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Monday, April 20, 2026

Car dealers should formalize its vendor relationships - Automotive News

When a Texas dealership group and a Stellantis store resolved a class action suit alleging underpayment of wages and overtime to detailers, porters, valets, shuttle drivers and car washers employed by a now-defunct company, the settlement reflected a legal and financial dilemma confronting dealerships that rely on outside contractors for fixed ops services.

And when a Texas vendor that supplies detailer, valet and car wash services agreed to pay $166,435 to close a U.S. Labor Department employee misclassification complaint, that settlement averted potential claims against the vendor's dealership clients.In the first case, a settlement reached earlier this year by Sonic Automotive Inc., several of its Texas dealerships and Gulfgate Dodge-Chrysler-Jeep-Ram in Houston meant a judge didn't need to decide a thorny question: Was Rascoa LLC, an independent contractor that had hired the workers, solely responsible for personnel management and compensation, as the dealerships argued? Or were Rascoa and the dealerships joint employers under federal labor law?The workers, eight of whom are sharing proceeds of a confidential settlement, claimed the dealerships were joint employers with Rascoa, which is out of business. They received uniforms and badges with individual store logos, and their suit asserted the stores had joint authority to hire, fire and supervise them, set schedules and control pay rates and work conditions.

In the second case, resolved in July, Majestic Dealership...



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