Guidance For New York State Automotive Dealerships With Respect To Automotive Sales Conducted Remotely Or Electronically During The COVID-19 Emergency.
BELLAVIA BLATT, P.C.
A T T O R N E Y S A T L A W
TELEPHONE: 516-873-3000
FACSIMILE:
New York State, under the authority of Governor Andrew Cuomo, implemented a statewide “PAUSE” (Policies Assure Uniform Safety for Everyone) order on March 20, 2020 whereby all non-essential businesses were required by law to reduce their in-person workforce by 100%. As pertaining to automotive dealerships within New York, the Governor initially only classified automotive repairs as being essential services and were thus exempt from the PAUSE reduction. At that time, automotive sales were deemed to be “non-essential” and subject to full compliance under the PAUSE mandate.
Significantly, as of March 26, 2020, Governor Cuomo modified his previous order and declared that all New York State licensed automotive dealerships, with respect to automotive repair services and “automotive sales conducted remotely or electronically, with in-person vehicle return and delivery by appointment only” (including leasing), are deemed, subject to certain restrictions, businesses performing essential services and are not subject to the 100% percent work force reduction under the previously issued “New York State on PAUSE” Executive Order (See. NYS Executive Order No. 202.8). This March 26th declaration was a result of intense negotiations spearheaded by NYSADA and all regional dealer associations with various New York State agencies.
It is important to understand, however, that very specific restrictions and guidelines must be adhered to, as mandated by New York State, under this designation with respect to the sales of motor vehicles made by dealers within New York. These restrictions will remain in place until the PAUSE order is lifted at an unspecified time in the future by Governor Cuomo.
The temporary workplace restrictions that all dealerships must follow relating to sales and service include the following.
• All sales terms and conditions must be negotiated and agreed to between the dealership and the customer prior to delivery.
• Negotiation must be conducted remotely or electronically.
• In person sales and leasing transactions are prohibited at a dealership’s premises (No “face to face” negotiations in the showroom).
• Vehicles may be delivered and lease returns may be conducted by “appointment only” at the dealership or at a customer’s residence.
• All social distancing requirements must be adhered to with respect to vehicle servicing, deliveries and returns.
• All Centers for Disease Control (CDC) Coronavirus Prevention Guidelines and New York State Department of Health (NYDOH) policies must be followed during all phases of the automotive transaction.
Operational Issues Addressed And Required In New York Under PAUSE:
Sales and Leasing: Dealerships must conduct all negotiations and sales of motor vehicles remotely and electronically via telephone, email, Internet or similar remote technology. Dealership showrooms are to be closed to the general public under the PAUSE mandate. Sales staff should only be present at the dealership to conduct remote sales and leasing if it is not possible for an employee to perform this function remotely (i.e., from the sales agent’s home due to technology limitations or Internet service provider interruption). Additionally, billing and other support personnel are permitted to be at the dealership only if such support cannot be accomplished remotely and only, as needed, to provide support for the sale. If a customer visits the dealership to drop off a vehicle, pick up a vehicle or to service a vehicle, there should be no sales related discussions at the dealership. Likewise, there should be no in person negotiation and sales conducted at a customer’s home or business. With respect to test drives, the New York State Department of Motor Vehicles has interpreted the PAUSE mandate to prohibit all test drives (See Test Drives / Best Practices below).
Delivery and Returns:
The delivery and return of vehicles (new or leased) may be conducted in person, by appointment only with the dealership or at a customer’s residence. With respect to delivery and returns made at the dealership, only the necessary staff should be on hand to conduct the delivery or the return of the vehicle. All document processing with respect to the delivery and return of vehicles
should occur within a “clean” room inside the dealership that is sanitized and maintained in accordance with the Guidance on Preparing Workplaces for COVID-19 as established (and updated)
by the Occupational Safety and Health Administration (See links below for additional federal and state information). Those processing the documents must maximize and maintain “social distancing” (at least 6 feet between individuals) to the extent it is feasible. With respect to the delivery and returns made at a customer’s residence, it would be best practice to conduct all vehicle delivery and returns at the dealership and avoid traveling to a customer and entering a customer’s home since this may pose elevated risks for employees. Again, should there be a delivery or vehicle return that does occur at a consumer’s residence, the dealership must have already concluded all negotiations concerning the motor vehicles remotely and electronically via telephone, email, Internet or similar remote technology.
