Existing law requires a person who acts as a vehicle dealer or salesperson to be licensed by the Department of Motor Vehicles. Existing law additionally requires a person who applies for a used vehicle dealers license to complete a preliminary educational program of not less than 4 hours, covering specified topics, including motor vehicle financing, advertising, odometers, air pollution control requirements, departmental forms, a written exam, and another educational program every 2 years after issuance of the license.

This bill would, with certain exceptions, prohibit a person licensed as a salesperson from performing the functions of a salesperson for a dealer that sells used vehicles unless he or she has, within the previous 3 years, completed the same educational program as the educational program required for licensed dealers every 2 years after issuance of the dealers license, and to provide evidence of completion to his or her employer. The bill would also require the dealer to maintain evidence that all salespersons employed by that dealer are in compliance with this requirement. The bill would also require a dealer to reimburse an employee, as specified, for the cost of training taken during employment.

The bill would make these new provisions operative on July 1, 2019.

Because a violation of these provisions would be a crime, this bill would create a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law requires a person who acts as a vehicle dealer or salesperson to be licensed by the Department of Motor Vehicles. Existing law additionally requires a person who applies for a used vehicle dealers license to complete a preliminary educational program of not less than 4 hours, covering specified topics, including motor vehicle financing, advertising, odometers, air pollution control requirements, departmental forms, a written exam, and another educational program every 2 years after issuance of the license.

This bill would, with certain exceptions, prohibit a person licensed as a salesperson from performing the functions of a salesperson for a dealer that sells used vehicles unless he or she has, within the previous 3 years, completed the same educational program as the educational program required for licensed dealers every 2 years after issuance of the dealers dealers license, and to provide evidence of completion to his or her employer. The bill would also require the dealer to maintain evidence that all salespersons employed by that dealer are in compliance with this requirement. The bill would also require a dealer to reimburse an employee, as specified, for the cost of training taken during employment.

Because a violation of these provisions would be a crime, this bill would create a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law requires a person who acts as a vehicle dealer or salesperson to be licensed by the Department of Motor Vehicles. Existing law additionally requires a person who applies for a used vehicle dealers license to complete an a preliminary educational program of not less than 4 hours, covering specified topics, including motor vehicle financing, advertising, odometers, air pollution control requirements, and departmental forms, and to complete a written exam. exam, and another educational program every 2 years after issuance of the license.

This bill would, with certain exceptions, prohibit a person licensed as a salesperson from performing the functions of a salesperson for a dealer that sells used vehicles unless he or she has has, within the previous 3 years, completed the same educational program as the educational program required for licensed dealers within the previous 3 years, every 2 years after issuance of the dealers license, and to provide evidence of completion to his or her employer. The bill would also require the dealer to maintain evidence that all salespersons employed by that dealer are in compliance with this requirement. The bill would also require a dealer to reimburse an employee, as specified, for the cost of training taken during employment.

Because a violation of these provisions would be a crime, this bill would create a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law requires a person who acts as a vehicle dealer or salesperson to be licensed by the Department of Motor Vehicles. Existing law additionally requires a person who applies for a used vehicle dealers license to complete an educational program of not less than 4 hours, covering specified topics, including motor vehicle financing, advertising, odometers, air pollution control requirements, and departmental forms, and to complete a written exam.

This bill would, with certain exceptions, prohibit a person licensed as a salesperson from performing the functions of a salesperson for a dealer that sells used vehicles unless he or she has completed the same educational program as the program required for licensed dealers within the previous 3 years, and to provide evidence of completion to his or her employer. The bill would also require the dealer to maintain evidence that all salespersons employed by that dealer are in compliance with this requirement. The bill would also require a dealer to reimburse an employee, as specified, for the cost of training taken during employment.

Because a violation of these provisions would be a crime, this bill would create a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law requires a person who acts as a vehicle dealer or salesperson to be licensed by the Department of Motor Vehicles. Existing law additionally requires a person who applies for a used vehicle dealers license to complete an educational program of not less than 4 hours, covering specified topics, including motor vehicle financing, advertising, odometers, air pollution control requirements, and departmental forms, and to complete a written exam.

This bill would, with certain exceptions, prohibit a person licensed as a salesperson from performing the functions of a salesperson for a dealer that sells used vehicles unless he or she has completed an the same educational program on the same topics as the program required for licensed dealers within the previous 2 3 years, and to provide evidence of completion to his or her employer. The bill would also require the dealer to maintain evidence that all salespersons employed by that dealer are in compliance with this requirement. The bill would also require a dealer to reimburse an employee, as specified, for the cost of training taken during employment.

