Amended federal guidance lists sales and leases of vehicles as essential business

California dealers should proceed with caution

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On March 19, 2020, Governor Newsom issued Executive Order N-33-20 directing all residents to stay home and for businesses to cease on-site operation, except as needed to maintain continuity of operations of essential critical infrastructure sectors designated by the Cybersecurity and Infrastructure Security Agency (“CISA”) of the Department of Homeland Security and additional sectors as the State Public Health Officer may designate as critical to protect the health and well-being of all Californians. On April 17, 2020, CISA designated personnel essential to sell and lease vehicles as essential critical infrastructure.

The Governor’s Order linked directly to CISA’s guidance at the time it was issued. The Governor has not issued a new order or any interpretive guidance as to whether the state-wide Order incorporates the amended CISA guidance or only relies on the guidance as it stood at the time of the Governor’s Order.

This leaves car dealers across the state wondering what to do. The first question for all dealers should be whether there is a local order that controls. We are aware that Los Angeles County, San Diego County, and the five Bay Area counties have all issued orders that restrict in-store sales of vehicles. These local orders control and should be complied with. Be sure to check your local government for controlling orders prior to opening up the showroom for in-store sales.

Second, if your county has not issued an order that limits in-store sales, understand the enforcement environment and plan to operate in a manner that will avoid community and local government backlash. In a number of cities we have seen community members calling local police departments complaining of open car dealerships, which in some cases have led to stricter orders in those locations limiting sales. We are therefore recommending that dealers continue to offer online sales of vehicles, encourage in-store sales only by appointment, and refrain from advertising that the showroom is open.

Finally, any dealer offering sales and leasing services in its dealership should adopt a formal social distancing protocol for the sales department. We have previously recommended that every dealer adopt such a policy for the service and parts departments that were allowed to stay open as “essential businesses.” Sales departments should now do the same, even in locations that do not yet mandate a formal social distancing protocol. The best way to respond to community or local government’s concerns about open showrooms is a strong social distancing policy with strict adherence.

Contact Scali Rasmussen today if you have questions about local enforcement of state or local orders and to develop a social distancing protocol that will keep your employees and community safe while limiting the dealership’s liability.