Service Of Vehicles:
Interactions between automotive service technicians and a customer seeking the repair and maintenance of his or her respective vehicle should only occur in a service bay that is sanitized and
maintained in accordance with the Guidance on Preparing Workplaces for COVID-19 as established (and updated) by the Occupational Safety and Health Administration. Social distancing areas should always be maintained, with a minimum of 6 feet between the customer and the technician at all times. Customers cannot be permitted to “linger” with the automotive technician, dealership employees or within the service area for any purpose. Remember, your dealership may have more customers during this time that require the servicing of vehicles as compared to the sales of new vehicles and it is vital that your service department exercise these guidelines with the utmost of caution during any customer interaction to prevent the spread of COVID-19. Staggering of service appointments in order to better guarantee proper social distancing between automotive technicians, dealership employees and customers is highly suggested. The service department and surrounding area should be deemed a dealership “high risk area” and sanitized accordingly.
Best Practice Suggestions For Certain Operational Issues Not Specifically Addressed In New York Under PAUSE:
Provision of Masks and Gloves to Employees / Best Practice:
Under the Occupational Safety and Health Administration Act of 1970, employers are required to provide each employee with a safe, healthful workplace. This Act requires employers to provide
employees with personal protective equipment when hazards demand such equipment.
Best Practice: To the extent possible (given the countrywide shortage during the pandemic), dealerships should provide their employees with masks, gloves, hand sanitizers, and antiseptic wipes.
Controlled Environment / Best Practice:
Under the current guidelines with respect to delivery and pick up of vehicles in New York, dealership employees are allowed to visit a customer’s home. However, it would be best practice to avoid traveling to a customer and entering a customer’s home since this may pose elevated risks for employees. An employee would be entering into an uncontrolled environment that may not be sanitary and risk exposure.
Best Practice: It is highly recommended that the delivery and return of all vehicles be conducted at the dealership and not at a customer’s home. The dealership can inform the customer that he or she must come to the dealership and, at the same time, reassure the customer that it is a controlled, sanitized environment. Since it will be a visit that is appointment based, the customer will be at ease knowing he or she will meet and conduct business in a safe, controlled and sanitized environment, maintaining social distance. Furthermore, there is an added risk that a customer may seek to invoke the three day “cooling off” period by alleging that there was sales activity at the time of delivery.
Appraisals & Trade Ins / Best Practice:
New York State has not included specific guidance as to the processes for appraisals and/or trade-ins.
Best Practice: Therefore, it would be sound practice for a customer and a dealer to commence the appraisal process remotely, with the customer furnishing to the dealer all the necessary information to begin the valuation of the vehicle. The customer and the dealer should schedule an appointment similar to a delivery or drop off under the PAUSE guidelines; including maintaining social distancing and sanitization methods as specified by the CDC and the New York State Department of Health. A visual inspection of proposed trade-in can be conducted by the dealer. The dealer should not enter the vehicle but require that the customer start the vehicle and demonstrate its operational ability. Further negotiations as to the trade in, should resume remotely.
Test Drives / Best Practice:
Dealers should note test drives do not fit within the spirit of PAUSE. Test drives are interpreted to be prohibited under PAUSE, and it appears that the Department of Motor Vehicles is taking this
position. Therefore, dealers should not offer test drives at this time. Best Practice: Explain to the customer that the Department of Motor Vehicles is interpreting the PAUSE mandate to prohibit all test drives and therefore, test drives are not allowed to be conducted in New York. Offer to review the vehicle remotely with the customer on the manufacturer’s website to address any questions that he or she may have.
Courtesy & Loaner Vehicles / Best Practice:
The PAUSE guidelines do not prohibit a dealership from the issuance of a courtesy “loaner” vehicle to a customer, as needed.
Best Practice: Each loaner vehicle will burden a dealership with significant sanitization prior to and after the vehicle has been furnished to a customer. The potential exposure to an employee while
cleaning the vehicle after use by multiple customers, increases and provide unnecessary risk to the employee. It is strongly recommended to immediately cease the practice of providing loaner vehicles to customers.
Swaps / Best Practice:
The PAUSE guidelines do not prohibit dealer to dealer vehicle swaps.
