New York has a little known law called "Spread of hours" pay which requires certain non-exempt employees (i.e. those subject to overtime) to receive an extra hour of pay at the minimum wage rate when the interval between the beginning and end of an employee's workday (the so-called "spread") exceeds 10 hours. The additional hour of pay is not payment for work performed and need not be factored in when calculating overtime pay. The spread includes working time plus time off for meals and any off-duty time, the result of which is that an employee working 10 hours or less on a particular workday may still be entitled to an extra hour of "spread of hours" pay.

 

     Here are a few scenarios to consider:  

1. A non-exempt employee works 7:00 a.m. to 10:00 a.m., then again from 7:00 p.m. to 10:00 p.m. in the same workday. The employee has worked 6 hours over a 15-hour spread.
2. A non-exempt employee works from 11:30 a.m. to 3:00 p.m., then again from 4:00 p.m. to 10:00 p.m. in the same workday. This employee has worked 9.5 hours over a 10.5-hour spread.
3. A non-exempt employee works from 7:00 a.m. to 5:30 p.m., with a one hour unpaid meal breaks. The employee has worked 9.5 hours over a 10.5-hour spread.

In each of the scenarios above, the employees work less than 10 hours, but the time is spread over a period that exceeds 10 hours.  

 

     The good news is that the New York Department of Labor and most New York courts have interpreted the "spread of hours" requirement not to affect workers whose total weekly compensation is sufficiently above the minimum rate. Therefore "spread of hours" pay is only due in the three scenarios discussed above only if the total wages paid to the employee are not equal to or greater than the total due for (1) all hours at the minimum wage plus (2) one additional hour at the full minimum wage.

 

For example: An employee earns $8.75/hour and works a 12-hour spread, in which he has 11 hours of working time. At the current minimum wage rate of $8.00/hour, this employee must be paid at least $96.00 for 11 hours at the minimum wage rate, plus an additional one hour for "spread of hours" pay. (This example assumes that the employee does not work more than 40 hours in the week in question and, therefore, is not entitled to overtime pay.) However, here the employee is not entitled to an extra hour of pay for "spread of hours" because the employee is sufficiently compensated with $96.25 for 11 hours of work at his wage rate of $8.75/hour.

 

     With minimum wage increases scheduled for the end of 2014 and 2015 (8.75 and 9.00 respectively), an employee who is not currently entitled to "spread of hours" pay, may be entitled to that extra hour of pay when the minimum wage increases later this year. Now is a good time to review your pay plans to determine if any employees could be subject to spread of hours pay.

 

     If you have any questions please contact Stevan LaBonte at 516-280-8580. 

  

 

On June 16, 2014 Governor Andrew M. Cuomo signed into law several revisions to the Franchise Motor Vehicle Dealer Act (the "Franchise Law").  The revisions were the culmination of many months of hard fought lobbying by the State and Metro dealer associations.  The following is a brief summary of some of the new protections for auto dealers against the arbitrary and unfair demands of auto manufacturers. 

 

1.       Service Contracts:  The Franchise Law was amended to now make it unlawful for a manufacturer to directly or indirectly coerce any franchised dealer to sell an  extended service contract, extended maintenance plan or similar product, including, but not limited to, gap products, which are offered, endorsed or sponsored by the manufacturer if: 

 

a.      It informs the dealer that failure to do so will substantially and adversely impact the dealer; or

 

b.      If the franchise agreement requires that the dealer sell, or sell exclusively the products; or

 

c.       The manufacturer measures the dealer's performance based on the sale of the products; or

 

d.      The manufacturer requires the dealer to exclusively promote the sale of the products.

 

2.      Facility Renovations: 

 

a.      Building Materials/Furnishings:  The Franchise Law now includes restrictions on how a manufacturer can control the manner in which dealers complete facility renovations.  Specifically, a manufacturer can no longer unreasonably require a dealer to purchase from a manufacturer's vendor goods, building materials, or services for the dealership, including, but not limited to, office furniture, design features, flooring, and wall coverings, if the dealer's vendor can provide the same materials or services of substantially similar quality and design.

