Greater New York Automobile Dealers Association

Coronavirus Resources for Dealers

TOP 10 DEALER QUESTIONS ON LAYING OFF STAFF

The most recent Executive Order Governor Cuomo put into place calls for all non-essential businesses shut, leaving dealers with questions on what to do with their employees. As dealers are forced to decide what to do with non-essential staff several questions arise about dealer obligations relating to pay, layoffs or furloughs. GNYADA is aware that dealers are generous by nature and, where possible, are trying to continue benefits for their employees.

Below, based on our conversation with employment law expert James E. McGrath, III we provide answers to the top 10 questions dealers have asked:

1. If a dealer lays off employees, can those employees receive Unemployment Insurance benefits?

Yes. Employees should be directed to apply at https://labor.ny.gov/unemploymentassistance.shtm

2. Can the dealership pay for laid-off employees’ health insurance if the employee is collecting unemployment?

Yes, under certain circumstances discussed below.

3. Must dealers provide a COBRA notice to laid-off employees?

Yes.

4. May a dealer pay COBRA payments on behalf of laid off employees?

Yes. Dealers can offer to continue payment of the employer portion or the entire health insurance premiums.

Some insurance carriers and some union plans have agreed to waive minimum hour requirements effectively permitting laid-off employees to continue to receive employer-provided health insurance. Dealers should check their policy documents and consult with their insurance company to determine if the carrier will waive this limitation in these circumstances - at least for some period of time.

Some dealers have indicated they will pay the full COBRA amount for a month or two. This could be done for as long as the dealer wished and was able for the duration of the layoff or the COBRA period.

Other dealers have indicated they intend to pay only some of the COBRA amount to laid-off employees for a period of time. For example, a dealer could agree to continue to pay the employer-share of the health insurance, with the employee continuing to pay his or her share.

5. Can the dealership keep non-essential employees on the payroll in order to maintain current health insurance?

Some dealers have indicated that they will retain employees on payroll (perhaps at a somewhat reduced amount) and continue to provide health insurance. Of course, under this scenario, the employee is not eligible for unemployment benefits.

6. Can a dealer be reimbursed for payment of health insurance premiums when employees are restored to their pre-layoff position?

Yes. Reimbursement for health insurance premiums is a permissible wage deduction.

7. Are laid-off employees entitled to their accrued leave time?

Dealers should consult their CBA or employee handbook policy to determine if unused leave time must be paid on termination (layoff).

8. Are commissions due when an employee is laid-off?

Commissions should be paid as they are earned in accordance with your commission agreement. Payment of bonuses and commissions to laid-off managers will not impact unemployment payments as those monies were earned prior to the layoff.

9. How should dealers with unionized employees respond to the Governor’s PAUSE Order?

Dealers should be in communication with their unions and follow the terms of the CBA.

10. Is the dealer required to send a WARN Act Notice?

Yes. The WARN Act requirement to provide 90 days' advanced notice has not been suspended because the WARN Act already recognizes that businesses cannot predict sudden and unexpected circumstances beyond an employer's control, such as government-mandated closures, the loss of your workforce due to school closings, or other specific circumstances due to the coronavirus pandemic.

Dealers should consider all of their options in determining how to provide benefits to their employees.

* WARN Fact Sheet and Sample Letters