Up To Speed - Q4 2022

EXECUTIVE COMMITTEE

Chairman, Marshall Harper

HARPER MOTORS District 6, Minden

Chairman-Elect, Kristie McMath-Hebert ARCENEAUX FORD District 5, New Iberia

Treasurer, Patton Fritze

RED RIVER MOTOR COMPANY District 7, Bossier City

Immediate Past Chairman Lawrence S. Searcy, Jr. WALKER AUTOMOTIVE District 16, Alexandria

Robert A. Grace

SOUTHPOINT VOLKSWAGEN District 11-12, Baton Rouge

Richard Q. Flick BANNER AUTOMOTIVE District 1-3, Metarie

Mark A. Hebert, Sr. NADA State Director HEBERT’S TOWN & COUNTRY CHRYSLER DODGE JEEP

DIRECTORS

L. Keith Hanks

LAKESIDE TOYOTA District 1-3, Metairie

Lee Carney GEAUX CHEVROLET District 1-3, LaPlace

Brett Barker

TERROBONNE FORD District 4, Houma

Brett K. Oubre

LAKESIDE FORD District 8, Ferriday

Hunter White

WHITE FORD LINCOLN District 9, Winnsboro

Allen O. Krake

SUPREME AUTOMOTIVE GROUP District 10, Slidell

David L. Fabre

ACURA OF BATON ROUGE District 11-12, Baton Rouge

John R. Young

JOHN R. YOUNG BUICK CHEVROLET GMC District 13, Eunice

Corey Tarver

LAKE CHARLES TOYOTA District 14, Lake Charles

Rand Alford

ALFORD MOTORS, INC. District 15, Leesville

Clinton E. Hixson

HIXSON AUTOPLEX OF ALEXANDRIA District 16, Alexandria

Scott Oliphant

KENWORTH OF LOUISIANA District 17, Heavy Truck

CONSUMERS TRUST DEALERS

There seems to be much debate about the future of the automotive industry and how the local dealer fits into that future. Pundits, writers and other so-called experts, some of whom don’t even own a vehicle, seem to comment weekly on the fate of the local dealer and their changing or diminishing role in the car buying process. Even our own OEM’s, at times, paint a vague role for the dealer and seem to dangle new ideas but don’t necessarily reinforce their dealer partner’s position. All the while, local dealers continue to thrive and evolve to their current business climate all in the name of serving their customers and local communities.

When looking to confirm the local dealer’s role in this uncertain future, one need look no further than a recent study released by Escalent, a research firm with a deep understanding of the auto industry, which resoundingly proves that electric vehicle (EV) shoppers overwhelmingly prefer purchasing EVs at their local dealerships. Consumers want customer

service, expert knowledge, and price competition, all of which they get from their local dealers. Consumers prefer this, instead of getting trapped in the 1(800) maze when trying to buy products or get service.

Whether selling or servicing ICE vehicles, EVs, or commercial trucks, the franchise model is second to none. As dealers work with their OEM partners, within the framework of state franchise laws, to evolve and prepare for industry shifts, that personal touch and local expertise the franchised dealer provides must remain a priority for the industry as a whole.

Your LADA leadership remains ready to promote and defend the principles of the franchise system. A system that promotes healthy competition, public welfare and prevents the undue influence or control over our Louisiana dealer members. The system most trusted by Louisiana consumers!

GET TO KNOW YOUR LADA

CHAIRMAN MARSHALL HARPER

We sat down with our LADA Board Chairman Marshall Harper to get to know him better. His story might seem the “norm” in our industry rich with family-owned, generational businesses, but his road to the dealership is definitely far from normal. Who would have thought and astro-physicist would become a third-generation dealer with enough kids to fill the starting line up on a basketball team?

Give us the quick lowdown on you and your family: My name is Marshall Harper. I am married to Marie and we have 5 children and 2 dogs. I am the dealer at Harper Chevrolet Buick-GMC in Minden.

It’s rare for businesses to make it into the third generation. In fact, only 13% of businesses make it into the third generation, but you are a thirdgeneration dealer, which is an amazing success story in and of itself. Can you describe how you found yourself in this position and what advice you would pass down to other NextGen dealers? Eh, give me some time some time to screw up this third generation thing.

