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Vol. 6,  #9 September 1, 2015

CFPB EXPANDS REACH TO
NON-BANK FINANCE COMPANIES 

Dealers advised to be on alert  for a
new round of letters.

        
      Dealers should be on the alert for letters from their auto lenders questioning the dealer's fair lending programs and practices.  New rules going into effect on August 31, 2015 will expand the authority of the Consumer Financial Protection Bureau ("CFPB") to allow the agency to supervise and examine non-bank finance companies.  This is expected to result in an increase in the amount of letters from auto lenders advising dealers to initiate fair landing programs and warning against discriminatory lending practices against minorities.

    When the CFPB initiated their review of bank finance companies in 2013, many dealers received letters from lenders, such as J.P. Morgan Chase, alleging discriminatory lending practices in the dealer's discretionary markup of customer auto loans.  These letters included a summary of the alleged discriminatory practices and the statistical breakdown of the deals in question.  The expansion of the CFPB's supervisory authority to non-bank finance companies should increase the number of investigations into a dealer's lending practices.

     Letters from the non-bank auto lenders are expected to advise dealers to be complaint with fair lending practices and follow a fair lending program.  Dealers who receive this type of letter should respond in writing with a summary of what the dealership is doing to be compliant with fair lending practices.  The LaBonte Law Group recommends that dealers implement the National Automobile Dealers Association's Fair Credit Compliance Policy and Program.  Implementing this program will provide you with everything you need to advise lenders that the dealership is in full compliance with fair lending practices.

     The letters from auto lenders may also contain allegations that the dealer has committed discriminatory lending practices.  The methodology used by bank and non-bank finance companies to identify discrimination in the mark up on customer auto loans is often too imprecise and relies upon too small a sample of deals and ignores many legitimate factors that do not involve discrimination.  If you receive this type of letter from a bank or non-bank finance company is it extremely important to formally respond in writing.  The response should challenge the allegations made by the auto lender and demand more specific information on how the results were calculated.

     Dealers who receive letters from their auto lenders are advised to contact the LaBonte Law Group at 516-280-8580 to discuss the contents of the letter and how to formally respond to the allegations.  
    
     
EMPLOYEE TERMINATION NOTICES  

                
     Employers in New York must provide provide written termination notices to employees.   Failure to provide written notices can subject the employer to monetary fines by the New York State Department of Labor.  

     The New York Labor Law requires a written termination notice to include:
  1. the exact date of the termination; and
  2. the exact date of the cancellation of employee benefits.
The termination notices must be provided to the former employee within five (5) working days after the termination date.  This notice requirement applies regardless of whether the employee is terminated, resigns, quits, retires or is laid off.

     Failure to provide the written termination notice can subject the employer to civil fines of up to $5,000 per employee.   In addition, aggrieved individuals can bring civil actions against employers that fail to provide the required notice.

     In order to prevent liability, employers should incorporate a form termination notice into their exit procedures.  The following is a sample termination notice.
Dear _____________:

Please note that your employment with [INSERT LEGAL NAME OF EMPLOYER] ("Company") ended on [DATE].

In addition, your participation in all employee benefits plans and programs ended on [DATE].

If you have any questions or concerns, please do not hesitate to contact the undersigned.  We wish you well in your future endeavors.

Very truly yours,
[COMPANY REPRESENTATIVE]
In the event the terminated employee participates or participated in an employer-sponsored health insurance plan, the middle paragraph in the sample notice should be replaced with either of the following paragraphs:
In addition, your participation in all employee benefits plans, including the Company's health insurance plans ended on [DATE]. Under separate cover, you will receive additional information about your rights, if any, to continue your participation in the Company's health insurance.

OR

In addition, your participation in all employee benefit plans, other than the Company's health insurance plan, ended on [DATE]. Your participation under the Company's health insurance plan will end on [DATE]. Under separate cover, you will receive additional information about your rights, if any, to continue your participation in the Company's health insurance plan after [DATE].
     For more information on employment termination notices please contact Stevan LaBonte at 516-280-8580.
 
Should you have any questions or need advice on anything related to the dealership please do not hesitate to give me a call or send me an e-mail.  Your questions will be answered promptly!!!

Sincerely,

Stevan LaBonte

Stevan H. LaBonte, Esq.
LaBonte Law Group, PLLC
100 Ring Road West, #108
Garden City, NY 11530
 
516.280.8580 (Phone)
631.794.2434 (Fax)