Federal Issues
Modern cars and light trucks contain advanced technology that monitors or controls virtually every function of the vehicle including: brakes, steering, air bags, fuel delivery, ignition, lubrication, theft prevention, emission controls and in some cases, tire pressure. Car owners and independent shops must have full access to the information and tools necessary to accurately diagnose, repair, or re-program these systems. This information and equipment is necessary to ensure vehicle safety, performance, and environmental compliance. Vehicle manufacturers are making access to such vital information increasingly difficult and costly to obtain for the independent aftermarket and its customers.
Without access to critical information and tools, motorists are forced to patronize new car dealerships, which may not be convenient, accessible or otherwise desirable to the car owner. Moreover, the lack of competition and consumer choice will inevitably lead to higher repair prices. Failure to perform necessary maintenance for any reason will result in unsafe and high-polluting vehicles populating the nation's highways.
The Motor Vehicle Owners' Right to Repair Act prevents vehicle manufacturers and others from unfairly restricting access to the information and tools necessary to accurately diagnose, repair, re-program or install automotive replacement parts. The Act would require the Federal Trade Commission to promulgate and enforce regulations that ensure competition in the vehicle repair business. In addition, the bill would permit the FTC, car owners and independent repair facilities to take legal action to ensure all information and tools are available and affordable. The Right to Repair Act does not affect the dealer's right to perform any services, including warranty work and does not unconstitutionally take the manufacturer's intellectual property or require them to disclose trade secrets.
Click here to send a letter to Congress.
Right to Repair.org.
Click here to see a list of OEM Service Information Web sites.
Magnuson-Moss Warranty Act
Background: With new car sales waning, vehicle manufacturers and their franchised dealers have been pursuing an increasingly aggressive strategy aimed at growing the sales of their original equipment replacement parts and repair services. The result has been a smear campaign by the vehicle manufacturers, which aims to discredit the quality of aftermarket parts by suggesting that the use of such parts could result in the invalidation of a vehicle’s warranty. For instance, in a 2011 release, Mazda alleged “aftermarket parts are generally made to a lower standard in order to cut costs and lack the testing required to determine their effectiveness in vehicle performance and safety…Mazda also recommends that car owners use original equipment replacement parts in repairs in order to ensure the validity of their warranty.”
Enacted in 1975, the Magnuson-Moss Warranty Act prohibits product manufacturers from conditioning consumer warranties on the use any original equipment part or service. Furthermore, a manufacturer can only deny warranty coverage if it can demonstrate that a non-original equipment part or related service caused a defect to occur in the original product. Of course, in the case of motor vehicles, new car manufacturers have ignored these conditions outlined in Magnuson-Moss and have misled consumers to believe that they must have dealer service shops install only original equipment replacement parts or fear having their new car warranty voided.
The Federal Trade Commission (FTC) is responsible for enforcing the Magnuson-Moss Warranty Act; however, in the case of motor vehicles, the FTC Federal Trade Commission has taken little action to ensure consumers receive accurate information regarding their rights under their new car warranties.
AAIA response: With the help of aftermarket companies and trade groups, AAIA has filed complaints with the FTC, taking issue with the unsubstantiated claims made by the vehicle manufacturers regarding the quality of aftermarket parts and the conditioning of warranties on the use of certain parts. AAIA has reached out the FTC indirectly through our allies in Congress who have been encouraged to put pressure on the FTC to take action against vehicle manufacturers. In response to an FTC Request for Comment on its warranty-related interpretations, AAIA called on the Commission to provide for better disclosure of a consumer’s rights under a new car warranty and for require substantiation be provided with any claims made by the vehicle manufacturers that non-original equipment parts are substandard.
Key points: There are a number of important points to consider when talking about the quality of aftermarket parts. Studies have confirmed that aftermarket parts are of a similar or even greater quality than the original equipment replacement parts they replace. In fact, most aftermarket parts are identical to original equipment parts because parts manufacturers create and sell the same parts to both the aftermarket and new vehicle manufacturers. Aftermarket companies have the benefit of observing a part’s performance and can then correct problems that are discovered only after the part has been in-use for some time.
Thus, the FTC must conduct greater oversight and enforcement on vehicle manufacturers who do not comply with the Magnuson-Moss Warranty Act and who seek to discredit aftermarket products; aggressively enforce requirements that vehicle manufacturers must substantiate all claims that use of non-original equipment parts could jeopardize a vehicle warranty; and require better consumer disclosure by car companies regarding their rights under the warranty. This might entail compelling the car companies to:
- Include in their warranty booklets a prominently placed statement that, as a motor vehicle manufacturer, they are prohibited from conditioning the warranty on the use of any non-original equipment part or service; or,
- Inform consumers of their rights with a written statement of reasons when a warranty is denied due to the use of a non-original equipment service or part.
National Labor Relations Board (NLRB)
Background: In 2009, AAIA and its member companies took action to oppose “card check” legislation that would have made it far easier for employees of any business to unionize. Thanks to our efforts, it failed to pass in the 111th Congress. However, the National Labor Relations Board (NLRB), which is an independent federal agency that works to protect the rights of private sector employees to unionize, has been using its executive power to negate our success in killing “card check” at the legislative level.
The NLRB and the Department of Labor (DOL) issued a number of recent rulemakings that ease the unionization of businesses and severely limit the rights of employers:
- Dec. 22, 2010: NLRB issued a Final Rule that requires all employers subject to the National Labor Relations Act (NLRA), which is nearly every private employer, to post a notice in the workplace about the right to organize a union under the NLRA.
