Texas Warranty Reimbursement State Law


Cliff Notes: Parts & Labor as of 2020:

Timeframes for Approval and Reimbursement of Warranty Claims TEX. OCC. CODE ANN. § 2301.404 (a):
• 30 days to approve or reject claim
• A claim that is not disapproved before the 31st day after the date of receipt is considered approved
• 30 days to pay after approval.
• The request must be sent to the manufacturer or distributor by certified mail

Reimbursement Rate for Labor TEX. OCC. CODE ANN. § 2301.402(a)(b)(c):
• The average labor rate charged during the preceding six months by the dealer on 100 sequential non-warranty repair orders, exclusive of routine maintenance; or the average labor rate charged for 90 consecutive days during the preceding six months by the dealer for non-warranty repairs, exclusive of routine maintenance.

SUBCHAPTER I. WARRANTIES: REIMBURSEMENT OF DEALER

Sec. 2301.401. WARRANTY, PREPARATION, AND DELIVERY REQUIREMENTS.
a) On request, a manufacturer or distributor shall provide to the department a copy of the current requirements the manufacturer or distributor imposes on its dealers with respect to the dealer’s:
(1) duties under the manufacturer’s or distributor’s warranty; and
(2) vehicle preparation and delivery obligations.
(b) Warranty or preparation and delivery requirements placed on a dealer by a manufacturer are not enforceable unless the requirements are reasonable.

Added by Acts 2001, 77th Leg., ch. 1421, Sec. 5, eff. June 1, 2003.
Amended by:
Acts 2011, 82nd Leg., R.S., Ch. 1290 (H.B. 2017), Sec. 14, eff. September 1, 2011.
Acts 2013, 83rd Leg., R.S., Ch. 1135 (H.B. 2741), Sec. 15, eff. September 1, 2013.

Sec. 2301.402. RATE OF COMPENSATION.
(a) A manufacturer or distributor shall fairly and adequately compensate its dealers for warranty work.
(b) A manufacturer or distributor may not pay or reimburse a dealer an amount of money for warranty work that is less than the amount the dealer charges a retail customer for similar nonwarranty work.
(c) In computing the amount of money a dealer charges a retail customer under Subsection (b), the manufacturer or distributor shall use the greater of:
(1) the average labor rate charged during the preceding six months by the dealer on 100 sequential nonwarranty repair orders, exclusive of routine maintenance; or
(2) the average labor rate charged for 90 consecutive days during the preceding six months by the dealer for nonwarranty repairs, exclusive of routine maintenance.

Added by Acts 2001, 77th Leg., ch. 1421, Sec. 5, eff. June 1, 2003.

Sec. 2301.403. ADJUSTMENT OF WARRANTY LABOR RATE.
(a) A dealer may request an adjustment in the dealer’s warranty labor rate. The request must be sent to the manufacturer or distributor by certified mail, return receipt requested, and must state the requested rate and include information reasonably necessary to enable the manufacturer or distributor to adequately evaluate the request.
(b) Not later than the 60th day after the date of receipt of a request under this section, the manufacturer or distributor shall provide written notice to the requesting dealer of the approval or disapproval of the request. If the request is disapproved, the manufacturer or distributor shall state the reasons for the disapproval.
(c) A requesting dealer may file a protest with the board if the manufacturer or distributor:
(1) disapproves the request; or
(2) fails to respond within the time required by this section.
(d) After a protest is filed, the board may uphold the manufacturer’s or distributor’s decision only if the manufacturer or distributor proves by a preponderance of the evidence that the disapproval of the request or failure to respond was reasonable.
(e) If the board does not determine that the disapproval of the request or failure to respond was reasonable, the board shall order the requested rate into effect as of the 60th day after the receipt of the request by the manufacturer or distributor.
(f) Except by agreement of the parties, a warranty labor rate established under this subchapter may not be adjusted more often than once a year.

Added by Acts 2001, 77th Leg., ch. 1421, Sec. 5, eff. June 1, 2003.

Sec. 2301.404. TIME FOR PAYMENT.
(a) A manufacturer or distributor shall pay a dealer’s claim for reimbursement for warranty work or dealer preparation and delivery work not later than the 30th day after the date of approval of the claim.
(b) A claim that is not disapproved before the 31st day after the date of receipt is considered approved.
(c) If a claim is disapproved, the manufacturer or distributor shall provide the dealer written notice of the reasons for the disapproval.

Added by Acts 2001, 77th Leg., ch. 1421, Sec. 5, eff. June 1, 2003.

Sec. 2301.405. CHARGE BACK TO DEALER.
(a) A manufacturer or distributor may not charge back to a dealer money paid by the manufacturer or distributor to satisfy a claim approved and paid under this subchapter unless the manufacturer or distributor shows that:
(1) the claim was false or fraudulent;
(2) repair work was not properly performed or was unnecessary to correct a defective condition; or
(3) the dealer who made the claim failed to substantiate the claim as provided by the manufacturer’s or distributor’s requirements that were enforceable under Section 2301.401 at the time the claim was filed.
(b) A manufacturer or distributor may not audit a claim filed under this subchapter after the first anniversary of the date the claim is submitted unless the manufacturer or distributor has reasonable grounds to suspect that the claim was fraudulent.

Added by Acts 2001, 77th Leg., ch. 1421, Sec. 5, eff. June 1, 2003.