 

b.      Remodeling:  It is now illegal for a manufacturer to require a dealer to construct a new dealer facility or substantially alter or remodel an existing dealer facility within ten (10) years from the date the construction or alteration/remodeling of the facility was last completed.   

 

3.      Exclusive Facilities:  A manufacturer now cannot require a dealer to establish or maintain exclusive dealership facilities unless such need is justified by current and reasonably expected future economic conditions existing in the dealer's relevant market area at the time the request for exclusive facilities is made.

 

4.      Exports:  Manufacturers cannot refuse to allocate, sell, or deliver vehicles to a dealer or to charge back or withhold payments from the dealer or threaten any adverse action against a dealer in connection with or as a result of any new vehicle sold by the dealer that is subsequently exported if the dealer can demonstrate that he exercised due diligence and that the sale was made in good  faith, including, but not limited to, that the dealer did not know nor reasonably should have known of the purchaser's intention to export the vehicle.  A dealer  which causes a new vehicle to be registered in New York or in another state and collects the appropriate sales tax, or that reasonably relied on a manufacturer to complete a sale shall be presumed to have exercised good faith and due diligence. 

 

5.      Allocation:  It is now illegal for a manufacturer to allocate vehicles based on a program that differentiates between vehicle sales by a dealer within a territory or geographic area assigned to such dealer and vehicle sales outside of such territory or geographic area or to utilize a discriminatory, unreasonable, arbitrary or unfair system of allocation of new inventory.  A manufacturer must communicate its system of allocation in writing in a clear and concise manner to all same line make dealers located in New York.  It is also illegal for a manufacturer to refuse to disclose to any dealer the manner and mode of distribution of vehicles in the dealer's line make within New York, and an explanation of the allocation system, including the methodology used, in a clear and comprehensible form.

 

6.      Parts Warranty Reimbursement:   The formula utilized by dealers for the calculation of reasonable rates for parts warranty reimbursement is amended to clarify which parts and repairs a dealer can exclude from their parts and/or labor calculations.  Specifically, dealers can now exclude from the parts and/or labor calculations and the manufacturer's reimbursement requirements:

 

a.      Parts sold at wholesale;

 

b.      Tires;

 

c.       Routine maintenance not covered under any retail customer warranty such as fluids, filters and belts not provided in the course of repairs;

 

d.      Vehicle reconditioning; and

 

e.      Batteries replaced as part of a routine maintenance operation.

 

7.      Audits:     No manufacturer can conduct an audit or charge back any warranty payment, or any sales, advertising or marketing incentive payment or otherwise hold a dealer liable for charges more than one year, or five years in the case of fraud, after the date the manufacturer made such payment to the dealer, without providing a notice to a dealer of information regarding errors or issues regarding such dealer's warranty, sales, advertising or marketing incentive claims that are the subject of the audit or charge back. 

 

In addition, in connection with a claim for warranty reimbursements, a dealer's failure to document properly one part of a warranty repair that contains more than one part shall not be the sole basis to charge back the entire repair.  A  manufacturer  cannot deny a claim submitted based solely on a dealer's incidental failure to comply with a specific claim processing requirement, a clerical error, or other administrative technicality, provided that the failure does not call into question the legitimacy of the claim and that the dealer corrects the claim according to manufacturer guidelines.  The manufacturer cannot impose the chargeback, debit the dealer's account, or otherwise seek to obtain all or any part of the chargeback funds from the dealer during the thirty-day period in which the dealer has the opportunity to file an action to dispute the charge back. 

 

The changes in the Franchise Law greatly increase the protections for new vehicle dealers in New York.  Most importantly, dealers now have the opportunity to submit requests to their manufacturer for reasonable rates on parts warranty reimbursement that exclude many of the items which manufacturers previously required (wrongfully) to be included in the reports which artificially lowered the calculated rates.  The exclusion of tires, batteries and other maintenance services will greatly help to demonstrate the true markup due to each dealer. 

 

If you are interested in having the LaBonte Law Group prepare your next submission to the manufacturer documenting the reasonable rates for the parts warranty markup contact Stevan LaBonte today at 516-280-8580.