I surprisingly found myself in this position. It was never really “in the plans.” After finishing college, I knew I did not want to go to graduate school for physics, but I didn’t know what I wanted to do. So I came home to goof off with my high school friends and make a little money at the dealership. This was as the recession of 2008 was looming, so things weren’t real rosy in the car business. I guess I was cheap labor that was slightly competent (I also had the correct last name), so I increasingly found myself in leadership conversations/ decisions/positions. Sixteen years later, it’s turned out to be a good decision….I think.

I’m not sure I’m qualified to give advice, but if I must: work in all the departments. Not only is it critical to understand how they all function individually, but

perhaps more importantly, how they function as a whole. You’ll also earn the respect of those co-workers in each department as you are able to understand things from their perspective.

What has been the hardest lesson you’ve learned so far and how did you overcome it? No matter how well you understand or master the numbers on a dealership statement, it’s not enough to run it. The numbers are just the results. The people and processes are the equations that create the numbers. The sooner you learn that your employees are the backbone of the operation and start to put the right people in the right positions, the whole operation will begin to improve.

You’ve been around LADA since your childhood with your dad serving as LADA Board Chairman and on the LADA-SIF and attending the LADA Annual Conventions reguarly. What are some of your favorite memories with LADA? Though they weren’t considered great memories at the time, I now look back on many of them with fondness. One that specifically stands out is during the Jackson Hole meeting when my father drove us two hours out of the way to Promontory, Utah to see the stupid golden spike that was driven into the ground to ceremoniously connect the two railroad systems that completed the transcontinental line at the time. We still make fun of him for that.

The Sandestin Hilton had a decent arcade for the time and going back to school shopping at the outlet mall in Alabama. Nothing like confidently rolling up to homeroom on the first day of school in a “slightly discolored” Polo shirt.

What is the first thing you do in the morning? Scroll Twitter for 10 minues

Email, text or phone call? Text

How do you take your coffee? Black

Favorite thing to do on your day off? Spend time with my wonderful children. Ah, who am I kidding? Take a nap!

Who is your favorite superhero? Jack Bauer

What is the best idea you’ve ever had for a business? The CCC, Competent Consumer Club. For $20/mo you get to speak directly with a human at any company to help solve your problem.

What was the first concert you attended? The best concert? Probably Huey Lewis & the News sometime in the 80’s; I think my aunt may have been a groupie. Pavement in Central Park, 2010.

Was the dress blue and black, or white and gold? Now we’re to the juicy questions. Obviously white and gold.

2022 Birdies, Brews & BBQ

While there may have been a few bogeys and mulligans taken this year at the Golf Tournament, no one can deny that the real winners were those Members of the Louisiana Automobile Dealers Association Self-Insurers’ Trust Fund

(LADA-SIF) that received their share of the 2022 Distribution that was being distributed. This year’s distribution totaled right above $3.6 Million of surplus funds that has been returned to the qualifying members. This marked the 25th consecutive year with distributions over $3 Million. In total, the LADA-SIF has now returned over $101 Million to the members since the program’s inception.

One way for dealers to preserve these distributions is to lower injury / illness incidence rates by improving their own workplace safety & health programs. Our loss prevention department can help create and maintain your own program which will help you continue to receive these distributions.

For additional information regarding the LADA-SIF and for all of your workers’ compensation needs, please contact:

Jean Robért at Risk Management Services, LLC

Email: jrobert@rmsla.com Phone: (504) 837-3100 Toll Free: (800) 351-RISK (7475)

THE DANGERS OF TRAINING COST DEDUCTIONS AND NEW EEOC GUIDELINES

By: Timoth Scott and Andrew Baer, Fisher Phillips, LLP

Dealers invest a substantial amount of money in training employees. The financial commitment is made with the idea that the employee will be with the dealership for a while and the more invested in the individual’s development, the better for everyone.

When the employment relationship ends, it is common for employers to question whether some of the financial investment in an employee can be recovered. The investment in training employees is made with the idea that the employee will use those new and developed skills for the employer’s business, not at a competing business.

In the retail automotive industry, employees are commonly sent to programs that issue certifications in various areas at the expense of the dealership. Many dealerships try to protect themselves by creating agreements with employees that require the repayment of training costs if the employee fails to meet certain conditions, typically something like staying with the dealership for a set period of time. When those employees leave, the question becomes whether those amounts can be deducted from the

employee’s final paycheck, which is typically the easiest way to recover the money. Unfortunately, many dealers do not consider the potential legal issues that can arise from such an arrangement under the federal Fair Labor Standards Act (“FLSA”) and the Louisiana Wage Payment Act.

