BILL ANALYSIS                                                                                                                                                                                                    






           SENATE TRANSPORTATION & HOUSING COMMITTEE       BILL NO: SB 1004
          SENATOR ALAN LOWENTHAL, CHAIRMAN               AUTHOR:  Huff
                                                         VERSION: 3/16/10
          Analysis by: Carrie Cornwell                   FISCAL:  yes
          Hearing date: March 23, 2010







          SUBJECT:

          Vehicles: licensed dealers and salespersons

          DESCRIPTION:

          This bill allows a vehicle dealer to post copies of occupational  
          licenses, rather than the original licenses, for the dealer and  
          the salespersons the dealer employs. It also allows a vehicle  
          salesperson to work for multiple dealerships, provided that  
          those dealerships share a common controlling ownership.

          ANALYSIS:

          Existing law charges the Department of Motor Vehicles (DMV) with  
          licensing and regulating motor vehicle dealers and salespersons  
          who conduct business in California. 

          State law requires that vehicle dealers post in a conspicuous,  
          public place in each and every location where the dealer does  
          business the dealer's DMV-issued dealer's license plus the  
          DMV-issued license of each salesperson employed by that dealer  
          at that location. Each licensed sales person employed by a  
          dealer must provide that dealer with his or her salesperson  
          license for posting. In addition, existing law precludes a  
          salesperson from working for more than one dealer, although he  
          or she can work at different locations of a single dealer,  
          provided each location has identical ownership and structure.

          Existing law permits DMV to refuse to issue or to revoke or  
          suspend a vehicle salesperson's license if, among other things,  
          the salesperson has acted as a salesperson for more than one  
          licensed dealer. State law also makes it illegal for a person to  
          duplicate a vehicle salesperson's license in such a way that it  




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          could be mistaken for a valid license.

           This bill  :

          1.Allows a vehicle dealer to post a copy, rather than the  
            original, of the dealer's and each salesperson's DMV-issued  
            occupational license.

          2.Makes it legal to duplicate a vehicle salesperson's license  
            for purposes of displaying that license at the dealership or  
            dealerships where the salesperson works.

          3.Makes it legal for a vehicle salesperson to work for more than  
            one dealer, provided that all of the dealers for whom the  
            salesperson works share a common controlling ownership, which  
            the bill defines as a structure in which more than 50 percent  
            of the ownership interests in each dealer are held by the same  
            person or persons, either directly or through one or more  
            wholly owned subsidiary entities.

          COMMENTS:

           1.Purpose  . The author introduced this bill to update California  
            law governing motor vehicle dealers and salespersons to  
            reflect changes in the operation and structure of companies  
            selling motor vehicles. This bill specifically recognizes that  
            dealerships today are organized in a wide variety of  
            structures from sole proprietorships to publicly traded  
            corporations. State law governing dealers' employment of  
            salespersons dates from a bygone era. This bill changes that  
            law to allow dealers to post copies, rather than originals, of  
            occupational licenses. It also allows a salesperson to work  
            for multiple dealerships so long as 50 percent the ownership  
            of each dealership is the same. 
          
           2.History  . It is unclear why existing law precludes a  
            salesperson from working for more than one vehicle dealer.  
            This provision dates from at least the 1950s. DMV staff  
            speculate that the prohibition was put into the law to avoid a  
            salesperson having conflicting allegiances and thus being  
            tempted to steer business one way or another between competing  
            dealers for whom the salesperson worked. The author or  
            committee may wish to consider whether it is appropriate to  
            repeal this prohibition entirely. 

           3.Moving the license with the salesperson  . An alternative to  




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            allowing the posting of duplicates of a salesperson's license  
            would be to have the salesperson take the license down and  
            with him or her when going to work at another location or  
            dealer. The sponsor, the California New Car Dealers  
            Association, explains that the salespersons' licenses are  
            frequently kept under a locked glass cover and that moving  
            licenses could create needless problems, including licenses  
            getting left behind at the wrong location upon occasion.
          
          POSITIONS:  (Communicated to the Committee before noon on  
          Wednesday, 
                     March 17, 2010)

               SUPPORT:  California New Car Dealers Association (sponsor)

               OPPOSED:  None received.