Spiffs-Can The Dealership Be Held Financially Liable?

Well, it never stops!! The Labor Board is at it again. This time it concerns “Spiffs” which are bonuses that are given in combination between the manufacturer and the dealership. The employee (salesperson) signs a contract between themselves and the manufacturer whereby they are in agreement with the manufacturer that if they sell, as an example, 75 cars throughout the year, they will receive a matching bonus of $25.00 from each the manufacturer, and the dealership, with the stipulation that they must still be employed on Decemember 31st of that year. One dealer terminated a salesperson who had in fact sold 72 in November. He filed with the Labor Board that he was denied the opportunity to sell the last three (but had several in the pipeline). The agreement is clearly a contract between the employee and the manufacturer. The Labor Board is sending the matter to a formal hearing arguing that the bonus is a performance bonus and that the dealership “allegedly” should have paid their $25.00 portion on the vehicles sold. The hearing is coming up soon and I will let you know the results. This is really cutting edge stuff! I know that the industry, as a whole, has not paid out the bonus if the employee is not employed on December 31st.