While it is not comparable to David Letterman’s Top 10 lists, at a recent industry gathering, OSHA announced its annual top 10 violations for fiscal year 2018 (October 1, 2017, through September 30, 2018). For those who have followed these lists in past years, there is a substantial amount of overlap but also new standards that have not made the list in the past.

Without further ado, the list is:

1. Fall protection – general requirements for construction industry. 29 C.F.R. § 1926.501.OSHA cited employers for 7,270 violations of this standard in 2018. OSHA’s focus on fall protection makes sense, as falls are the leading cause of deaths at construction sites.
2. Hazard communication – general industry. 29 C.F.R. § 1910.1200. OSHA cited employers for 4,552 violations of this standard in 2018. The HAZCOM standard is long and detailed with specific requirements, creating a number of potential pitfalls for employers, including everything from substantial training requirements to maintaining safety data sheets (SDSs) and chemical lists.
3. Scaffolds – construction industry. 29 C.F.R. § 1926.451. OSHA cited employers for 3,336 violations for this standard in 2018. This standard goes hand in hand with fall protection requirements, which is a major reason for OSHA’s focus here.
4. Respiratory protection – general industry. 29 C.F.R. § 1910.134. OSHA cited employers for 3,118 violations for this standard in 2018.
5. Lockout/tagout – general industry. 29 C.F.R. § 1910.147. OSHA cited employers for 2,944 violations for this standard in 2018. This standard is a perennial favorite for OSHA and has appeared on the top 10 list consistently over the years.
6. Ladders – construction industry. 29 C.F.R. § 1926.1053. OSHA cited employers for 2,812 violations for this standard in 2018. Another fall protection-related standard: see a pattern?
7. Powered industrial trucks – general industry. 29 C.F.R. § 1910.178. OSHA cited employers for 2,294 violations of this standard in 2018. This is another common target for OSHA inspections due to the high risk associated with operating forklifts and other POTs. Common citations include not having certified drivers and failing to recertify drivers every three years.
8. Fall protection – training requirements for construction industry. 29 C.F.R. § 1926.503. OSHA cited employers for 1,982 violations for this standard in 2018. When OSHA cannot cite the employer for another violation, the agency loves to see if they can find a training violation. This is especially common in cases of employee misconduct resulting in an accident: OSHA cannot prove employer knowledge of the accident, but they claim the accident happened because the employee was trained properly. Having robust training records can mitigate against the risk of OSHA snooping around for a violation simply because an accident has occurred.
9. Machine guarding – general industry. 29 C.F.R. § 1910.212. OSHA cited employers for 1,972 violations for this standard in 2018. Like LOTO, this is a perennial member of the top 10 list.
10. Personal protective and lifesaving equipment – eye and face protection – construction industry. 29 C.F.R. § 1926.102. OSHA cited employers for 1,536 violations for this standard in 2018. This standard is new to the list this year.

Employers should take away from this list that fall protection remains the number one concern for OSHA, as four of the top 10 relate directly to this hazard. Similarly, known high-risk areas of employment, including lockout/tagout and machine guarding, remain perennial concerns for OSHA. Take advantage of this information to refocus your efforts on maintaining a robust safety program at your workplace.

By Mike Follina

How will you make profit in other areas of your dealership if vehicle sales decline? This is a question you need to ask every day.

Now is the time to assess and improve your current processes. I see plenty of room for improvement in many dealerships I visit, particularly in the service department.

The good news? You can make BIG improvements in how your service department operates and generates profit with minor tweaks.

Here are three crucial areas service departments could step up their game:

Not doing a thorough walk-around

The walk-around should be taken seriously for all RO’s – even simple ones like oil changes. We know a thorough walk-around leads to more sales. But when do you perform the walk-around?

Always tackle the walk-around right when a vehicle arrives. This will give you a chance to present any findings to the customer. Speak to them directly so they understand any issues. The better the customer understands an issue, the more likely you’ll hear “yes” to your recommendations.

I recommend equipping advisors with tablets. This allows advisors to approach customers at the vehicle, enter the RO, conduct the walk-around immediately and document recommendations. It allows interaction with the customer and removes a major barrier (the desktop computer).

Pro tip: If your service advisors need practice with their presentation skills, implement role-playing activities. Good interaction with customers doesn’t come naturally to everyone. Be patient with your staff, but hold them accountable by expecting continuous improvement.

Wrong techs for the wrong jobs

When higher level techs conduct routine maintenance, while lower level techs take on complex repairs they aren’t ready for, the dealership loses dollars and efficiency.

This problem can be solved at the dispatcher’s desk. An experienced dispatcher with an advanced shop loading tool ensures the right techs are assigned the right jobs.

