ASK Fisher & Phillips: Dealership Update

by Fisher Phillips

Our Dealership Practice Group represents thousands of dealerships all across the country, from large consolidators to regional groups to single dealerships. Because we have worked so closely with so many dealerships for so many years, we have acquired an in-depth understanding of dealership operations as well as a wealth of practical experience in dealing with dealers’ unique labor and employment issues. 

In “Ask Fisher & Phillips,” we take some of the more common dealership questions and provide our response and suggestions. This section is based on our clients’ real-life questions. But don’t worry… all names have been removed to protect the innocent!


We have a salesperson who signed off on his pay plan which states that if he has a CSI score below the national average he will be deducted $500. We know not to take him below minimum wage. He sent us an email saying this pay policy falls short of the law and we need to get with our legal counsel about it for the benefit of our sales team. Please advise.


This has been coming up more and more often. Probably because every salesperson in the country has a computer and Internet access and a lot of free time.

GMs like to use the “carrot and stick” approach with bonuses like CSI: If you are good we reward you. But if you are bad, we punish you. The problem with this is that to a court or a jury, it looks like you are taking something away from the employee that he has otherwise earned. Or that the employee is being forced to pay money to the employer. Or that the employee is being forced to make a “kickback” to the employer in order to keep his job. 

Using the word “forfeit” in the pay plan is also a good way to wind up in court. Many states have strict laws about paying employees everything that they have earned on their regular pay day. If the bad CSI scores result in employees not receiving all of the commissions they have earned, you have a ready-made lawsuit.    

You can avoid this kind of challenge by carefully wording your bonus programs to keep them separate from the employee’s regular compensation (commissions) and by ensuring that any bonus deduction is made only from other bonuses paid.  


We just purchased the assets of an existing car dealership with about 35 employees. We are retaining all of those employees and using their original start date for our records. Do they still have to complete new hire paperwork?


You can, if you wish, use the employees’ previous start date for purposes of determining the amount of vacation or other benefits the employees will receive. A lot of dealerships do this – it is an excellent way to transition the employees to new ownership while also giving them the benefit of their service under the prior ownership.

However, as far as the law is concerned, you are actually hiring all of these employees for the first time when you close on the sale and purchase the new dealership. Therefore, technically speaking, the employees’ actual start date is the date of the closing. Not only should the employees complete a new W-4 form and I-9, we also recommend that they fill out a new application and background check authorization. 

You should then run the new employees through your normal background screening, including drug testing and criminal-background checks. Once the employees have passed these steps, have them sign off on your handbook. This is a good way to impress upon the employees that even though they are working at their same desk as before, they are working for a new employer and are subject to the new employer’s rules.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Fisher Phillips | Attorney Advertising

Written by:

Fisher Phillips

Fisher Phillips on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.