Senate panel advances bill setting rules for dealer pay on warranty repairs after hours dispute

A North Dakota Senate committee advanced House Bill 15-15 on a 4‑2 vote after nearly three hours of testimony and debate over how dealers should be paid for labor when performing warranty repairs.

Proponents and opponents agreed the bill addresses how many hours a manufacturer must reimburse a dealer for warranty work; they disagreed over what method should determine that time. Levi Andress, a registered lobbyist with GA Group representing the Alliance for Automotive Innovation, told the committee the alliance offered two amendment approaches: an “actual time” measure (amendment 03/2003) that would pay dealers for every minute a technician documents working on a repair, and a “rebuttable presumption” approach (03/2002) that would presume a dealer’s documented request for extra time is reasonable unless the manufacturer denies it in writing and provides reasons.

The bill as introduced would allow dealers to use third‑party time guides. Andress said the manufacturers’ chief objection is the use of third‑party guides; he said his clients offered the two alternatives to address that concern. “The problem that the bill seeks to solve is how many hours of labor a manufacturer should pay the dealer when the dealer performs work on a vehicle under a manufacturer's warranty. It’s all about the hours,” Andress said.

Dealers’ representatives urged the committee to preserve the time‑guide approach already used by many dealerships and contended that switching to straight/actual time would add administrative burden and could discourage efficiency. Matthew Larsgaard, with the Automobile Dealers Association of North Dakota, told the committee that dealers generally use published, industry time guides for both customer estimates and internal compensation, and that requiring signed job time tickets or other time‑tracking could be disruptive. “Straight time would completely upend our business model,” Larsgaard said, adding that technicians currently are paid under a flat‑rate system and could earn more under the introduced time‑guide approach.

Testimony and written materials cited competing concerns about fraud controls and audits. Larsgaard noted manufacturers already have audit and chargeback rights under current law; Andress replied that audit rights do not address the core dispute about which time standards apply. The manufacturers’ representative also referenced a cost estimate — that passage of the bill as written would raise warranty costs borne by consumers — and told the committee an analysis estimated roughly $22,000,000 in additional warranty repair costs to North Dakota consumers if the bill were enacted statewide without change.

Committee members questioned details of both alternatives, including how a rebuttable‑presumption process would operate (Andress pointed to page 2 of the 03/2002 draft as “the heart of this amendment”), how job time tickets would be authenticated, and whether the statutory language would affect parts pricing or only labor time. Andress described 03/2002 as focusing on reasonableness across multiple sections and said manufacturers urged reasonableness language as a moderating standard. Larsgaard acknowledged that the bill’s core dispute is not parts rates but which time guide or record controls the number of reimbursable hours.

Senators asked for clarification on related provisions: whether parts markup and special part‑number rules remained, how dealers could request changes to manufacturer time guides, and whether technicians’ pay could be directed to increase as part of any amendment. Dealers suggested a potential compromise that any additional reimbursement could be steered toward technicians to address recruitment and retention concerns; manufacturers said they had discussed but not endorsed specific allocation formulas.

After questions and short rebuttals from both sides, Senator Corey moved a “do pass” recommendation and Senator Paulson seconded. The clerk recorded votes: Vice Chair Corey (Aye), Senator Hogan (Aye), Senator Klein (Aye), Senator Paulson (Aye), Senator Romo (Nay) and Chairman Clemens (Nay). The motion passed and Senator Klein agreed to carry the bill to the floor.

The committee did not adopt either the actual‑time amendment (03/2003) or the rebuttable‑presumption amendment (03/2002) during the session; both were discussed as possible committee amendments. Committee members said they wanted time to study the technical language and the operational effects described by witnesses.

The debate focused on three practical tradeoffs: (1) whether to rely on industry time guides that many dealers use today, (2) whether to require documentation of actual technician minutes, and (3) whether to create a rebuttable presumption to facilitate dealer claims for extra time while giving manufacturers a written‑denial process. Both sides described existing checks — industry time‑guide publishing practices, dealer compensation practices, and manufacturers’ audit rights — and emphasized different risks from changing the statutory framework.

Supporters of the bill said it closes perceived loopholes in a 2013 franchise‑protection law; opponents cautioned that changes could shift warranty costs to vehicle buyers. Committee members asked staff to supply additional materials and analysis before any final conference committee compromise is negotiated.

Ending

The bill now moves toward the full Senate with a committee “do pass” recommendation. Committee members said they expect technical amendments to be discussed in the next stages; no floor action date was set in the hearing record.