The Fair Labor Standards Act

The FLSA governs minimum wage and overtime. Non-exempt employees must be paid a minimum wage in accordance with the federal requirements, which is currently set at $7.25. Notwithstanding the overtime exemption applicable to many dealership employees, almost all non-managerial employees in sales, service, and parts remain subject to the minimum wage requirement.

The FLSA protects an employee’s right to minimum wage and sufficient overtime by governing what deductions may be made from an employee’s pay. The FLSA allows employers to impose work related costs to their employees as long as the deductions do not cut into the minimum wage or overtime requirements. If deductions result in an employee

receiving less than the minimum wage for any week, the employer will be found to have violated the FLSA. Employers need to make sure that any deductions being made are proper and do not violate the FLSA’s overtime or minimum wage provision. The FLSA still applies to an employee’s final paycheck, so any deductions from the last paycheck must still follow FLSA requirements.

Accordingly, applying the FLSA “free and clear” rule, dealers should never make a deduction from an employee’s pay in connection with training costs (or uniforms, tools, etc.) that brings them below the federal minimum wage level.

The Louisiana Wage Payment Act

For matters relating to minimum wage and overtime, Louisiana defers to the FLSA. However, Louisiana’s Wage Payment Statute places certain guidelines on employers issuing final pay to a terminated employee. Employees who leave employment, whether voluntarily or involuntarily, must be paid all wages “then due” within fifteen days or by the next payroll, whichever is earlier. Wages includes not only compensation, but also accrued but unused PTO or vacation. Employers who violate these provisions can be liable to the employee for up to 90-days of penalty wages and attorney’s fees expended in recovering the unpaid wages. When money is deducted from an employee’s final paycheck improperly, the employer may be in violation of the Louisiana Wage Payment Act.

Both the FLSA and Louisiana Wage Payment Act are breeding grounds for litigation. Both laws are routinely misapplied, and each statute allows plaintiffs to recover their attorney’s fees if they are successful in pursuing claims. The best way to minimize risk of violating these laws is to reduce all payroll arrangements (including training reimbursement agreements) to writing so that there is a clear understanding of what is required.

Training Reimbursement Agreement Gone Bad

Employers who deduct training costs from an employee’s final paycheck have increasingly found themselves in unsuccessful litigation over these actions.

A federal court case recently litigated in Baton Rouge underscores some of the legal issues employers face when they make deductions from a separating employee’s final paycheck. There, the employee received a substantial damages award against his former employer under both the FLSA and Louisiana Wage Payment Act after training costs were deducted from his final paycheck. The employee had executed an employment agreement allowing for deductions up to $500.00 from his final paycheck to cover training costs if he left before reaching one year of employment. Because he was terminated after only six months, the transit system deducted a pro-rated amount of the training costs from his final paycheck. The employee’s final paycheck was less than the training costs owed, and he received a final check for zero dollars.

The court determined that the employee’s agreement violated Louisiana law by requiring him to forfeit his wages. As a result, the contract was rendered null and void on that basis.

The court next examined the deduction for compliance with the FLSA. The court noted that the employee had a right to receive minimum wage “free and clear” of any deductions. The deduction of the training costs brought him below minimum wage, and, therefore, the deduction of the payroll amounts violated the FLSA.

Finally, the court ruled that because the agreement was null and void, the employed improperly failed to pay him for all of his hours worked in his last paycheck in violation of the Louisiana Wage Payment Act.

The court determined that the employee had earned

wages of approximately $240 payable in his final paycheck. Based upon the remedies available under both the FLSA and the Wage Payment Act, the court awarded the employee more than $24,000, not include attorneys’ fees.

This case is not unique. Dealers should be extremely cautious when putting together training reimbursement agreements and even more so when deciding whether to make a deduction to an employee’s pay to recoup that investment. Dealers who currently have such agreements should have them vetted by their employment attorney. Moreover, the decision of whether to actually make a deduction from pay should be carefully reviewed as well. This is a situation where some foresight can save the dealer a great deal of expense.