Best Practice: Swaps of vehicles between dealerships are discouraged since an employee will be entering a vehicle at another dealer’s location and be unaware if the proper CDC and NYSDOH
guidelines were observed with respect to the sanitization of the swapped vehicle.
Wholesaling Trade-Ins / Best Practice:
The PAUSE guidelines do not prohibit wholesaling trade-ins.
Best Practice: Although arguably permitted to facilitate the sale of a new vehicle, wholesaling trade-ins of vehicles is discouraged. This may subject the dealership’s employees to unnecessary health risks due to the interaction between multiple individuals necessary to wholesaling. It is recommended that a dealership should retain these vehicles on its storage lot.
Off-Boarding New Vehicles / Best Practice:
Dealers who are considering canceling deliveries from their OEM should underscore, as an additional basis for cancellation, that employee health concerns are legitimate insofar as there is no assurance that vehicles are safe to enter immediately after being unloaded.
Best Practice: If deliveries are accepted, proper precaution must be taken to sanitize the vehicles so as not to endanger the health of an employee.
E-Signatures / Best Practice:
The federal Electronic Signatures in Global and National Commerce Act, or ESIGN, enacted in 2000, permits e-contracting of auto sales. Over 47 states including Washington, D.C., have Uniform
Electronic Transaction Act laws, giving e-signatures legal authority. The federal E-Sign Act allows for electronic signatures on documents relating to vehicle sales and leasing. The Act states that a contract or signature, “may not be denied legal effect, validity, or enforceability solely because it is in electronic form.” Provided that the customer agrees to conduct the transaction via electronic means, the E-Signature Act will govern the transaction. Under the Act, a paper or “wet” signature is just as enforceable as a digital signature. In New York, The Electronic Signatures and Records Act (ESRA) provides that signatures made via electronic means will be legally binding as handwritten signatures.
Best Practice: To the extent that your dealership is required to obtain original “wet” signatures (for DMV or F&I purposes), you will need to provide a sanitized area for customers to sign hard copies of documents relating to the sale and leasing of a vehicle. A long table, 6 ft, end to end, set in an open-air space or within a sanitized area of the dealership with proper ventilation that conforms to the CDC and NYSDOH guidelines would be permissible. The dealership employee and the consumer can sit at opposite ends of this table. It would be recommended to provided two sets of documents; one set for the dealer employee interacting with the consumer and one set for the consumer to review prior to signing so as to avoid any close contact during the review of sales contract and warranty language. The dealer should provide the customer with her or her own clean pen (to keep) that he or she may use to execute the necessary documents. A cautionary note: check with your F&I providers as to the type of signatures that may be required prior to initiating a sales transaction with a customer.
Important Reminders For Dealerships:
Some final points to consider when preparing your dealership to be compliant with both the CDC and the New York Department of Health guidelines:
• Instruct employees to not shake hands.
• Wear latex gloves (or latex free gloves if any employee has a latex allergy) at all times when conducting any transaction with a customer. This includes the transfer of paper documentation, obtaining identification cards, licenses, consumer credit cards and signatures). Do not reuse gloves and dispose of worn gloves immediately and properly.
• Do not share writing instruments such as pens or pencils.
• Do not share or touch smartphones, tablets or related “high risk” touch technology that
is not owned by the employee or dealership.
• Clean all “high risk” surfaces that consumers may come into contact with such as steering wheels, doorknobs, handles, computer touch screens, bathrooms, kitchen areas, and water coolers.
• Service technicians should disinfect keys, door handles, steering wheels and buttons and switches at the time of customer drop off and prior to the return of the vehicle to the customer.
All personal interactions must adhere to New York State Department of Health and CDC Guidelines with no exception. Any dealership that fails to follow the guidelines as implemented by New York State may subject itself to civil or criminal penalties. The New York Attorney General has stated that these policies will be enforced in full.
Centers for Disease Control and Prevention, Interim Guidance for Businesses and Employers on COVID-19
https://www.cdc.gov/coronavirus/2019-ncov/community/guidance-business-response.html
United States Department of Labor, Occupational Safety and Health Administration: Guidance On Preparing Workplaces for COVID-19:
https://www.osha.gov/Publications/OSHA3990.pdf
The New York State Department of Health:
https://coronavirus.health.ny.gov/home