Because a violation of these provisions would be a crime, this bill would create a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law requires a person who acts as a vehicle dealer or salesperson to be licensed by the Department of Motor Vehicles. Existing law additionally requires a person who applies for a used vehicle dealers license to complete an educational program of not less than 4 hours, covering specified topics, including motor vehicle financing, advertising, odometers, air pollution control requirements, and departmental forms, and to complete a written exam.

This bill would, with certain exceptions, prohibit a person licensed as a salesperson from performing the functions of a salesperson for a dealer that sells used vehicles unless he or she has completed an educational program on the same topics as the program required for licensed dealers within the previous 2 years, and to provide evidence of completion to his or her employer. The bill would also require the dealer to maintain evidence that all salespersons employed by that dealer are in compliance with this requirement.

Because a violation of these provisions would be a crime, this bill would create a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

GOVERNOR'S VETO

GV Bill Id:AB 2026

Author:(Lackey)

As Enrolled Ver:August 28, 2018

2/3 vote

Original Committee Reference: TRANS.

SUMMARY: Requires a person licensed by the Department of Motor Vehicles (DMV) as a salesperson for a dealer of used vehicles to complete an education program before they can perform their duties, activities and functions.

The Senate amendments make technical, clarifying changes and delay implementation until July 1, 2019.

AS PASSED BY THE ASSEMBLY, this bill:

1. Prohibited a person who is licensed as a salesperson for a dealer of used vehicles from performing the duties, activities, and functions of a sales person unless they have completed an education program in the last two years.
2. Required a person who is licensed as a salesperson for a dealer of used vehicles to complete an educational program within the first six months of employment, and then every three years thereafter.
3. Required the education program to be not less than four hours.
4. Required a salesperson to provide evidence of completion of the education program to their employer unless the educational program was provided by the employer.
5. Exempted the following salespersons from the requirement:
6. A new vehicle dealer that sells only new vehicles or a combination of new and used vehicles at the place of business where the salesperson is employed.
7. A person who holds a license as an automobile dismantler.
8. A person who holds a motorcycle only dealer's license.
9. A person who holds a trailer only dealer's license.
10. A person who holds an all-terrain only dealer's license.
11. Allowed a dealer that sells used vehicles and operates a minimum of 10 branches of the business within the state to provide the education class to their employees.
12. Required dealers to compensate the salesperson for the cost of the education program and for the time taken in the class unless the salesperson opts to take a class at a time or place not prescribed by the employer, as long as the employer provides reasonable opportunity for the employee to take the educational program at the employer's expense.

FISCAL EFFECT: According to the Senate Appropriations Committee, pursuant to Senate Rule 28.8, negligible state costs.

COMMENTS: The DMV requires every manufacturer, manufacturer branch, remanufacturer, remanufacturer branch, distributor, distributor branch, transporter, or dealer of vehicles to receive a license from the DMV. As part of that license, an applicant is required to take a four- hour educational course and pass an examination on equipment relating to vehicles, advertising, odometers, vehicle licensing and registration, branch locations, offsite sales, unlawful dealer activities and the handling, completion and disposition of departmental forms.

A dealer is not required to take the educational program if the program is completed by a managerial employee of the dealer. Dealers who sell vehicles on a wholesale basis only and who, in a one-year period, deal with less than 50 vehicles subject to registration are also exempt. An applicant for a new vehicle dealer's license or any employee of that dealer, a person who holds a valid license or an applicant for as an automobile dismantler or their employees, an applicant for a motorcycle-only dealers license or their employees, an applicant for a trailer only dealers license or their employees and an applicant for an all-terrain only dealer's license or their employees are also exempt from taking the educational exam.

Vehicle salespersons are required to be licensed with the DMV and are required to renew their license every year. There are no examination requirements set forward for someone to become a licensed salesperson. While all dealer salespersons are required to be licensed, this bill only requires salespersons employed by used car dealers that exclusively sell used vehicles to participate in the educational program. This bill exempts new cars salespersons, automobile dismantlers, motorcycle only dealers, trailer only dealers, and all-terrain only dealers. Most of these exemptions mirror the exemptions for the dealer owners education requirement. The sponsors contend that they are exempting new car dealers from the requirement because franchise agreements and other legal barriers provide sufficient incentive for those dealers to provide the proper training to their employees.

The Independent Automobile Dealers Association of California, who is sponsoring this bill, states, "In an attempt to create better transactions for consumers AB 2026 asks that California requires licensed salespeople take the same continuing education course as is required of a dealer/owner. Compared to other industries, the auto industry stands out with its lack of education for licensed salespeople. No other major industries allow licensing for individuals without an educational component. An automobile purchase is often the first or second most expensive purchase made by consumers. Evidence confirms that many auto purchase transactions by independent dealers contain errors of some kind by salespeople as a result of a general lack of knowledge of applicable laws and regulations."

