Federal Automotive FAQ
EMPLOYEE VS. INDEPENDENT CONTRACTOR
Its difficult to prove that drivers and other people are dealership employee or are independent contractors. State agencies across the country are constantly auditing car dealerships for how they pay their workers. Each state and agency’s test is a little different; however, they do look for common elements, such as:
- Do the workers use their own vehicle or a company owned vehicle?
- Are workers paid an hourly rate or a flat rate?
- Are workers reimbursed expenses or do they absorb the cost?
- Do workers submit invoices for each “job” he/she completes?
If the worker uses the dealership vehicle, is paid hourly, reimbursed for expenses and does not submit an invoice, the state agency will likely consider the worker an employee. If the opposite is true, the worker may be considered an independent contractor, however, it will still be an uphill battle. I once had a client being audited who fought to prove the cleaning company he used was an independent contractor, not an employee!
IRS CASH REPORTING OVER $10,000
A dealer must file Form 8300 to report cash paid to it if the cash payment is over $10,000 and received as: (a) One lump sum of over $10,000, (b) Two or more related payments that total in excess of $10,000, (c) or Payments received as part of a single transaction (or two or more related transactions) that cause the total cash received within a 12-month period to total more than $10,000. The payments must be received in the course of trade or business, received from the same buyer (or agent), and received in a single transaction or in two or more related transactions.
Cash is currency and coins of the United States and any other country. Cash is also certain monetary instruments – a cashier’s check, bank draft, traveler’s check, or money order – if it has a face amount of $10,000 or less. If a business receives over $10,000 in a monetary instrument, the bank issuing the instrument will report the transaction to the IRS, relieving the recipient from doing so.
FAMILY MEDICAL LEAVE ACT
The FMLA applies only private sector employers that employ 50 or more employees (include full and part time), to public agencies, including state, local and federal employers and local educational agencies (schools).
No. To be eligible to take FMLA leave for any qualifying reason, an employee must have worked for the employer for a total of 12 months, have worked at least 1,250 hours over the previous 12 months, and work at a location where at least 50 employees are employed by the employer within 75 mile.
FMLA only requires unpaid leave. However, the law permits an employee to elect, or the employer to require the employee, to use accrued paid leave for some or all of the FMLA leave period. An employee’s ability to elect to use accrued paid leave during a period of FMLA leave is determined by the terms and conditions of the applicable paid leave policy.
You must post a Buyers Guide before you “offer” a used vehicle for sale. A vehicle is offered for sale when you display it for sale or let a customer inspect it for the purpose of buying it, even if the car is not fully prepared for delivery. This requirement also applies to used vehicles for sale on your lot through consignment, power of attorney, or other agreement. At public auctions, dealers and the auction company must comply. The Rule does not apply at auctions that are closed to consumers.
If you conduct a used car transaction in Spanish, you must post a Spanish language Buyers Guide on the vehicle before you display or offer it for sale.
You may remove the Guide for a test drive, but you must replace it as soon as the test drive is over.
The warranty information you provide on the Buyers Guide is not sufficient to meet the requirements of the Warranty Disclosure Rule. Therefore, your written warranty and the Buyers Guide must be two separate documents.
Regulation M of the Consumer Leasing Act states: An advertisement that states any of the following items: (1) The amount of any payment; or (2) A statement of any capitalized cost reduction due at signing, shall also disclose: (a) the fact transaction advertised is a lease, (b) the total amount due prior to or at delivery, (c) the number, amounts, and periods of scheduled payments under the lease, (d) A statement of whether or not a security deposit is required; and (e) any end of lease liability.
Regulation Z of the Truth-in-lending Act states: An advertisement that states any of the following items: (1) The amount or percentage of any downpayment; (2) The number of payments or period of repayment; (3) The amount of any payment; or (4) The amount of any finance charge, shall also disclose: (a) the amount or percentage of the downpayment, (b) the terms of repayment, which reflect the repayment obligations over the full term of the loan, including any balloon payment, and (c) the applicable APR.
If a product or service usually is sold at a price arrived at through bargaining (negotiations), rather than at a regular price, it is improper to represent that another product or service is being offered “free” with the sale.