the transaction documents. Even a misdemeanor charge of wrongful use may lead to a malicious prosecution lawsuit since the customer is operating on legally issued documentation, even if it is overdue. Even if you win the suit, the publicity about the events will likely damage the dealership. The answer is a civil suit to recover the vehicle. The dealership then can quickly obtain a judgment it can use as the basis for discovery from the customer to find the vehicle and to potentially recover damages if the car can never be found or to recover the dealership’s losses for the period the vehicle was withheld. 6. True. Employees in a car dealership not entitled to premium overtime, such as salespeople, must still be paid minimum wage for every hour worked. The best way to determine the number of hours worked by employees is to have them punch in and out on a time clock. Carefully supervising that each employee is punching his or her own time is a perfectly acceptable way for the company to expect its employees to operate. It is important, especially in tough times, to be sure all employees earn minimum wage for hours worked. Even for commissioned employees, there should be a regular determination that the employee earned at least minimum wage for every hour worked during the pay period. How do you know this without a time clock? Timesheets are notoriously inaccurate. Eliminating the requirement for recording time and relying solely on schedules is worse. The time clock is the best method for knowing the hours worked. 7. False. We have been telling you for years to stop doing pay plans on napkins. A pay plan written in haste that just provides how the employee will be paid with a minimum guarantee is likely to be misconstrued by a court as an employment contract for a specific duration. A pay plan simply describes the method for calculating pay due to a manager or salesperson. Prepare a professional pay plan. What are the elements of a professional pay plan? • It must be in writing, and it must be signed by the employee. • Carefully describe the basis on which the employee will be paid. • If it is a sales pay plan, be sure the basis for pay is commissionable gross determined in the sole discretion of dealership management, and the plan should specifically state that. • There should not be a specific definition of vehicle cost. • No length of time should be specified, or the plan could be construed as an agreement for employment for a specified time. 18 Virginia Auto Dealer
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