November 10, 2017 - Introduced by Representatives Ballweg, Barca, Considine,
Felzkowski, Fields, Meyers, Mursau, Novak, Petryk, Rohrkaste, Sinicki,
Thiesfeldt, Tittl, Wachs, Zepnick, Steffen and Tusler, cosponsored by
Senators Olsen, Darling, Erpenbach, Feyen, Miller, Moulton, Testin and
Wanggaard. Referred to Committee on Consumer Protection.
AB635,1,5 1An Act to renumber and amend 218.0125 (1) (b) and 218.0125 (7); and to
2create
218.0125 (1) (b) 1. to 7., 218.0125 (7) (c) 2. and 218.0125 (8) of the
3statutes; relating to: reasonable compensation of a motor vehicle dealer by a
4motor vehicle manufacturer, importer, or distributor for certain motor vehicle
5service work.
Analysis by the Legislative Reference Bureau
This bill makes several changes related to motor vehicle manufacturers',
importers', or distributors' (manufacturers') compensation of motor vehicle dealers
(dealers) for certain service work for the manufacturer (covered work).
Under current law, a manufacturer must reasonably compensate a dealer that
performs covered work. Covered work is work to rectify certain product defects,
certain motor vehicle delivery or preparation work, and other work requested or
approved by the manufacturer. The manufacturer must compensate the dealer
based on the dealer's effective nonwarranty labor rate and the average percentage
markup over dealer cost for parts. The effective nonwarranty labor rate is
determined by dividing the total customer labor charges for “qualifying nonwarranty
repairs” by the total number of hours that would be allowed for the repairs if the
repairs were made under the manufacturer's time allowances.
This bill limits qualifying nonwarranty repairs to repairs made to a motor
vehicle of a line make for which the manufacturer provides a warranty. The bill also
excludes several types of motor vehicle work from the definition of qualifying
nonwarranty repair.

Under current law, a claim made by a dealer for compensation for covered work
must be either approved or disapproved within 30 days after the claim is submitted
to the manufacturer, and an approved claim must be paid within 30 days after its
approval. A manufacturer, however, retains the right to audit claims for a period of
one year after the date on which the claim is paid and to charge back any amounts
paid on claims that are false or unsubstantiated.
This bill specifies that a manufacturer may not charge back amounts paid on
claims due to the dealer's failure to comply with requirements of the manufacturer
related to the processing of a warranty claim if the dealer provides reasonable proof
that the work for which the claim is made was actually performed and was covered
work.
This bill also specifies that a manufacturer may not do any of the following for
the purpose of recovering the costs of compensating its dealers for covered work:
1. Increase the price the manufacturer charges its dealers for services or for
vehicles or other goods.
2. Impose a charge or surcharge on its dealers.
3. Reduce a payment that is due from the manufacturer to its dealers.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB635,1 1Section 1. 218.0125 (1) (b) of the statutes is renumbered 218.0125 (1) (b)
2(intro.) and amended to read:
AB635,2,83 218.0125 (1) (b) (intro.) “Qualifying nonwarranty repairs" means nonwarranty
4repairs to a motor vehicle of a line make for which the manufacturer, importer, or
5distributor provides a warranty
that would be covered by the warranty of a
6manufacturer, importer, or distributor if the vehicle being repaired was covered by
7the warranty. The term “Qualifying nonwarranty repair” does not include routine
8maintenance.
any of the following:
AB635,2 9Section 2. 218.0125 (1) (b) 1. to 7. of the statutes are created to read:
AB635,2,1010 218.0125 (1) (b) 1. Oil changes or other routine maintenance.
AB635,2,1311 2. Replacement of fluids, filters, belts, nuts, bolts, fasteners, wiper blades,
12bulbs, or similar items, unless the replacement is part of a repair that otherwise
13constitutes a qualifying nonwarranty repair.
AB635,3,2
13. Replacement of tires, alignments, or other work related to the replacement
2of tires.
AB635,3,53 4. Repairs paid for by, or made under a service contract sponsored or
4administered by, the manufacturer, importer, or distributor or an affiliate of the
5manufacturer, importer, or distributor.
AB635,3,76 5. Repairs of a motor vehicle that is owned at the time of the repair by the dealer
7or an employee of the dealer.
AB635,3,88 6. Installation of accessories.
AB635,3,99 7. Motor vehicle safety or emissions inspections required by law.
AB635,3 10Section 3. 218.0125 (7) of the statutes is renumbered 218.0125 (7) (a) and
11amended to read:
AB635,3,1612 218.0125 (7) (a) A claim made by a franchised motor vehicle dealer for
13compensation under this section shall be either approved or disapproved within 30
14days after the claim is submitted to the manufacturer, importer or distributor in the
15manner and on the forms the manufacturer, importer or distributor reasonably
16prescribes.
AB635,3,21 17(b) An approved claim under par. (a) shall be paid within 30 days after its
18approval. If a claim under par. (a) is not specifically disapproved in writing or by
19electronic transmission within 30 days after the date on which the manufacturer,
20importer or distributor receives it, the claim shall be considered to be approved and
21payment shall follow within 30 days.
AB635,4,2 22(c) 1. A manufacturer, importer or distributor retains the right to audit claims
23under par. (a) for a period of one year after the date on which the claim is paid and
24to charge back any amounts paid on claims that are false or unsubstantiated. If there
25is evidence of fraud, this subsection subdivision does not limit the right of the

1manufacturer to audit for longer periods and charge back for any fraudulent claim
2under par. (a), subject to the limitations period under s. 893.93 (1) (b).
AB635,4 3Section 4. 218.0125 (7) (c) 2. of the statutes is created to read:
AB635,4,94 218.0125 (7) (c) 2. A manufacturer, importer, or distributor may not charge
5back any amount paid on claims under par. (a) due to the dealer's failure to comply
6with requirements of the manufacturer, importer, or distributor related to the
7processing of a warranty claim if the dealer provides reasonable proof that the work
8for which the claim is made was actually performed and was subject to reasonable
9compensation under sub. (2m) or (3m).
AB635,5 10Section 5. 218.0125 (8) of the statutes is created to read:
AB635,4,1311 218.0125 (8) A manufacturer, importer, or distributor may not do any of the
12following for the purpose of recovering the costs of compensating its dealers under
13this section:
AB635,4,1514 (a) Increase the price the manufacturer, importer, or distributor charges its
15dealers for services or for vehicles or other goods.
AB635,4,1616 (b) Impose a charge or surcharge on its dealers.
AB635,4,1817 (c) Reduce a payment that is due from the manufacturer, importer, or
18distributor to its dealers.
AB635,4,1919 (End)
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