Please see the policy committee analysis for full discussion of this bill.

GOVERNOR'S VETO MESSAGE:

This bill requires a person licensed by the Department of Motor Vehicles as a salesperson for a used car dealer to complete an education program prior to being hired and every three years thereafter.

While it is obviously important that used car salespersons understand relevant laws and regulations, this bill is unnecessary.

Car dealers are already required to be knowledgeable of applicable laws and to see to it that their sales staff follow the rules. Additionally, I am not a fan of mandating pre-packaged, four-hour continuing education courses which will never substitute for effective supervision.

Analysis Prepared by: David Sforza / TRANS. / (916) 319-2093 FN: 0005280

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 2026

Author:(Lackey)

As Amended Ver:August 13, 2018

Majority vote

Original Committee Reference: TRANS.

SUMMARY: Requires a person licensed by the Department of Motor Vehicles (DMV) as a salesperson for a dealer of used vehicles to complete an education program before they can perform their duties, activities and functions.

The Senate amendments make technical, clarifying changes and delay implementation until July 1, 2019.

AS PASSED BY THE ASSEMBLY, this bill:

1. Prohibited a person who is licensed as a salesperson for a dealer of used vehicles from performing the duties, activities, and functions of a sales person unless they have completed an education program in the last two years.
2. Required a person who is licensed as a salesperson for a dealer of used vehicles to complete an educational program within the first six months of employment, and then every three years thereafter.
3. Required the education program to be not less than four hours.
4. Required a salesperson to provide evidence of completion of the education program to their employer unless the educational program was provided by the employer.
5. Exempted the following salespersons from the requirement:
6. A new vehicle dealer that sells only new vehicles or a combination of new and used vehicles at the place of business where the salesperson is employed.
7. A person who holds a license as an automobile dismantler.
8. A person who holds a motorcycle only dealer's license.
9. A person who holds a trailer only dealer's license.
10. A person who holds an all-terrain only dealer's license.
11. Allowed a dealer that sells used vehicles and operates a minimum of 10 branches of the business within the state to provide the education class to their employees.
12. Required dealers to compensate the salesperson for the cost of the education program and for the time taken in the class unless the salesperson opts to take a class at a time or place not prescribed by the employer, as long as the employer provides reasonable opportunity for the employee to take the educational program at the employer's expense.

FISCAL EFFECT: According to the Senate Appropriations Committee, pursuant to Senate Rule 28.8, negligible state costs.

COMMENTS: The DMV requires every manufacturer, manufacturer branch, remanufacturer, remanufacturer branch, distributor, distributor branch, transporter, or dealer of vehicles to receive a license from the DMV. As part of that license, an applicant is required to take a four- hour educational course and pass an examination on equipment relating to vehicles, advertising, odometers, vehicle licensing and registration, branch locations, offsite sales, unlawful dealer activities and the handling, completion and disposition of departmental forms.

A dealer is not required to take the educational program if the program is completed by a managerial employee of the dealer. Dealers who sell vehicles on a wholesale basis only and who, in a one-year period, deal with less than 50 vehicles subject to registration are also exempt. An applicant for a new vehicle dealer's license or any employee of that dealer, a person who holds a valid license or an applicant for as an automobile dismantler or their employees, an applicant for a motorcycle-only dealers license or their employees, an applicant for a trailer only dealers license or their employees and an applicant for an all-terrain only dealer's license or their employees are also exempt from taking the educational exam.

Vehicle salespersons are required to be licensed with the DMV and are required to renew their license every year. There are no examination requirements set forward for someone to become a licensed salesperson. While all dealer salespersons are required to be licensed, this bill only requires salespersons employed by used car dealers that exclusively sell used vehicles to participate in the educational program. This bill exempts new cars salespersons, automobile dismantlers, motorcycle only dealers, trailer only dealers, and all-terrain only dealers. Most of these exemptions mirror the exemptions for the dealer owners education requirement. The sponsors contend that they are exempting new car dealers from the requirement because franchise agreements and other legal barriers provide sufficient incentive for those dealers to provide the proper training to their employees.

The Independent Automobile Dealers Association of California, who is sponsoring this bill, states, "In an attempt to create better transactions for consumers AB 2026 asks that California requires licensed salespeople take the same continuing education course as is required of a dealer/owner. Compared to other industries, the auto industry stands out with its lack of education for licensed salespeople. No other major industries allow licensing for individuals without an educational component. An automobile purchase is often the first or second most expensive purchase made by consumers. Evidence confirms that many auto purchase transactions by independent dealers contain errors of some kind by salespeople as a result of a general lack of knowledge of applicable laws and regulations."

Please see the policy committee analysis for full discussion of this bill.

