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 SB 1004 (HUFF) Page 2 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 SB 1004 (HUFF) Page 3 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.