- June 21, 2011: DOL Office of Labor-Management Standards (OLMS) published a Notice of Proposed Rulemaking (NPRM) to reinterpret what constitutes “persuader” activity under the Labor-Management Reporting and Disclosure Act (LMRDA) by greatly expanding what exactly employers and consultants would need to report regarding communications with employees about unions.
- June 22, 2011: NLRB published an NPRM setting forth new procedures for “conducting a secret ballot election to determine if employees wish to be represented for purposes of collective bargaining.” These new procedures could result in union representation elections being held within 10-21 days of a union petition, often referred to as “snap” elections since the average time to election in 2010 was 31 days, with a target median of 45 days.
- Jan. 4, 2012: President Obama circumvented a Senate filibuster and recess appointed two Democrats and one Republican to the NLRB, effectively restoring the Board’s full slate of five members so that it may function.
Our Response: AAIA is an active member of the Coalition for a Democratic Workplace (CDW), which coordinates responses and lawsuits targeting the NLRB’s radical agenda. We are signatories to numerous letters to members of Congress and have specifically requested support for legislation which would address the NLRB’s campaign to use executive action to implement key portions of its agenda.
Key Points: AAIA opposes the NLRB’s recent pro-union efforts for numerous reasons:
- The above rulemakings severely restrict the ability of businesses to effectively make important business decisions that could create needed jobs in communities around the country.
- A notice explaining the rights of employees under the NLRA posted in the workplace is unnecessary, biased and beyond the Board’s authority to require.
- Further complicating what employers are required to say and report on when communicating with employees places an unnecessary burden on businesses, particularly small ones, who now require expensive legal advice in order to conform to these new labor relations standards.
- Snap elections deny employees the time and information needed to make fair and informed decisions about unionization.
- The 2012 recess appointments to the NLRB were unconstitutional because the President circumvented the formal nomination process by appointing these officials without Senate approval.
Healthcare/The Patient Protection and Affordable Care Act (PPACA)
Now that the 1099 Reporting provision in the PPACA has been successfully repealed (great effort on the part of AAIA and membership), there are several other provisions that will have significant impact on small businesses. AAIA belongs to, and is an active participant in, the Small Business Coalition for Affordable Healthcare and the Stop the HIT Coalition (Health Insurance Tax). More information on the coalitions can be found on our Grassroots Activities page.
Grandfathered
Of primary importance to most businesses is the key question of whether or not their current healthcare plan will remain valid. The President was famously quoted as saying “If you like your health plan you can keep it”. There appears to be several areas of concern regarding the ability of a business to stay “grandfathered”. Changes to the amount of copayment or employer contribution rates will be deemed acceptable or cause for the loss of “grandfathered” status based on complicated formulas spelled out in the law. One of the variables in the formulas is the medical inflation rate which will affect the outcome of every calculation. Our coalition has submitted comments to the Department of Health and Human Services in response to its publication of an Interim Final Rule mid-2010. This one may yet play out in the courts (a common refrain).
The Employer Mandate
Scheduled for a January 1, 2014 implementation, the employer-mandate provision assesses a penalty fee of $2,000.00 per full-time employee, excluding the first 30 employees, on employers with more than 50 employees that do not offer coverage and have at least one full time employee who receives a healthcare premium tax credit. Employers with more than 50 employees that do offer health insurance but have at least one full-time employee receiving the premium tax credit will be assessed a penalty fee under a slightly more complicated formula. They will pay the lesser calculation of either $3,000.00 for each employee receiving a tax credit or $2,000.00 for each full time employee, excluding the first 30 employees. The employee premium tax credits are figured on a sliding scale determined by the individual’s or family’s income from133-400% of the Federal Poverty Level and the amount of the credit ranges from 2-9.5% of income.
Fears are widespread in the business community that the mandate will reduce wages and job creation as the cost of the mandate is absorbed, with more problems likely, not the least of which are decreased productivity and higher prices for customers. For those businesses hovering around the 50-employee level, the decision to stay under 50 and slow down growth or expand and face higher costs, will be a difficult one. In the 112th Congress Senator Hatch(R-OR) has introduced S. 20 and Rep. Boustany (R- LA) and Rep. Boren (D-OK) have introduced H.R. 1744 to repeal the mandate. Please visit our Grassroots Activity page to take personal action.
See also the Congressional Research Service Report: Summary of Potential Employer Penalties Under the Patient Protection and Affordable Care Act (PPACA).
The Health Insurance Tax
Labeled a “health insurance fee”, this is actually a direct tax on small business. PPACA assesses a tax on all health insurance companies based on their “net premiums” written. The tax will raise $8 billion starting in 2014 and $14.3 billion in 2018 and later years.
The amount of the tax that the insurance company is responsible for is equal to the percent of the market subject to the tax that the insurance company covers. The larger the insurance company’s market-share, the higher their annual health insurance tax. One thing insurers and economists have agreed upon throughout the healthcare debate: new taxes on insurers inevitably means new costs passed along to customers. The only insurance plans that factor into the equation for purposes of determining the insurance company’s portion of the fees are fully--insured plans—the plans that 87 percent of small business owners purchase.
A recent Congressional Budget Office report confirms that the small business insurance tax “would be largely passed through to consumers in the form of higher premiums for private coverage.” And a recent study by Douglas Holtz-Eakin indicates that the anticipated impact is as much as three percent or nearly $5,000 per family over a decade. It is most troubling that the customers that will pay for these increased costs are the same small business owners who have been asking for health insurance reform that reduces their costs. Please visit our Grassroots page to take personal action.