The EEOC Has Issued a New Poster

The EEOC released a new “Know Your Rights” poster on October 20, 2022 to update the current version displayed in the workplace. Businesses with at least 15 employees need to replace their old poster with the new version. The new poster must be placed in a conspicuous location in the workplace where notices to applicants and employees are customarily posted. Changes to the poster include:

• New straightforward language and formatting have been utilized;

• Harassment is noted as a prohibited form of discrimination;

• Clarifies that sex discrimination includes discrimination based on pregnancy and related conditions, sexual orientation, and gender identity;

• Provides information about equal pay discrimination for federal contractors; and

• Provides a QR code that allows workers to quickly access the EEOC’s website on how to file a charge.

Many of the changes memorialize updates that have been in place for a period of time, while others, such

as the QR code, make it easier for employees to reach the EEOC.

In recognition of the work from home trends, the EEOC encourages employers to post a digital copy of the poster on their website.

The EEOC has not issued an effective date for replace the old poster, but the sooner the better.

Please reach out to Tim Scott (tscott@fisherphillips. com) or Andrew Baer (abaer@fisherphillips.com) if you have any questions about deductions from pay, the new EEOC poster, or any other labor or employment legal matters.

Andrew Baer

Tim Scott

LADA Annual Golf Tournament Birdies, Brews & BBQ

Our 24th Annual Golf Tournament was held on October 4, 2022, and was a massive success! This year was a year of many firsts for our ever-popular tournament. Golfers were greeted with a delicious, hot breakfast sponsored by ProBilling & Funding Service. They were treated to food throughout the course served by many of our associate members. It’s hard to say who had more fun -- the golfers enjoying the prestine course, the vendors mingling with dealers and fellow associates, serving food and libations, or the LADA staff soaking it all in!

We ended the day with the post-tournament networking lunch event Birdies, Brews, & BBQ—

previously known as the Shrimp Feast. There was no shortage of incredible door prizes for our golfers and no shortage of amazing, award-winning BBQ from Mike Finey (Dealertrack) and his Irish Brew BBQ Cooking team.

We extend a heartfelt thank you to all of our sponsors that made this event possible and to all of the members that were able to join us for a day on the golf course.

We look forward to seeing everyone on the greens again next year!

STRATEGIES TO MAXIMIZE THE PROFITABILITY OF MBI REINSURANCE PROGRAMS AND RETRO PARTICIPATION ACCOUNTS IN THE FINAL PUSH OF Q4

By: Keith Decell, Jason Rasti, Cole Miller, and Sunny Mayhall, The LDS Group

While sales, service, parts, and F&I are traditional drivers of dealer profit, a dealer reinsurance program or participation account can be on-par if certain techniques are utilized. After all, a reinsurance program or participation account positions the dealer to be more than a retailer of F&I products and allows the dealer access to underwriting profits and investment income. With just a few weeks remaining in the year, it is not too late to employ the following strategies with an aim toward maximizing profitability.

Increase Penetrations of Existing Products

In our experience, frequent training of F&I professionals is one of the most effective ways to increase product penetrations. During the COVID-19 pandemic, we instituted “Coaching with Cole”, a Zoom coaching session held every business day at 10 am. This 15 to 20-minute interactive F&I training seminar shares what the top producing men and women are doing to be top producers. We track attendance, which varies between 80-100 F&I professionals daily, and send dealers reports on the F&I employees who watch Coaching with Cole.

REINSURANCE

Since 2020, we have seen a direct correlation between Coaching with Cole participation and increased penetrations by the F&I professionals who regularly tune-in. Coaching with Cole topics are ever changing to meet market demands. Past training areas include mastering the F&I presentation, knowing your dealership’s pre-owned program, the amended Safeguards Rule December 9, 2022 deadline, habits of successful salespeople, things never to do during a customer presentation, handling objections to mechanical policies, how to be relentless in F&I, and how to approach cash deals. Coaching with Cole’s success means it is here to stay and proves how essential consistent training is to increased penetrations. Unsurprisingly, increased penetrations can lead to increased reinsurance or participation account profitability.

Selectively Add MBI Products as the Market Allows MBI products that automatically come with the purchase of a vehicle without charge to the customer offer special reinsurance and participation account opportunities. For instance, we have three month/ three-thousand-mile and six month/six-thousandmile mechanical policies as well as limited lifetime powertrain policies. Not only do complimentary products such as these invite opportunity for customer upgrades but dealers with reinsurance programs or participation accounts are able to reserve products on every vehicle sale and enhance reinsurance or participation account profitability.

