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Read the latest news from Scali Rasmussen, including legal alerts and event listings.

Volkswagen dealers in crisis

Mind your messaging

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The response to Volkswagen’s deceptive use of software to fake emissions results is still unfolding, as are announcements of measures the automaker will take to address the damage. Governments around the world, including the U.S., have announced they will launch investigations. At last count, over two dozen class action lawsuits have already been filed in the U.S., several of which have been filed in California. And the American public often doesn’t understand the difference between the factory and the independently owned and operated Volkswagen dealerships.

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Effective January 1, 2016, the minimum wage in California will increase to $10 per hour. However, for Los Angeles employers, the increase does not stop there. On June 13, 2015, Los Angeles Mayor Eric Garcetti signed a law requiring businesses to increase pay for minimum wage workers to $15 by 2020. The Los Angeles increase will be introduced over the next five years, with the first pay hike to $10.50 per hour taking effect on July 1, 2016.

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In Benson v. Southern California Auto Sales, Inc., Case No. G050484, the Court of Appeal held a car dealer’s offer of rescission, $2,500 in attorney’s fees and a requirement that plaintiff release all other claims was “appropriate” and sufficient to cutoff a plaintiff’s ability to recover damages or attorney’s fees. (The court indicated this ruling would not necessarily apply to a claim seeking injunctive relief.) In this brave new post-Benson world not only can car dealers insist with confidence that a plaintiff release all claims as part of the settlement of a CLRA demand but can point to this written legal opinion quantifying $2,500 as reasonable amount for attorney’s fees incurred in pursuing a CLRA claim. This quantification of reasonable attorney’s fees should provide especially welcome relief from the previously plaintiff favorable climate where plaintiff’s attorneys routinely demanded upwards of $15,000 in attorney’s fees when negotiating settlement of CLRA claims before a complaint was even filed.

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Lyft, Uber, Sidecar and other such “rideshare companies” are undoubtedly changing the automotive industry. The state of California and many of its cities have embraced rideshare companies to varying degrees with new regulations. But lawmakers have not adjusted vehicle sales and finance laws to accommodate this new business model. And rideshare companies continue to innovate, most recently by establishing programs to sell or lease vehicles to their drivers through franchised auto dealerships. These programs raise several difficult legal issues for dealers who desire to participate in these programs to increase their sales performance or revenues.

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This summer, the Department of Labor (“DOL”) released proposed amendments to the “white collar” exemption standards under the federal Fair Labor Standards Act (“FLSA”). The white collar exemptions from the FLSA overtime requirements include the executive, administrative and professional classifications. A 60-day public comment period ended on September 4, 2015 and now the DOL will review and evaluate the public comments submitted and issue final amendments, which may differ from the proposed amendments. It is unknown exactly when the final amendments will be issued, however, they are expected to take effect some time in 2016.

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Although the California sick leave law (Healthy Workplaces, Healthy Families Act of 2014) took effect in July of this year, employers are already anxious for clarification on its practical application. In mid-July, certain issues were clarified through urgency legislation amendments (addressed in our previous newsletter). On August 7, in an opinion letter, the Labor Commissioner issued an employee-friendly interpretation of the legislation as it applied to employees who work 10-hour shifts.

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