New York recently joined a small but growing number of states when it enacted a new law requiring automobile manufacturers to pay dealers for warranty work using “reasonable” time allowances from standard labor time guides. See N.Y. Veh. & Traf. Law § 465 (2024).
This law is aimed at ending the practice whereby manufacturers reimburse dealers significantly fewer hours for warranty services than what those same dealers charge customers paying for the very same repairs.
The intended beneficiaries of this new law are (i) dealerships who pay flat-rate technicians in excess of the reimbursement rate out of their pockets; (ii) flat-rate technicians who are often paid fewer hours on warranty repairs; and (iii) customers who could arguably suffer from rushed repair work. New York’s law requires the manufacturers to set warranty reimbursement rates based on “reasonably utilized” third-party time guides. Alaska, Minnesota, Montana, and Illinois also have laws aimed at establishing minimum requirements for warranty reimbursement for new vehicle manufacturers.
This trend is not without controversy. Manufacturers argue that manufacturer-established warranty time is calculated based on time studies of technicians who are trained to complete the repairs with access to specialized tools that make repairs more efficient. According to the manufacturers, third-party time guides are meant to account for the time it would take an independent repair shop mechanic to complete the repair without specialized training and equipment. Manufacturers also argue that warranty reimbursement laws drive up the cost of vehicles sold with warranties.
To date, neither Pennsylvania nor New Jersey have adopted similar laws. Nonetheless, many of the goals align with legislative trends we have seen across the region, including expanded employee protections and supporting community-based businesses like dealerships.
Going forward, dealers in Pennsylvania and New Jersey should be attuned to this trend and account for it, especially when negotiating collective bargaining agreements with technicians that offer enhancements to adjust for lower warranty times and may become outdated.
