BILL ANALYSIS
SB 1004
Page 1
SENATE THIRD READING
SB 1004 (Huff)
As Amended May 28, 2010
Majority vote
SENATE VOTE :34-0
TRANSPORTATION 11-0 APPROPRIATIONS 17-0
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|Ayes:|Bonnie Lowenthal, |Ayes:|Fuentes, Conway, |
| |Jeffries, | |Bradford, |
| |Bill Berryhill, | |Charles Calderon, Coto, |
| |Blumenfield, Buchanan, | |Davis, |
| |Furutani, Hayashi, | |De Leon, Gatto, Hall, |
| |Miller, Niello, | |Harkey, Miller, Nielsen, |
| |Portantino, Solorio | |Norby, Skinner, Solorio, |
| | | |Torlakson, Torrico |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Updates statutes regarding salespersons licenses.
Specifically, this bill :
1)Allows motor vehicle dealers and salespersons to post exact copies
of their licenses, in lieu of the actual licenses, at the dealer's
place of business.
2)Allows a salesperson to work for more than one dealer if all of
the dealers for whom he or she works have common controlling
ownership, which is defined as when more than 50% 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.
3)Requires the salesperson's license, or license copy, to be posted
at each dealership where he or she is employed.
4)Requires any copy of the salesperson's license to be destroyed by
the dealer upon termination of the salesperson's employment with
that dealer.
5)Allows the Department of Motor Vehicles (DMV) to refund a dealer's
cash deposit that has been submitted in lieu of a dealer bond
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after five years from the date a bond is secured and maintained,
if the DMV is satisfied there are no outstanding claims against
that deposit.
EXISTING LAW :
1)Requires vehicle dealers to post in a conspicuous, public place in
each and every location where the dealer does business the
dealer's license as well as the sales license of each salesperson
employed by that dealer at that location.
2)Prohibits 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.
3)Allows 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.
4)Allows DMV to refund a dealer's cash deposit that has been
submitted in lieu of a dealer bond after three years from the date
the dealer has ceased to do business or from the date the dealer
has ceased to be licensed, if DMV is satisfied that there are no
outstanding claims against the deposit.
FISCAL EFFECT : Unknown. This bill was withdrawn for the Senate
Appropriations Committee pursuant to Senate Rule 28.8.
COMMENTS : The author has 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. The 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 an earlier
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% the
ownership of each of those dealerships is the same.
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 has speculated that the prohibition was
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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 sponsor, the California New Car Dealers Association, notes that
corporate structures for individual stores may differ for tax or
business reasons, "but so long as the controlling owner is the same,
a dealer should have the ability to shift a salesperson from one
store to another. Under current law, in order to move between
dealerships, a salesperson would likely be forced to resign his or
her employment and be "rehired" at the second store unless both the
ownership and structure are identical. For large dealer groups,
including publicly traded companies, this rule is a serious
impediment, yet serves no particular purpose. Dealers should have
the flexibility to move salespeople to stores under common
controlling ownership where sales potential is the greatest at any
particular time."
An alternative to 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 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.
Finally, the bill addresses the instance of a dealer who initially
posts with DMV a cash deposit in lieu of the $50,000 bond that is
required to protect against fraud and monetary loss to a purchaser,
seller, financing agency, or government agency. If such a dealer
subsequently obtains a bond, he or she can only have the deposit
refunded by waiting for three years after having ceased to do
business. This has the unintended consequence of requiring the
dealer to close his or her shop in order to secure the return of
that deposit. The bill therefore allows a refund of the deposit
five years after the dealer has secured and maintained a bond,
provided DMV is satisfied that there are no outstanding claims
against the deposit.
Analysis Prepared by : Howard Posner / TRANS. / (916) 319-2093
FN: 0005217
SB 1004
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