But even a good dispatcher can only do so much. ROs need to be turned over to the dispatch desk almost immediately after they’re written. My recommendation is to have tablets to write and send ROs directly to the dispatcher. Having the right software solutions in service is just as critical as having the right CRM in the front end.

Failing to continuously communicate with customers

Customers should be informed every step of the way during a repair. Inform the customer immediately if a new problem is spotted. Make sure you provide a clear description of the problem and a picture of what’s wrong. This proves you are transparent, credible and trustworthy.

A J.D. Power study found just 2% of customers are recipients of service alerts via texts or emails. Think of how much your service department could separate itself from the competition if it implemented text messaging.

The parts department can improve communication with the customer too. Contact the customer as soon as a special order part arrives. Too often I see service departments receive a special order part that sits for days before they reach out to the vehicle owner.

Conclusion

These changes do more than create efficiency and profit; they make your service department a more desirable place for customers to do business. Your commitment, consistency, and accommodation to your customers is important. Maybe you’re great with customer interaction, but behind the scenes you lack a strong process. Or, you might have the best techs, but fall short when it comes to customer interactions. Either way, both areas – customer-facing and non – need to be strong and feed off of each other. Commit to improving all areas of service and watch what happens.

For more information on training and system utilization improvement, contact Reynolds Consulting Services at 888.204.6092 or send us an email, consulting@reyrey.com.

By Thomas B. Hudson

I frequently speak at industry conferences. When my presentation is over, there are always a few folks from the audience who have questions or who just want to talk about the legal side of the car business.

When there are questions, it sometimes seems that there’s something of a “flavor of the month” thing going on – I’ll get several questions that are either identical or have small variations on a central theme.

At this year’s National Independent Auto Dealers Association conference in Orlando, that theme seemed to be service contracts in general and, in particular, whether a dealer may require a credit buyer to buy one. Like most legal questions, the answer to this one is easy, except when it isn’t.

The easy part of the question is whether the practice of requiring a service contract in connection with the credit sale of a vehicle violates the federal Truth in Lending Act and Regulation Z. The answer to that question is a simple “no” because, as you might guess, the federal disclosure requirements tend to deal with disclosure rather than the substance of the transaction. It isn’t far from the truth to say, “The feds don’t care what you do, as long as you disclose it correctly.”

But the fact that federal disclosure laws don’t prohibit the practice doesn’t mean that the practice is not affected by them. In this case, the key to the application of federal law is the word “require.” When a dealer requires a service contract in financing transactions, but not in similar cash transactions, the charge for the service contract must be treated as a finance charge, added to other finance charges and included in the APR calculation. That’s pretty basic.

A little more esoteric is just how the charge must appear in the federal disclosure part of the retail installment contract. It should be shown as a “prepaid finance charge.” That means that most generic retail installment contracts cannot be used because they do not incorporate a prepaid finance charge disclosure.

And then there’s state law. In states that have definitions of “finance charge” that mirror or operate like the federal disclosure laws, several problems arise. First, there may be a state law that simply prohibits requiring the purchase of a service contract. Then there’s the disclosure issue, which, in a lot of states, will require the same sort of analysis required at the federal level.

Are we done? Nope.

Most states impose a rate cap for finance charges. In such states, the cost of the service contract, when added to other finance charges in the deal, may produce a rate so high that it exceeds the state’s maximum permitted rate.

Finally, there is the issue of how finance charges must be computed at the state level. Some states require that finance charges be computed only by applying a rate to a declining balance. An up-front charge such as the fee for a service contract won’t meet that test.

One conference attendee kept arguing that requiring a service contract couldn’t create the difficulties I described to him. Finally, he said, “My DMS provider says that by simply including the cost of the service contract in the Itemization of Amount Financed, I’m disclosing everything correctly!” In response, I asked, “But have you told the DMS provider that you are requiring the buyer to purchase the service contract, or does the DMS provider believe that the purchase is voluntary? Go ask the DMS provider that question.” The dealer left to wander over to the DMS provider’s booth in the exhibit hall, and I didn’t hear from him again.

From several recent AG actions, I can tell you that this one is a front-burner problem. If you’re requiring buyers to buy service contracts, pull down the shades, flip the sign on the door from “OPEN” to “CLOSED,” lock the doors, and go visit your lawyer.

*Thomas B. Hudson was a founding partner of Hudson Cook, LLP, and is now of counsel in the firm’s Maryland office. He is the CEO of CounselorLibrary.com, LLC, and is a frequent speaker and writer on a variety of consumer credit topics. Tom can be reached at 410.865.5411 or by email at thudson@hudco.com.