In this trying time, I’d like to start off my article by saying that we at KPA are here for our clients. These are tough times for us all and we will all eventually persevere through this together. Now, unless you are Jared Leto who went on a 12-day technology-free meditation retreat during the outbreak, I’m sure all of you have been inundated with information about COVID-19 and the various “Shelter in Place,” “Stay at Home,” “Safer at Home,” and other orders swirling around California these past few weeks. It’s a lot to consider even before you add the federal and presidential guidance. In an attempt not to belabor the point, we wanted to quickly remind everyone about these orders, how they fit with each other, and what they mean for dealerships here in California.
The Executive Order and What it Means
We’re going to attack this out of chronological order starting with Governor Gavin Newsom’s Executive Order N-33-20 (the “Order”) issued on March 19, 2020. The Order is essentially a state-wide “stay at home” order directing all California residents to stay at their places of residence, with the exception of those workers needed to maintain the operations of “critical infrastructure sectors.” The Order references the Department of Homeland Security Cybersecurity and Infrastructure Security Agency (CISA) Memorandum, which outlines those critical infrastructure sectors. Shortly thereafter, the California State Public Health Officer issued a list identifying “Essential Critical Infrastructure Workers.” Importantly for dealerships, the list identifies automotive repair and maintenance as essential, but not automotive sales. However, in what may be a potential light at the end of a tunnel, the CISA Memorandum was recently updated to provide guidance that workers critical to vehicle leasing that “facilitate continuity of operations for essential workforces and other essential travel” are part of critical infrastructure. You can view the updated CISA Memorandum here.
I know what many of you are saying in your head (or perhaps even aloud) right now: “There are county and city orders that disagree with Governor Newsom’s Executive Order, so how does the new CISA guidance play into this?!” You are not wrong, or alone, in asking that. Regarding the Governor’s Executive Order, what we now know is that it should be seen as a minimum requirement. That is, if a local (i.e., county or city) order is less restrictive relative to the Order, then the Order is controlling. Similarly, if a local order is more restrictive, then you should abide by the more restrictive local order. You can look online on your county’s or city’s website for copies of these local orders. Remember that your local law enforcement (police, sheriff, etc.) are the ones actually enforcing these orders, and at the end of the day, you should always abide by an instruction you receive from these authorities regardless of whether you think it to be objectionable when compared with the Executive Order or other applicable local order.
What seems to be clear in all of this is that your service and parts departments can remain open during these times. So, the million-dollar question is: “What is a dealer to do about the sales department?” Well, obviously the most conservative approach is to completely close the sales department in the interim until the Governor and local authorities say otherwise. However, while your sales department must close in the traditional sense, a good faith argument can be made, especially in light of the new CISA guidance, that a skeleton crew can remain behind to protect inventory, process payroll, and perform other minimum basic operations to maintain the sales department, and to assist in selling vehicles to customers in limited, exigent circumstances (i.e., an urgent need for a vehicle for a worker in a critical infrastructure sector, such as a first responder, or someone who works in utilities, or for emergency travel). It would be advisable in this current climate to conduct such a sale or lease online or telephonically, and to conduct an offsite delivery of the vehicle. In fact, due to recent updates in certain Northern California city and county orders, those dealers affected by these orders must ensure that no sale takes place on the premises and that only online sales take place with remote deliveries. Before making the business decision to sell or lease a vehicle in such a manner, dealers should review their online/telephonic sales and remote deliveries policies and procedures and should consult with competent counsel. You should also check your local orders to ensure that remote sales and deliveries are a viable option. Importantly, this is a rapidly evolving situation, where laws, orders, and regulations are constantly being enacted and amended, so you should remain alert for further developments on this front. And it bears repeating – we recommend that you obey orders from local law enforcement to cease operations first (if that is the case) and then to seek guidance from legal counsel as to what options you may have.
What Else Can We Do In the Meantime?
While the sales departments may be currently closed or limited, there are still things for dealers to think about during these times other than selling or leasing vehicles. First, and perhaps foremost, your service and parts departments are still likely open for business and those employees still have a certain level of interaction with customers and other employees. Dealers must ensure employee and customer safety during these times. Here are some things dealers should consider:
- Installing appropriate social distancing and avoidance protocols (i.e., maintain six feet of separation and avoid shaking hands with employees or customers);
- Eliminating sharing equipment, sharing workstations, or having any in-person work gatherings (meetings);
- Suspending community amenities, such as sodas, coffee, food, and vending machines;
- Temporarily closing the break room from seating or as a gathering location;
- Installing vehicle drop-off and pick-up procedures that minimize contact with customers and that utilize technology that promotes non-person-to-person contact (i.e., email, phone calls, FaceTime, Zoom, etc.);
- Enforcing procedures to disinfect and sanitize vehicle surfaces, keys, door handles, etc. after receiving them from customers, but before driving them into the service bay, and before returning them to customers;
- Having employees don proper personal protective equipment (PPE) where possible (disposable gloves, eye protection, and masks) and install surface protectants were necessary (seat covers and floormat covers); and
- Creating remote and telework policies that allow employees to work from home where possible.
Also keep in mind that COVID-19 will likely be around long after your sales department returns to some semblance of normalcy, so you should think about installing similar long-term employee/customer safety protocols there as well. KPA has environmental, health, and safety experts on hand who will be able to help you create these protocols. If you are already an EHS client, please reach out to your KPA consultant in this regard.
Additionally, you may also want to consider using this time to play catch-up on other things. Make sure your store has California Consumer Privacy Act policies and procedures in place. Audit your sales practices so that you can have new trainings in place when your sales department opens again (in the traditional sense). Also, make sure your posters and notices are up-to-date and appropriately placed, both on the customer and employee side. Off the top of my head, one that comes to mind is the Families First Coronavirus Response Act Notice.
We know that these times are hard, and everyone everywhere has been affected by this global pandemic. We are all in this together, and this too shall pass. Hotline clients are invited to contact us at (800) 785-2880 (then press “4” for hotline) or firstname.lastname@example.org. We are here to answer any questions you may have.