Fixed Ops Journal – February 2016 - (Page 8)

FIXED OPS JOURNAL LEGAL LANE ■ VW store pays a price in phony warranty probe W hat can happen when an automaker suspects a dealership of phony warranty claims? For a Corona, Calif., Volkswagen store, it meant an audit, site visit, lawsuit and now a confidential settlement without an admission of wrongdoing. Volkswagen of America accused CardinaleWay Volkswagen and five employees, including a service manager and two technicians but not the dealer, of fraud, including sham time sheets and sham repair claims. The inquiry followed an anonymous tip, ostensibly from an employee, suggesting an audit, "especially on warranty and rentals." VWoA conducted a statistical analysis of claims and found a "high probability of noncompliance with VWoA's policies and procedures," which prompted a claim review and site visit by warranty field managers. The review discovered allegedly fraudulent time sheets with "overlapping and concurrent time punches and repeating minutes" for technicians who purportedly made repairs during lunch breaks and worked more than 24 hours a day, according to court documents. The store also obtained reimbursement for "sham repairs" that weren't done or were unnecessary, the suit alleged. VWoA had sought compensatory and punitive damages for fraud, breach of contract, bad faith and business and vehicle law violations. Now the two sides are preparing the final documents for the settlement. ■ Supreme Court to rule on service advisers' overtime M ust dealerships pay overtime to service advisers? For now, the answer depends on a store's location. Yes, if the dealership is in any of nine Western states. No, in eight Southern and mid-Atlantic states. As for the future, the U.S. Supreme Court has accepted a California Mercedes-Benz dealership's request to resolve the conflict. Arguments are expected this spring. The issue arose when five service advisers sued Mercedes-Benz of Encino for violation of overtime pay requirements of the Fair Labor Standards Act. A lower-court judge accepted the store's argument that the exemption for "any salesman, partsman or mechanic primarily en- PAGE 8 FEBRUARY 2016 gaged in selling or servicing automobiles" covers advisers. But the 9th U.S. Circuit Court of Appeals disagreed, finding the provision ambiguous and accepting the U.S. Labor Department's interpretation that they were entitled to overtime. Under that interpretation, it said, "A salesman is an employee who sells cars, a partsman is an employee who requisitions, stocks and dispenses parts, and a mechanic is an employee who performs mechanical work on cars. "Service advisors do none of those things. They sell services for cars. They do not sell cars, they do not stock parts and they do not perform mechanical work on cars." The appellate court for the 9th circuit hears cases from Washington, Idaho, Montana, Oregon, California, Nevada, Arizona, Alaska and Hawaii. In earlier cases, the 4th U.S. Circuit Court of Appeals - which handles cases from Maryland, Virginia, West Virginia, North Carolina and South Carolina, and the 5th U.S. Circuit Court of Appeals - which covers Texas, Louisiana and Mississippi - ruled that the exemption covers service advisers. ■ Decision on moving techs to nonunionized shop D ealerships that consolidate stores or relocate employees face a potential trouble spot. The Chrysler bankruptcy led to a 2009 decision by Burke Automotive Group Inc. to close its Dodge of Naperville store in suburban Chicago and move the store's six unionized mechanics to its larger Naperville JeepDodge store, where the existing 14 mechanics weren't represented by a union. But the dealership didn't negotiate the transfer with the International Association of Machinists, unilaterally lowered the transferred workers' pay and benefits to match their nonunionized counterparts and withdrew union recognition. Two mechanics quit rather than accept the lower pay package. Those were unfair labor practices, the District of Columbia U.S. Court of Appeals ruled, saying the dealership could have negotiated pay, benefits and working conditions for transferred mechanics that differed from those outside the union. Although "it may be unworkable to continue recognizing a union representing only a his- toric bargaining unit if unit employees are working side-by-side with non-unit employees," the court said, "it may turn out that Burke's withdrawal of recognition was simply premature - but premature is still improper." Dealer lawyer James Hendricks Jr. of Chicago said dealers must pay careful attention to the National Labor Relations Board's "constantly changing rules." Only two transferred mechanics still work at the dealership, and "we haven't heard from the union after the last bargaining session in 2011," Hendricks said. The dealership group has asked the Supreme Court to review the case. ■ Anti-union remarks spell trouble for dealership W hen it comes to unionization, managers should be careful what they say - or else. That's the lesson from the 7th Circuit U.S. Court of Appeals, which upheld a National Labor Relations Board finding that Libertyville Toyota in Illinois committed unfair labor practices when two high-ranking corporate executives made improper antiunion remarks and when the store fired a painter involved in union activities. It all began in 2011 when "union activity was afoot" at the store, as the court put it. Painter Jose Huerta was suspended and then fired after an anonymous caller said he was promoting union activities and had been charged with drunken driving. Also, a vice president, who was also associate general counsel and regional human resources director of the dealership's corporate parent, AutoNation Inc., tried to dissuade the service department's 80 employees from supporting an organizing drive by the International Association of Machinists and Aerospace Workers. The NLRB and appeals court concluded that the executives' comments at the staff meeting - secretly recorded by an employee - threatened that unionization would be futile, that unionized employees faced demotion and that supporters would be blacklisted, as well as implying that pay would increase if the unionization effort failed. The dealership was ordered to reinstate the wrongfully fired employee with back pay. On Nov. 3, the appeals court denied the store's petition for a new hearing. ■ - Eric Freedman ❙

Table of Contents for the Digital Edition of Fixed Ops Journal – February 2016

Editor’s Letter: Welcome to Fixed Ops Journal
Service Counter: Tracking fixed-ops numbers
Legal Lane: Court cases that affect you
Mobile mechanics: Do shop-free technicians threaten your business?
Mark Smith: A fixed-ops-focused dealer aims to change the industry
Adding capacity: Sales spur FCA, Subaru dealerships’ fixed-ops growth
Richard Truett: Toolmaker targets new techs
Designed for service: A look at a Minnesota dealership’s makeover
Weekend work: Service extends to Saturday, even Sunday
Tech exodus: How outdated policies worsen the tech shortage
Before Xtime: The origins of widely used scheduling software
Older parts: Toyota, Ford respond to older cars on the road
5 minutes with: Ford’s Toney, Toyota’s Laukes
Shop Talk: One question, multiple service directors
Fixed in Time: A look at service of yesteryear

Fixed Ops Journal – February 2016