Analysis Prepared by: David Sforza / TRANS. / (916) 319-2093 FN: 0004012

 THIRD READING 

Bill No: AB 2026

Author:

Amended: 8/13/18 in Senate

Vote:

SENATE TRANS. & HOUSING COMMITTEE: 12-0, 6/12/18

AYES: Beall, Cannella, Allen, Dodd, Gaines, Galgiani, McGuire, Roth, Skinner, Vidak, Wieckowski, Wiener

NO VOTE RECORDED: Morrell

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 73-0, 5/17/18 (Consent) - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST:

This bill requires a person licensed by the Department of Motor Vehicles (DMV) as a salesperson for a dealer of used vehicles to complete an education program before they can perform their duties, activities and functions.

Senate Floor Amendments of 8/13/18 delay the operative date of bill’s provisions until July 1, 2019, in order to facilitate compliance.

ANALYSIS:

Existing law:

1. Prohibits any person from acting as a dealer, manufacturer, distributor, transporter, or salesperson of motor vehicles without first procuring a license or temporary permit issued by DMV.
2. Requires a person applying for a dealer’s license for the purpose of selling used vehicles to complete a written examination and an educational program covering specified topics before being issued that license, and to successfully complete, every two years after that license is issued, a four-hour educational program in order to maintain or renew that license.
3. Requires a salesperson employed by a dealer to receive a license with the DMV and to renew their license every three years.

This bill:

1. Prohibits a person who is licensed as a salesperson for a dealer of used vehicles from performing the duties, activities, and functions of a sales person unless they have completed an education program in the last three years.
2. Requires a person who is licensed as a salesperson for a dealer of used vehicles to complete an educational program within the first six months of employment, and then every three years thereafter.
3. Requires the education program to be not less than four hours, and cover the following topics:
   1. Motor vehicle financing;
   2. Truth in lending;
   3. Sales and use taxes;
   4. Advertising;
   5. Odometers;
   6. Vehicle licensing and registration;
   7. Branch locations;
   8. Offsite sales;
   9. Unlawful dealer activities;
   10. Air pollution control requirements;
   11. Regulations of the Bureau of Automotive Repair;
   12. Handling, completion, and disposition of departmental forms; and,
   13. The equipment of vehicles.
4. Requires a salesperson to provide evidence of completion of the education program to their employer unless the educational program was provided by the employer.
5. Exempts the following salespersons from the requirement:
   1. A person employed by a new vehicle dealer that sells only new vehicles or a combination of new and used vehicles.
   2. A person who holds a license as an automobile dismantler.
   3. A person who holds a motorcycle only dealer’s license.
   4. A person who holds a trailer only dealer’s license.
   5. A person who holds an all-terrain only dealer’s license.
6. Allows a dealer that sells used vehicles and operates a minimum of 10 branches of the business within the state to provide the education class to their employees.
7. Requires dealers to compensate the salesperson for the cost of the education program and for the time taken in the class unless the salesperson opts to take a class at a time or place not prescribed by the employer, as long as the employer provides reasonable opportunity for the employee to take the educational program at the employer’s expense.

Comments

1. Author’s Statement. Although used car dealers are required to take an educational course that covers topics such as vehicle financing, advertising, odometers, air pollution requirements, and department forms, used car salespeople, who often handle the entire car purchasing transaction, are not required to complete any education courses. AB 2026 resolves this educational disparity by mandating that used car dealership staff enroll in an educational class and maintain the certification on a tri-annual basis.
2. Teach Me. Dealers have educational requirements as part of the qualifications for their license. This bill extends those same requirements to many salespeople, though salespeople working at new car dealers are exempt.
3. Not Too Tough. The education requirements in this bill are relatively modest, requiring about four hours of effort and costing less than $100, which is often reimbursed by the dealer. The DMV Web site indicates 38 different providers of this type of education program.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT: (Verified 8/14/18)

Beck’s Auto Sales

Cost U Less Cars

Guy Strohmeier’s Auto Center

Hibdon Auto Center

I-Deal Cars Inc.

Independent Automobile Dealers Association of California

JustBetterCars.com

Pacific Auto

ParkMarina Motors

Tristar Motors LLC

One individual

OPPOSITION: (Verified 8/14/18)

None received

ASSEMBLY FLOOR: 73-0, 5/17/18

AYES: Acosta, Aguiar-Curry, Travis Allen, Arambula, Baker, Berman, Bigelow, Bloom, Bonta, Brough, Burke, Caballero, Calderon, Carrillo, Cervantes, Chau, Chávez, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Dahle, Daly, Eggman, Flora, Fong, Frazier, Friedman, Gallagher, Eduardo Garcia, Gipson, Gloria, Gonzalez Fletcher, Gray, Grayson, Harper, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Mullin, Nazarian, Obernolte, O'Donnell, Patterson, Quirk, Quirk-Silva, Reyes, Rodriguez, Rubio, Salas, Mark Stone, Thurmond, Ting, Voepel, Waldron, Weber, Wood, Rendon

