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CATA Bulletin
April 14, 2014


Leased-vehicle tax bill nears law

April 11, 2014

Illinois Gov. Pat Quinn reportedly is poised to sign into law on April 17 a measure to change tax calculations on vehicles leased in the state. If he does, the change would take effect Jan. 1, 2015.
House Bill 2317, under which vehicles leased for one year or longer would have sales tax owed calculated on the monthly payment instead of the vehicle’s selling price, unanimously passed both chambers of the state’s General Assembly and was sent to Quinn March 6. He has until about May 5 to act on the bill.
The Chicago Automobile Trade Association and the Illinois Automobile Dealers Association have made several runs at the taxation change on long-term leases, but officials with the Illinois Revenue Department always focused on near-term shortfalls in tax collection over long-term gains. Immediate gains would be seen in the proposed structure, under which dealers could not offer advance trade-in credits to their lease customers.
And with consumers enjoying lower monthly payments on leased vehicles, advocates project increased leasing activity.
Officials of the Illinois Revenue Department agree that Illinois should compute the sales tax in the same manner as 47 other states. The department indicated its position on HB 2317 to be positive.
If the change is made, revenues are projected to increase $14 to $28 million, based on forecasts of increased leasing activity. Lease transactions in Illinois currently are about half the number in nearby states.

Free employment litigation webinar

April 11, 2014

Wage and hour claims continue to be one of the fastest growing areas in employment litigation, which may involve disputes over overtime pay violations, exempt employee misclassification, and employee working off-the-clock.
The American International Automobile Dealers Association will examine top wage-and-hour pitfalls for dealers to avoid at a free webinar, "Wage & Hour: Employment Litigation," at 12 p.m. CDT April 23. To register, go to
The webinar will be hosted by Truth Fisher, an attorney with Advisors Law Group, LLP. Fisher’s employment law background includes extensive experience defending corporations, organizations, directors, officers and handling claims ranging from wage and hour violations to harassment, retaliation and other alleged workplace misconduct. 
Registrants do not need to be an AIADA member to register, but registration is limited to the first 150 individuals who register.

Don't let the employee handbook become a straightjacket

April 11, 2014

"Welcome to our dealership family!" many employee handbooks begin. "We’re extremely pleased to have you join our dynamic and growing company. Work hard and contribute to our success and you will enjoy a long and rewarding career with us."
Most people would consider such statements a pleasant but harmless way to draw employees into the rest of the handbook. Those people would be wrong. The seemingly innocuous opening comments could form the basis of a lawsuit by some future discharged and disgruntled employee.
Employee handbooks are a useful tool for communicating the policies, rules and regulations of a dealership. They can be a valuable promotional instrument for attracting new employees to the company.
A handbook should answer most of the routine questions asked by new employees, thus saving managers’ time. They also can improve morale by reassuring a worker than everyone will be treated fairly. Plus, handbooks meet the legal requirements for disseminating information in larger companies.
Their most important purpose, however, is to protect the store in its dealings with employees by summarizing the relationship between the dealership and its workers.
Implied promises
Unless they are written carefully and updated regularly, employee handbooks can create headaches for the employer. The biggest problems arise from language that implies a contract with an employee.
Fuzzy or overly complicated descriptions in a handbook can make it difficult for a dealer to fire or even discipline a worker without risking liability for wrongful discharge. Companies can make two mistakes when writing a handbook, say most experts in the field: saying too little and saying too much.
"Smaller companies have a tendency to paint themselves into a corner by making their handbooks contractual without realizing it," said human resources consultant Ethan Winning. "The more they say, the more vulnerable they become" to charges that the company didn’t follow its own policies.
Handbooks that exceed 50 pages probably are full of implied contracts, Winning said.
Walt Olsen, an employment law expert in New York, said increased employment litigation can constrain common sense in normal business dealings. "It used to be," Olsen said, "that if an employee wanted a guaranteed long-term relationship with a company, he had to get it in writing in the form of a binding contract. 
"But many states have moved away from that idea, which has opened the door for creative lawyers to invent contractual rights of tenure." Even a brief note saying "Good job" or "Well done" may be argued by lawyers and seen by courts as an implied contract.
The best handbooks
Three main components typify the best handbooks. One section gives general information about the company, its mission, work rules, and procedures. Another section describes what management expects from employees. A third section gives general information about salary and pay issues, employee benefits (medical insurance, vacation, time off, retirement), and employee services.
A handbook should be filed in a ring binder so that pages can be replaced and added when policies change, without reprinting the entire book. The final page should be a tear-off page that the employee signs and dates to acknowledge receipt of the handbook. Keep that page with the employee’s other personnel records.
Avoid problems
Handbooks should carry a disclaimer that the manual is not a contract. Other disclaimers should remind the employee that:
• Employment is "at will." That means either the employer or employee can end the relationship at any time for any or no reason.
• Disciplinary procedures are advisory and not binding, which permits the dealer to modify the procedures. Use short and general statements. Avoid detailed disciplinary and discharge language.
• Terms and conditions of employment may be changed at the dealer’s discretion.
• Rules and procedures governing the workplace should avoid an exhaustive list of all activities. Indicate that the list is not meant to be all-encompassing.
Once written, employee handbooks should be updated at least yearly because state and federal labor codes may change.

