Warranty Work Reimbursement: New York Dealer Choice of Time Guide
By: Andrew G. Thomas, Esq. and Richard Sox, Esq.
On September 4, 2024, New York’s Governor signed pro-dealer legislation which mandates that vehicle manufacturers fully compensate their dealers for the real time it takes to perform warranty and recall repair work. Specifically, the bill added language to New York’s existing franchise act which requires manufacturers to pay labor time defined by the retail time guide reasonably utilized by the dealer. This law went into effect at signing.
New York, like many other states, already provided dealers the right to make periodic submissions for warranty reimbursement rates on parts and labor equal to their respective retail rates. However, dealers were previously stuck with whatever labor hours their respective manufacturer(s) assigned to repairs, as the statute did not address what labor time allowances were reasonable for warranty repairs. Thus, while New York dealers were entitled to be reimbursed for warranty work at the hourly rate they charged retail customers for repairs, they were not necessarily entitled to the number of hours the repairs actually required. The legislation passed early this month corrected that issue.
New York’s new legislation is part of a growing trend in the industry, as several other states have also recently passed legislation allowing dealers to receive warranty labor compensation based on retail time guides, or at least addressing what reasonable labor time allowances should be for warranty repairs. Examples of other states with these types of laws include Illinois and Montana. The language from Montana is the most similar, as it lets the dealer choose between the manufacturer’s time guide or the labor time guide used by the dealer for retail work. Illinois, on the other hand, requires that labor hours be determined by actual time expended, any time guide previously agreed to by the manufacturer and dealer, or the manufacturer’s time guide multiplied by 1.5. Wisconsin also defines what number of hours must be reimbursed for warranty work, but limits the number of hours to those contained in the manufacturer’s allowances.
This is a great step forward, as dealers must be entitled to reasonable compensation for warranty work, which should account not only for the rate of reimbursement paid by the manufacturer, but also provide for a reasonable time allowance for warranty repairs.
The attorneys at Bass Sox Mercer have significant experience with assisting motor vehicle dealers in making the submission(s) necessary to take advantage of new warranty time allowance provisions.Any questions related to proper warranty time reimbursement should be directed to Richard Sox, Esq. at rsox@bsm-law.com.