A bipartisan New Jersey bill aims to provide automotive dealership technicians with wages for warranty repair services equal to those for other repair services.

While the bill is specific to automotive dealership mechanics, it could be an interesting one to follow for collision repairers should similar legislation be brought forward for the industry.

In support of the bill, the New Jersey State American Federation of Labor & Congress of Industrial Organizations (AFL-CIO) and the International  Association of Machinists and Aerospace Workers (IAM) say it would foster improved working conditions and enhance the quality of life for mechanics and their families.

The “Motor Vehicle Open Recall Notice and Fair Compensation Act” (A4380/S3309) states there is “a vast disparity in bargaining power between motor vehicle franchisors and their franchisees, which if left unchecked, would discourage local investment in the motor vehicle franchise system and result in fewer new motor vehicle franchisees, less competition in the motor vehicle marketplace, and diminished consumer access to qualified motor vehicle warranty, open recall, and routine service facilities.

“[I]t is necessary for the legislature to further revise the laws pertaining to motor vehicle franchisees to strengthen and clarify certain provisions of existing law intended to protect the public from marketplace behavior that has the potential to restrict competition for sales and threaten highway safety by limiting consumer access to essential warranty and open recall service provided by neighborhood new car dealers.”

If a part or repair remedy isn’t reasonably available to perform a service or repair, the bill would require OEMs to pay, if not preempted by federal law or regulation, 1.75% of the value of the motor vehicle per month, or per portion of a month, while the part or remedy is unavailable.

The compensation could be paid under a national recall compensation program as long as the amount is equal to or greater than the amounts under the proposed bill.

According to the bill, OEMs would pay an hourly rate for repair labor services performed in an amount that is the greater of:

• • The franchisee’s hourly labor rate for retail customer repairs, as determined by dividing the amount of the franchisee’s total labor sales for retail customer repairs by the number of total labor hours that generated such sales for the month preceding the request. Only retail sales not involving warranty repairs or certain parts, such as for routine vehicle maintenance, would be considered in calculating the average percentage of parts markup and labor rate; or
  • An amount equal to the franchisee’s markup over cost that results in the same gross profit percentage for labor hours performed in retail customer repairs as evidenced by the average of the gross profit percentage for the two months preceding the franchisee’s written request.

In a news release, IAM Eastern Territory General Vice President David Sullivan added that automotive technicians are “the backbone of our vehicle maintenance system.”

“They work tirelessly to ensure our cars are safe and reliable, and it’s high time that their expertise and hard work are recognized and rewarded with fair compensation,” he said.

In 2021, IAM Local 701 supported a similar bill in Illinois that the legislature passed.

A list of complaints by Illinois dealership service departments at the time about their relationship with automakers when it comes to being paid for warranty work sounded like collision repairers had written them, describing how they struggle to be paid by insurance companies.

The law requires manufacturers to pay “full compensation for diagnostic work, as well as repair service, labor, and parts” and that time allowances for the diagnosis and repair shall be “no less than charged to retail customers for the same work.”

A dealer’s retail labor rate is defined in the law as “the same effective labor rate (using the 100 sequential repair orders chosen and submitted by the dealer less simple maintenance repair orders) that the dealer receives for customer-pay repairs.”

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