Do U.S. drivers care about improving mpg?

April 11, 2014

The average fuel economy of new cars sold in the U.S. hit another all-time high in March, reaching 25.4 mpg. But do Americans really care?
The fuel-economy data comes from the University of Michigan Transportation Research Institute, which has been tracking the fuel consumption of new cars since October 2007. In its first study, the national average was just above 20 mpg. Last month, Corporate Average Fuel Economy hit 31 mpg.
The green-minded also should be happy to know that auto emissions still hover near record lows. There was a small uptick from February’s all-time-low stats, but the distance Americans drove crept up slightly in March, so it’s not surprising that emissions ticked up, too. (Americans drive about 3 percent fewer miles annually than they did in 2007.)
The real questions here are (1) Why is fuel economy increasing, and (2) Who cares?
The answer to item No. 1 is simple: science, competition, and federal regulations. The answer to item #2 also is fairly straightforward: "very few people, that’s who."
Technology is giving consumers the ability to go farther on a gallon of gas. Smarter engines, hybrid powertrains, and lighter vehicles mean that some cars easily reach 50 mpg. As gas prices continue to rise, offering cars with higher fuel economy gives automakers a competitive edge. And of course, don’t forget the very important fact that the Environmental Protection Agency will require automakers to have a fleet-wide CAFE of 54.5 mpg by the year 2025.
The world’s car buyers obviously make note of gas prices, and there’s data to suggest that fuel economy remains the top criteria for new-car shoppers. 
However, while that may affect consumers’ choices within a certain segment — say, jumping from one carmaker’s crossover to another’s — that doesn’t mean that consumers are going to move to a completely new style of vehicle — say, from an SUV to a compact. A 2012 study revealed that 42 percent of shoppers would refuse to change the type of vehicle they drive, even if gas were to hit $10 a gallon.
That headstrong attitude, paired with the current construction surge, helps to explain why sales of pickups and SUVs are booming, even though the national average for a gallon of regular unleaded is $3.57. Sales figures probably would relent a bit if gas edged above $4, but the cynics have a hunch that any slump wouldn’t last long.

In Memoriam, April 14, 2014

April 11, 2014

Frank Mauro Gesualdo, a World War II U.S. Navy veteran and patriarch of a family that operates 24 dealerships in Illinois, Indiana and Wisconsin, died April 1 at age 90.
Mr. Gesualdo, aboard the USS Hornet in 1942 during the Battle of the Santa Cruz Islands, survived 72 hours in the Pacific Ocean after the aircraft carrier was battered by Japanese bombs.
After founding multiple companies connected to the automotive industry, Mr. Gesualdo in 1968 opened Frank Mauro Oldsmobile at 105th Street and Michigan Avenue in Chicago, and then followed with dealerships in Evanston and Highland Park. 
Survivors include his wife of 63 years, Rita; sons Mark, Ralph and Gregory; daughter Gina; and 11 grandchildren. Donations appreciated to St. Jude Children’s Research Hospital, 501 St Jude Place, Memphis, TN 38105, (800) 822-6344.