Escalation Claims Process

Though reinsurance programs and participation accounts offer profit opportunities for dealers, they are not without risk. Severe claims impact loss ratio performance and should be treated accordingly. In

our experience, we have found that claims escalation procedures are effective tools at managing severity. For instance, we have developed minimum rules for placing claims under review based upon the vehicle’s mileage at the time of the claim (i.e., claims made immediately after policy purchase or claims made immediately after the vehicle is out of factory or powertrain warranty) or based upon costs. Once a claim is designated as “Under Review”, it is passed to senior adjusters who then interface with the dealer or the dealer’s designee through the claims process. This degree of communication and interaction helps to manage a claim’s severity; indirectly helps to manage loss ratios; and aids in customer satisfaction.

These are just a few of the techniques that can further increase reinsurance and participation account profitability. Whether they serve as yearend motivation or are tabled for first-of-the-year reflections, changes that lead to growth in dealer reinsurance programs or participation accounts can lead to overall growth in the dealership.

THOUGH

PROGRAMS AND PARTICIPATION ACCOUNTS OFFER PROFIT OPPORTUNITIES FOR DEALERS, THEY ARE NOT WITHOUT RISK.

Keith Decell

Jason Rasti Cole Miller

Sunny Mayhall

EV HAZARDS: STAYING SAFE WITH PROPER PPE

By: Micah O’Shaughnessy, CSP, ASP

It’s imperative to understand the mechanics of electricity and electrical personal protective equipment (PPE) to stay safe on the job. Due to the wide variety of factors that contribute to skin resistance, exposure to a high-voltage battery is a very risky endeavor. That’s where personal protective equipment comes into play.

There are three types of PPE for working safely with electricity: safety glasses, insulated gloves, and arcflash equipment.

What’s an arc flash?

An arc flash is the combination of light and heat produced when current travels through the air or ground or another voltage phase, called an arc fault. Arc-flash equipment generally consists of footwear, pants, a long-sleeved shirt, gloves, and headgear— all specially designed to protect the wearer from burns. Most electric vehicle manufacturers do not require technicians who work with EVs to wear arc-

flash equipment. That’s because no manufacturer requires technicians to open a battery case under any circumstances.

For the work you perform, you must wear safety glasses and lineman gloves (also called lineman’s gloves).

Safety Glasses

Safety glasses protect the wearer from hazards to the eyes and should be a standard part of every technician’s work uniform. It is always a good idea to confirm that the glasses comply with ANSI Z87+ standards: They must provide protection from impact and chemical exposure, and they must protect the peripherals.

Lineman Gloves

Commonly called hybrid or EV gloves, lineman gloves are designed to prevent the wearer from becoming part of an electrical circuit. You should wear them

any time you are working with the high-voltage system, whether that is the battery or the energized components of the vehicle.

Here’s what you need to know about wearing lineman gloves:

Proof Test Every Six Months

Lineman gloves require proof testing every six months to ensure their integrity. Even a microscopic perforation can compromise the gloves, allowing the wearer to enter into the circuit. Proof testing must be performed by a laboratory accredited by the North American Independent Laboratories for Protective Equipment Testing.

Inspect and Air Test Before Each Use

Physically inspect and air test the gloves using an air testing kit before each use. You’re looking to identify tears, holes, ozone cuts, defects, or material swelling or thinning. Perform air testing in compliance with the glove manufacturer’s recommendations and glove type requirements.

Wear the Correct Class

There are six main classes of lineman gloves: 00, 0, 1, 2, 3, and 4. Automotive technicians use Class 00 or Class 0 gloves. Class 00 gloves are rated for 500 V use

and Class 0 gloves are rated for 1,000 V use.

Wear with Leather Gloves

Never use lineman gloves without a pair of leather protector gloves over top. They are designed to protect the insulated gloves from wear and tear, such as cuts, abrasions, and punctures. There are limited exceptions to this requirement, but considering the high voltage of electric vehicle batteries, leather protectors are required.

Other Sources for Safety Information

Vehicle and battery manufacturers publish their recommendations for safety precautions, personal protective equipment, and any other administrative or engineering controls. These publications should be your first reference point when you perform maintenance work on an EV high-voltage system.

A dealership should also perform a hazard assessment for electric vehicle work to determine which hazards employees are exposed to and how to control those hazards. You may also reference OSHA 1910.137 – Electrical Protective Equipment and NFPA 70E, though those regulations are not specific to electric vehicles.