BILL ANALYSIS
SB 1004
Page 1
SENATE THIRD READING
SB 1004 (Huff)
As Amended August 16, 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 after five years from the date a bond is secured
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and maintained, if the DMV is satisfied there are no
outstanding claims against that deposit.
6)Requires a motor vehicle dealer, for each credit report he or
she obtains for use in connection with a consumer's credit
application, to provide that consumer a summary of the
information from the credit report that corresponds to the
current federal credit score reporting requirements that apply
to vehicle dealers.
7)Provides that this requirement does not limit or restrict any
rights or remedies otherwise available under existing law.
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.
5)Requires a motor vehicle dealer who obtains a credit report
for use in connection with a consumer's credit application to
provide that consumer a summary of the information from the
credit report in a format specifically described in statute.
FISCAL EFFECT : Unknown. This bill was withdrawn from the
Senate Appropriations Committee pursuant to Senate Rule 28.8.
COMMENTS : The author has introduced this bill to update
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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 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.
The bill also addresses the instance of a dealer who initially
posts with DMV a cash deposit in lieu of the $50,000 bond that
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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.
Finally, this bill allows dealers to use the federally-mandated
credit report disclosure form, rather than one specified in
state statute, when they obtain credit reports on customers who
apply to finance their vehicle purchases.
Analysis Prepared by : Howard Posner / TRANS. / (916) 319-2093
FN: 0005990