NO VOTE RECORDED: Cristina Garcia, Melendez, Muratsuchi, Santiago, Steinorth

Prepared by:

8/14/18 14:56:50

**** END ****

 THIRD READING 

Bill No: AB 2026

Author:

:

Vote:

SENATE TRANS. & HOUSING COMMITTEE: 12-0, 6/12/18

AYES: Beall, Cannella, Allen, Dodd, Gaines, Galgiani, McGuire, Roth, Skinner, Vidak, Wieckowski, Wiener

NO VOTE RECORDED: Morrell

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 73-0, 5/17/18 (Consent) - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST:

This bill requires a person licensed by the Department of Motor Vehicles (DMV) as a salesperson for a dealer of used vehicles to complete an education program before they can perform their duties, activities and functions.

ANALYSIS:

Existing law:

1. Prohibits any person from acting as a dealer, manufacturer, distributor, transporter, or salesperson of motor vehicles without first procuring a license or temporary permit issued by DMV.
2. Requires a person applying for a dealer’s license for the purpose of selling used vehicles to complete a written examination and an educational program covering specified topics before being issued that license, and to successfully complete, every two years after that license is issued, a four-hour educational program in order to maintain or renew that license.
3. Requires a salesperson employed by a dealer to receive a license with the DMV and to renew their license every three years.

This bill:

1. Prohibits a person who is licensed as a salesperson for a dealer of used vehicles from performing the duties, activities, and functions of a sales person unless they have completed an education program in the last three years.
2. Requires a person who is licensed as a salesperson for a dealer of used vehicles to complete an educational program within the first six months of employment, and then every three years thereafter.
3. Requires the education program to be not less than four hours, and cover the following topics:
   1. Motor vehicle financing;
   2. Truth in lending;
   3. Sales and use taxes;
   4. Advertising;
   5. Odometers;
   6. Vehicle licensing and registration;
   7. Branch locations;
   8. Offsite sales;
   9. Unlawful dealer activities;
   10. Air pollution control requirements;
   11. Regulations of the Bureau of Automotive Repair;
   12. Handling, completion, and disposition of departmental forms; and,
   13. The equipment of vehicles
4. Requires a salesperson to provide evidence of completion of the education program to their employer unless the educational program was provided by the employer.
5. Exempts the following salespersons from the requirement:
   1. A person employed by a new vehicle dealer that sells only new vehicles or a combination of new and used vehicles.
   2. A person who holds a license as an automobile dismantler.
   3. A person who holds a motorcycle only dealer’s license.
   4. A person who holds a trailer only dealer’s license.
   5. A person who holds an all-terrain only dealer’s license.
6. Allows a dealer that sells used vehicles and operates a minimum of 10 branches of the business within the state to provide the education class to their employees.
7. Requires dealers to compensate the salesperson for the cost of the education program and for the time taken in the class unless the salesperson opts to take a class at a time or place not prescribed by the employer, as long as the employer provides reasonable opportunity for the employee to take the educational program at the employer’s expense.

Comments

1. Author’s Statement. Although used car dealers are required to take an educational course that covers topics such as vehicle financing, advertising, odometers, air pollution requirements, and department forms, used car salespeople, who often handle the entire car purchasing transaction, are not required to complete any education courses. AB 2026 resolves this educational disparity by mandating that used car dealership staff enroll in an educational class and maintain the certification on a tri-annual basis.
2. Teach Me. Dealers have educational requirements as part of the qualifications for their license. This bill extends those same requirements to many salespeople, though salespeople working at new car dealers are exempt.
3. Not Too Tough. The education requirements in this bill are relatively modest, requiring about four hours of effort and costing less than $100, which is often reimbursed by the dealer. The DMV Web site indicates 38 different providers of this type of education program.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT: (Verified 7/2/18)

Beck’s Auto Sales

Cost U Less Cars

Guy Strohmeier’s Auto Center

Hibdon Auto Center

I-Deal Cars Inc.

