Fixed Ops Journal - October 2022 - F15

Tillman Coff ey, a partner in Atlanta
law fi rm Fisher Phillips, told Fixed
Ops Journal that dealerships can take
steps to head off such problems, especially
those that arise when a vendor
goes belly-up or has no assets.
It's increasingly common for stores
with a lot of turnover among fi xed ops
support staff to look to outside contractors,
he says. " Over the years, I've
seen a number of these relationships
that are fairly informal, " he says.
A crucial starting point is a comprehensive
Coffey: Avoid a
captive vendor.
written contract " with a company that looks
like a company, has workers' compensation
and other insurance, is registered with the
state and has a formalized payroll system. "
" You want an outside vendor that appears to
be a legitimate business, " Coff ey says.
Th e contract should lay out the nature of the
relationship between dealership and vendor,
requiring the outside company to supply evidence
it has all necessary licenses and mandating
detailed invoices. Th e vendor should
agree to indemnify the dealership for claims
arising from its services, including claims for
unpaid or underpaid wages, he adds.
To avoid the appearance of a joint
employer, dealerships must be careful
not to become too involved in managing
and supervising vendor employees,
Coff ey says. While dealerships
have the right to give instructions, such
as determining how many vehicles will
be detailed daily, they shouldn't be inspecting
vehicles or telling vendor personnel
how to do their work.
" Make sure there is a clean line so an objective
person would say it is really an independent
contractor, " he says.
Coff ey recommends contracting with companies
that provide services for multiple dealerships.
" You don't want to have a captive
vendor, " he cautions.
Ensure your own compliance
In addition, dealerships should ensure their
own wage and hourly practices comply with
federal and state laws, Coff ey says. Th at includes
periodic audits to verify all employees
are classifi ed and paid correctly and that payroll
records are properly retained.
Th e U.S. Labor Department has vowed to
aggressively enforce wage and hour laws.
For example, in announcing the Majestic
Dealership Services settlement on behalf of
106 workers, a department offi cial warned:
" Employers who misclassify workers deny
them their full wages, benefi ts and legal rights,
avoid payments of payroll taxes which cheats
all taxpayers and gain an unfair and illegal
competitive advantage over employers whose
pay practices abide by the law. "
Coff ey notes the terms of employment practice
liability insurance policies vary, and some
don't cover wage and hour claims. Even with
such coverage in the policy or rider, it's uncertain
whether a carrier would reject coverage
of claims by a vendor's employee.
Dealerships may agree to settle back wage complaints
and suits even if they believe they
aren't joint employers with their vendors, he says.
" Sometimes it's cheaper and more fi nal just
to pay rather than have lengthy litigation with
the government, " Coff ey says, observing the
amount of potential wages in dispute is often
insignifi cant relative to the cost of attorney
fees. " It may be easier to move on. " 
OCTOBER 2022 PAGE 15
http://www.admiglobal.com/getyour360
Fixed Ops Journal - October 2022

Table of Contents for the Digital Edition of Fixed Ops Journal - October 2022
