It’s remarkable how fast 2025 has gone by, filled with impactful developments that affect the auto industry nationally and locally. As I reflect on the many accomplishments of NJ CAR during the past year, I feel a sense of pride because of the important passage of one of the most comprehensive warranty labor time laws in the United States.

The passage and enactment of the “Motor Vehicle Open Recall Notice and Fair Compensation Act” (A4380/S3309) (P.L. 2025, c.140) is a tremendous accomplishment for NJ CAR. While there are numerous provisions, its name signifies two of the main features of the law, which are to 1) Provide enhanced notification to consumers about open recalls, and 2) Establish a process for the fair compensation of automotive technicians through their dealerships. Another important aspect of the law is amending the New Jersey Franchise Practices Act (NJFPA) to grant standing to NJ CAR to sue on behalf of dealers if there is an alleged violation of the NJFPA by manufacturers.

Safety Recall Notice

In 2024, the National Highway Traffic Safety Administration (NHTSA) ordered automakers to recall 27.7 million vehicles across the United States. Approximately 1.4 million vehicles in New Jersey today are being operated on the roadways with unresolved safety or emissions recalls. The new law requires that when the New Jersey Motor Vehicle Commission (NJMVC) issues motor vehicle registration or registration renewal notices to New Jersey consumers, it must also notify them that the NHTSA maintains a database whereby consumers can determine if their motor vehicle is subject to an open recall.

This “Open Recall Notice” must also include a link to the NHTSA database and a statement indicating that each open recall may be repaired at no cost to the consumer by a franchised new car dealer approved by the manufacturer. The NJMVC may apply for monies, including through federal grants, to fund this process. The law also provides that manufacturers who do business in the State must assist the NJMVC with the application for funding. The chief administrator may require manufacturers who conduct business in the State to pay a fee to fund the implementation.

Fair Compensation for Warranty and Recall Work

For many years, it has been the practice of manufacturers to manipulate the time it takes to complete a repair under warranty or recall. This manipulation often takes the form of a reduction in the number of hours it takes to make a repair immediately before a significant recall is announced. Dealers were also subjected to time guides established by the manufacturer, which were set in pristine conditions that do not consider the rigors of the average dealership service facility. These imbalances required a change in the law, which the “Motor Vehicle Open Recall Notice and Fair Compensation Act” sought to address.

The law requires manufacturers to compensate dealers for warranty and recall work at the same rate a retail customer pays for the same repair, accomplishing this by allowing the dealership to set its own average retail labor time allowance to be paid by the manufacturer. The law also allows the dealership to establish its own multiplier by:

“… taking the number of hours billed in 100 sequential customer-paid service repair orders or 90 days of customer paid service repair orders, whichever is less, covering repairs made no more than 180 days before the submission, and dividing that by the numbers of hours permitted by the motor vehicle franchisor for any such repairs under the motor vehicle franchisor’s labor time guide for franchisor-paid repairs or service. The resulting quotient shall be applied to the motor vehicle franchisor’s labor time guide to establish the motor vehicle franchisee’s average retail labor time allowance.”

In practice, the law requires a step-by-step procedure to establish a dealer’s labor time allowance.

These steps are summarized as follows:

• STEP 1 — Dealer takes 100 sequential customer-paid repair orders or 90 days of customer-paid repair orders, whichever is less, to establish their own multiplier. Only repairs made no more than 180 days prior to submission of the claim can be considered.
  • This is not applicable to all exclusions listed by the law, including routine maintenance, as well as all lines without an operations code in the manufacturer’s time guide.
• STEP 2 — Dealer would then add up all the hours of labor time for the 100 sequential customer-paid repair orders.
  • That number is your NUMERATOR.
• STEP 3 — Dealer would then add the OEM labor time hours from the manufacturer’s time guide with correlating operations codes to the customer pay work for the 100 repair orders they are analyzing.
  • That number is your DENOMINATOR.
• STEP 4 — Dealer would then divide the hours in the numerator by the hours in the denominator to establish the dealership multiplier that would be applied to all warranty and recall work, which is all based on customer-paid repair orders.

It is worth noting that this process can be tedious for dealerships to calculate on their own. Therefore, it is recommended that dealerships use a credible warranty reimbursement firm to help submit a proposal to their manufacturer to establish their labor time allowance. In anticipation of the law’s effective date, April 1, 2026, NJ CAR has partnered with ARMATUS and WITHUM to help educate our members about the submission process serving as an option to provide their services if members choose.

Standing

As a trade association that represents 520+ franchised neighborhood new car and truck dealers in New Jersey, we take pride in advocating for our members. That advocacy often involves the State legislature, but sometimes litigation is required to protect the interests of the association’s members.

Unfortunately, NJ CAR met roadblocks on the issue of standing in recent cases brought both in Federal and State courts. New Jersey case law has a liberal treatment of associational standing. However, the New Jersey Supreme Court recently ruled in N.J. Coal. of Auto. Retailers, Inc. v. Ford Motor Co., 261 N.J. 348 (2025), that NJ CAR could not bring an action under the NJFPA using associational standing because the statute states that franchisees are the only ones who can bring actions against their franchisor for violations of the NJFPA. 

Amending the NJFPA to grant standing to NJ CAR was essential to allow the association to freely advocate for its members in court on important issues that arise under that statute. However, the law is not retroactive and does not apply to causes of action that originated prior to April 1, 2026.

Special Thanks

The passage of this law would not have been possible without the hard work of many stakeholders, including automotive technicians, unions, warranty reimbursement professionals, and finally, NJ CAR staff. I also want to point out the invaluable role the grassroots efforts of NJ CARPOOL played in securing the law’s passage. I encourage dealers to continue participating in NJ CARPOOL as it is a very valuable tool.

Enacting the “Motor Vehicle Open Recall Notice and Fair Compensation Act” is the first step toward achieving roadway safety by providing the timely repair of vehicles under recall and providing a clear process for fair compensation for automotive technicians.