Independent Automobile Dealers Association of California

JustBetterCars.com

Pacific Auto

ParkMarina Motors

Tristar Motors LLC

One individual

OPPOSITION: (Verified 7/2/18)

None received

ASSEMBLY FLOOR: 73-0, 5/17/18

AYES: Acosta, Aguiar-Curry, Travis Allen, Arambula, Baker, Berman, Bigelow, Bloom, Bonta, Brough, Burke, Caballero, Calderon, Carrillo, Cervantes, Chau, Chávez, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Dahle, Daly, Eggman, Flora, Fong, Frazier, Friedman, Gallagher, Eduardo Garcia, Gipson, Gloria, Gonzalez Fletcher, Gray, Grayson, Harper, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Mullin, Nazarian, Obernolte, O'Donnell, Patterson, Quirk, Quirk-Silva, Reyes, Rodriguez, Rubio, Salas, Mark Stone, Thurmond, Ting, Voepel, Waldron, Weber, Wood, Rendon

NO VOTE RECORDED: Cristina Garcia, Melendez, Muratsuchi, Santiago, Steinorth

Prepared by:

8/8/18 9:52:12

**** END ****

SENATE COMMITTEE ON TRANSPORTATION AND HOUSING

Senator Jim Beall, Chair

2017 - 2018 Regular

Bill No: AB 2026 Hearing Date: 6/12/2018

SUBJECT: Used vehicle salespersons

DIGEST: This bill requires a person licensed by the Department of Motor Vehicles (DMV) as a salesperson for a dealer of used vehicles to complete an education program before they can perform their duties, activities and functions.

ANALYSIS:

Existing law:

1. Prohibits any person from acting as a dealer, manufacturer, distributor, transporter, or salesperson of motor vehicles without first procuring a license or temporary permit issued by DMV.
2. Requires a person applying for a dealer’s license for the purpose of selling used vehicles to complete a written examination and an educational program covering specified topics before being issued that license, and to successfully complete, every two years after that license is issued, a four-hour educational program in order to maintain or renew that license.
3. Requires a salesperson employed by a dealer to receive a license with the DMV and to renew their license every three years.

This bill:

1. Prohibits a person who is licensed as a salesperson for a dealer of used vehicles from performing the duties, activities, and functions of a sales person unless they have completed an education program in the last three years.
2. Requires a person who is licensed as a salesperson for a dealer of used vehicles to complete an educational program within the first six months of employment, and then every three years thereafter.
3. Requires the education program to be not less than four hours, and cover the following topics:
4. Motor vehicle financing;
5. Truth in lending;
6. Sales and use taxes;
7. Advertising;
8. Odometers;
9. Vehicle licensing and registration;
10. Branch locations;
11. Offsite sales;
12. Unlawful dealer activities;
13. Air pollution control requirements;
14. Regulations of the Bureau of Automotive Repair;
15. Handling, completion, and disposition of departmental forms; and,
16. The equipment of vehicles
17. Requires a salesperson to provide evidence of completion of the education program to their employer unless the educational program was provided by the employer.
18. Exempts the following salespersons from the requirement:
19. A person employed by a new vehicle dealer that sells only new vehicles or a combination of new and used vehicles.
20. A person who holds a license as an automobile dismantler.
21. A person who holds a motorcycle only dealer’s license.
22. A person who holds a trailer only dealer’s license.
23. A person who holds an all-terrain only dealer’s license.
24. Allows a dealer that sells used vehicles and operates a minimum of 10 branches of the business within the state to provide the education class to their employees.
25. Requires dealers to compensate the salesperson for the cost of the education program and for the time taken in the class unless the salesperson opts to take a class at a time or place not prescribed by the employer, as long as the employer provides reasonable opportunity for the employee to take the educational program at the employer’s expense.

COMMENTS

1. Author’s Statement. Although used car dealers are required to take an educational course that covers topics such as vehicle financing, advertising, odometers, air pollution requirements, and department forms, used car salespeople, who often handle the entire car purchasing transaction, are not required to complete any education courses. AB 2026 resolves this educational disparity by mandating that used car dealership staff enroll in an educational class and maintain the certification on a tri-annual basis.
2. Teach Me. Dealers have educational requirements as part of the qualifications for their license. This bill extends those same requirements to many salespeople, though salespeople working at new car dealers are exempt.
3. Not Too Tough. The education requirements in this bill are relatively modest, requiring about four hours of effort and costing less than $100, which is often reimbursed by the dealer. The DMV website indicates 38 different providers of this type of education program.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

Assembly Votes:

Transportation: 14-0

Appropriations: 16-0

Floor: 73-0

POSITIONS: (Communicated to the committee before noon on Wednesday, June 6, 2018.

SUPPORT:

Becks Auto Sales

Cost U Less Cars

Guy Strohmeir’s Auto Center

Hibdon Auto Center

I-Deal Cars Inc.

Independent Automobile Dealers Association of California

JustBetterCars.com

Pacific Auto

Park Marina Motors

TriStar Motors LLC

One individual

OPPOSITION:

None received.

