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VADA's January 2010 newsletter includes a great article about making sure that you have in place safeguards to help you hold onto the money you make, and to be sure that the dealership uses best practices to protect against losses and lawsuits.

KPA's HotlinkHR program can help you with 5 of the 10 protections listed in that article for 2010 that a dealer should have in place to minimize the risks that most frequently lead to costly problems. 

Hire soundly. With turnover, dealers are always hiring, and hopefully increased business in 2010 will increase your opportunities to hire new personnel. Expensive employment claims arise most often from poor hiring decisions. Train managers to recruit, interview, and select employees wisely. Make sure that managers understand the qualifications they are looking for in an employee. Make sure that they interview appropriately to determine applicants’ qualifications. 

Pay minimum wage and, where applicable, overtime. When sales are tough, sometimes sales people don’t earn minimum wage for each hour worked based on their draws. Sometimes employees who should earn time and a half overtime are misclassified. Wage claims, especially class action wage claims, can be expensive including treble damages and attorneys’ fees. Make sure that salespeople and other employees earn minimum wage for each hour worked.  Make sure that non-exempt employees are not mistakenly classified as exempt from overtime pay requirements.

Prevent discrimination and harassment claims. The most expensive personnel claims against dealers are claims for discrimination or harassment. Have a strong policy. The law may give you some protection if an employee does not let you know of a problem, but only if employees know how to make their complaints known. Be sure that your complaint process is in writing, preferably in your personnel handbook. Cover it in meetings from time to time. Treat every employment problem seriously. Properly investigate a potential claim. Candidly assess the situation. Take action consistent with actions you have taken under similar circumstances. Have zero tolerance for retaliation.

Know your customer. Implement and use your Red Flags program. Compliance with the FTC Red Flags Rule is important to help your dealership know your customers and avoid becoming a victim of identity theft. Many dealers have put off compliance with the FTC Red Flags Rule because they view it as a costly government mandate. But compliance with this rule is important to help the dealership avoid becoming a victim by delivering a $20,000, $30,000 or $40,000 vehicle to an identity thief.

Safeguard your customer information. You are mandated by law to have an information safeguards program in effect. This is for the protection of your customers’ identities, and if you don’t have a program in place the potential legal action can be quite expensive. More importantly for your dealership, your customer records are your assets. A salesperson who leaves your dealership with your customer information to work for a competitor is improperly taking your assets. Protect your customer information as you would any of your other valuable company assets by making sure it is safeguarded.