On the Dash:
- New Jersey law guarantees dealerships fair compensation for recall and warranty work, including average retail labor time allowances.
- Manufacturers must cover all costs for recalled vehicles, including parts, labor, and inventory, and cannot retaliate against dealers.
- The law strengthens consumer protections, improves recall notifications, and gives dealer associations legal standing to enforce compliance.
New Jersey Gov. Phil Murphy signed legislation Sept. 12 that guarantees dealership technicians fair compensation for recall and warranty work while providing additional protections for both dealerships and vehicle owners. The Motor Vehicle Open Recall Notice and Fair Compensation Act (A4380/ S3309) will take effect on April 1, 2026, and is designed to standardize labor reimbursement and enforcement for New Jersey dealerships.
The law requires manufacturers to pay dealerships no less than the retail labor rate for warranty and recall repairs, including an option to calculate reimbursement using an “average retail labor time allowance.” This process enables dealers to submit recent customer-paid service orders, allowing them to determine the time required for specific repairs and ensuring more accurate compensation than manufacturer flat-rate guides. Automakers are also responsible for costs associated with recalled vehicles under “stop sale” or “do not drive” orders, including parts, labor, and inventory.
Dealerships submitting claims are protected from financial retaliation by manufacturers, and the law increases accountability by giving the New Jersey Coalition of Automotive Retailers (NJ CAR) and similar associations legal standing to sue over violations. The legislation also strengthens notification requirements for vehicle owners with open recalls, encouraging them to complete free safety repairs at authorized dealerships.
The legislation follows a growing national trend of states regulating manufacturer reimbursement for dealer labor, though New Jersey’s approach is unique in offering a statutory method for calculating average retail labor time allowances. By codifying fair compensation and strengthening enforcement, New Jersey aims to provide dealers with predictable and equitable payment for essential safety and warranty repairs, while protecting consumers.