-- END --

Date of Hearing: May 9, 2018

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 2026

Author:(Lackey) – As Amended Ver:April 10, 2018

Urgency: No State Mandated Local Program: Yes Reimbursable: No

SUMMARY:

This bill requires a person licensed by the Department of Motor Vehicles (DMV) as a salesperson for a dealer of used vehicles to complete an education program before he or she can perform their duties, activities and functions. Specifically, this bill:

1. Requires a person who is licensed as a salesperson for a dealer of only used vehicles to complete an educational program within the first six months of employment, and then every three years thereafter.
2. Specifies the education program to be at least four hours and cover specified topics
3. Allows a dealer that sells used vehicles and operates a minimum of 10 branches of the business within the state to provide the education class to their employees.
4. Requires dealers to compensate the salesperson for the cost of the education program and for the time taken in the class unless the salesperson opts to take a class at a time or place not prescribed by the employer, as long as the employer provides reasonable opportunity for the employee to take the educational program at the employer’s expense.

FISCAL EFFECT:

Minor and absorbable costs to DMV to ensure compliance as part of the department’s regular inspection process.

COMMENTS:

1. Background and purpose. Vehicle salespersons must be licensed by the DMV and are required to renew their salesperson license every year. There are no examination or training requirements to obtain a vehicle salesperson license from DMV. While salespersons for all vehicle dealers must have a valid DMV-issued license, this bill requires only salespersons employed by used car dealers that exclusively sell used vehicles to participate in the educational program.

The Independent Automobile Dealers Association of California, which is sponsoring this bill, states:

In an attempt to create better transactions for consumers AB 2026 asks that California requires licensed salespeople take the same continuing education course as is required of a dealer/owner. Compared to other industries, the auto industry stands out with its lack of education for licensed salespeople. No other major industries allow licensing for individuals without an educational component. An automobile purchase is often the first or second most expensive purchase made by consumers. Evidence confirms that many auto purchase transactions by independent dealers contain errors of some kind by salespeople as a result of a general lack of knowledge of applicable laws and regulations.

1. Staff comments. Exempting salespersons who have been employed by a dealer of used vehicles for less than six months from the educational requirements in this bill allows sufficient time for newly hired employees to receive the required training. However, this could also create an incentive for a dealer to turn over staff after several months in order to avoid bearing the cost of providing the required training. The author may want to consider ways of mitigating this potential problem.

Analysis Prepared by: Jessica Peters / APPR. / (916) 319-2081

Date of Hearing: April 16, 2018

ASSEMBLY COMMITTEE ON TRANSPORTATION

Jim Frazier, Chair

ABPCA Bill Id:AB 2026 (

Author:Lackey) – As Amended Ver:April 10, 2018

SUBJECT: Used vehicle salespersons

SUMMARY: Requires a person licensed by the Department of Motor Vehicles (DMV) as a salesperson for a dealer of used vehicles to complete an education program before they can perform their duties, activities and functions. Specifically, this bill:

1. Prohibits a person who is licensed as a salesperson for a dealer of used vehicles from performing the duties, activities, and functions of a sales person unless they have completed an education program in the last two years.
2. Requires a person who is licensed as a salesperson for a dealer of used vehicles to complete an educational program within the first six months of employment, and then every three years thereafter.
3. Requires the education program to be not less than four hours, and cover the following topics:
4. Motor vehicle financing;
5. Truth in lending;
6. Sales and use taxes;
7. Advertising;
8. Odometers;
9. Vehicle licensing and registration;
10. Branch locations;
11. Offsite sales;
12. Unlawful dealer activities;
13. Air pollution control requirements;
14. Regulations of the Bureau of Automotive Repair;
15. Handling, completion and disposition of departmental forms; and,
16. The equipment of vehicles
17. Requires a salesperson to provide evidence of completion of the education program to their employer unless the educational program was provided by the employer.
18. Exempts the following salespersons from the requirement:
19. A new vehicle dealer that sells only new vehicles or a combination of new and used vehicles at the place of business where the salesperson is employed.
20. A person who holds a license as an automobile dismantler.
21. A person who holds a motorcycle only dealer’s license.
22. A person who holds a trailer only dealer’s license.
23. A person who holds an all-terrain only dealer’s license.
24. Allows a dealer that sells used vehicles and operates a minimum of 10 branches of the business within the state to provide the education class to their employees.
25. Requires dealers to compensate the salesperson for the cost of the education program and for the time taken in the class unless the salesperson opts to take a class at a time or place not prescribed by the employer, as long as the employer provides reasonable opportunity for the employee to take the educational program at the employer’s expense.

EXISTING LAW:

1. Prohibits any person from acting as a dealer, manufacturer, distributor, transporter, or salesperson of motor vehicles without first procuring a license or temporary permit issued by DMV.
2. Requires a person applying for a dealer’s license for the purpose of selling used vehicles to complete a written examination and an educational program covering specified topics before being issued that license, and to successfully complete, every two years after that license is issued, a four-hour educational program in order to maintain or renew that license.
3. Requires a salesperson employed by a dealer to receive a license with the DMV and to renew their license every three years.
4. Defines “vehicle salesperson” as a person who does one or a combination of the following:
5. Is employed as a salesperson by a dealer, as, or who, under any form of contract, agreement, or arrangement with a dealer, for commission, money, profit, or other thing of value, sells, exchanges, buys, or offers for sale, negotiates, or attempts to negotiate, a sale, or exchange of an interest in a vehicle required to be registered with DMV.
6. Induces or attempts to induce any person to buy or exchange an interest in a vehicle required to be registered, and who receives or expects to receive a commission, money, brokerage fees, profit, or any other thing of value, from either the seller or purchaser of the vehicle.
7. Exercises managerial control over the business of a licensed vehicle dealer or who supervises vehicle salespersons employed by a licensed dealer, whether compensated by salary or commission, including, but not limited to, any person who is employed by the dealer as a general manager, assistant general manager, or sales manager, or any employee of a licensed vehicle dealer who negotiates with or induces a customer to enter into a security agreement or purchase agreement or purchase order for the sale of a vehicle on behalf of the licensed vehicle dealer.
   

FISCAL EFFECT: Unknown

COMMENTS: The DMV requires every manufacturer, manufacturer branch, remanufacturer, remanufacturer branch, distributor, distributor branch, transporter, or dealer of vehicles to receive a license from the DMV. As part of that license, an applicant is required to take a four- hour educational course and pass an examination on equipment relating to vehicles, advertising, odometers, vehicle licensing and registration, branch locations, offsite sales, unlawful dealer activities and the handling, completion and disposition of departmental forms.

A dealer is not required to take the educational program if the program is completed by a managerial employee of the dealer. Dealers who sell vehicles on a wholesale basis only and who, in a one-year period, deal with less than 50 vehicles subject to registration are also exempt. An applicant for a new vehicle dealer’s license or any employee of that dealer, a person who holds a valid license or an applicant for as an automobile dismantler or their employees, an applicant for a motorcycle-only dealers license or their employees, an applicant for a trailer only dealers license or their employees and an applicant for an all-terrain only dealer’s license or their employees are also exempt from taking the educational exam.

Vehicle salespersons are required to be licensed with the DMV and are required to renew their license every year. There are no examination requirements set forward for someone to become a licensed salesperson. While all dealer salespersons are required to be licensed, this bill only requires salespersons employed by used car dealers that exclusively sell used vehicles to participate in the educational program. This bill exempts new cars salespersons, automobile dismantlers, motorcycle only dealers, trailer only dealers, and all-terrain only dealers. Most of these exemptions mirror the exemptions for the dealer owners education requirement. The sponsors contend that they are exempting new car dealers from the requirement because franchise agreements and other legal barriers provide sufficient incentive for those dealers to provide the proper training to their employees.

The Independent Automobile Dealers Association of California, who is sponsoring this bill, states, “In an attempt to create better transactions for consumers AB 2026 asks that California requires licensed salespeople take the same continuing education course as is required of a dealer/owner. Compared to other industries, the auto industry stands out with its lack of education for licensed salespeople. No other major industries allow licensing for individuals without an educational component. An automobile purchase is often the first or second most expensive purchase made by consumers. Evidence confirms that many auto purchase transactions by independent dealers contain errors of some kind by salespeople as a result of a general lack of knowledge of applicable laws and regulations.”

Committee comments: This bill treats salespersons differently depending on the type of dealership for which they work for. New car dealer salespersons will not have to take the education program, while car salespersons who work for larger chain dealerships will be able to be educated directly by their dealer to satisfy the requirements of this bill. The sponsors contend that new car dealers and larger chain used dealers properly train their staff because of franchise agreements and potential legal hurdles. It is unclear why these same issues would not lead to smaller dealers properly training their staff as well. In order to ensure dealers are not simply outsourcing their training requirements in a manner that would result in a cost to their workers, the author agreed to take amendments to require employers to be responsible for paying for the cost of the education program, and to be responsible for compensating the employee for the time they spend in the education program.

REGISTERED SUPPORT / OPPOSITION:

Support

Independent Automobile Dealers Association of California (Sponsor)

Beas Auto Sales

Becks Auto Sales

Cal West Motors

CARSSYSTEMS

Cost U Less Cars

Guy Streohmeier’s Auto Center

Hibbon Auto Center

I-Deals Cars Inc.

Justbettercars.com

Pacific Auto

Park Marina Motors

S& S Auto Sales Inc.

Tristar Motors LLC

3 private citizens

Opposition

None on file

Analysis Prepared by: David Sforza / TRANS. / (916) 319-2093