121 CRMA Report – October 2017

In this issue

CHICAGO BUDGET ADDRESS
COOK COUNTY BUDGET PREVIEW
CITY COUNCIL UPDATES

CHICAGO BUDGET ADDRESS

Earlier this morning, Mayor Rahm Emanuel delivered his budget address for the upcoming 2018 budget year. Much of the speech focused in on the importance of investing in communities, from using the Neighborhood Opportunity Fund to develop and expand neighborhood retail and restaurant businesses to hiring more police officers and getting them better training, to investing in education and increased local job opportunities for teens and young adults. As for the city’s finances, the Mayor noted that all of the pensions are on a direct path to solvency, that he is balancing the budget without raiding the rainy day fund, selling assets or borrowing money to pay off existing loans. Through tough negotiations, the city has been able to keep its healthcare costs relatively flat and decreased its structural deficit since the Mayor’s been in office by 82%. He highlighted how important it was to eliminate the head tax during his first term, and announced that unemployment over the last six years has been cut in half.

The city’s $9 billion budget for 2018 will build on these successes but will not be without some additional revenue. The next installment from the previously approved increases in the property tax will hit next year as well as an increased amusement tax for large venues. Ride share fees will also increase in order to tackle public transportation modernization and address lost revenue from the parking garage tax and the flailing taxi industry. Outside of the previously scheduled property tax increase, the retail and restaurant industry should be able to survive next year’s budget largely unscathed. This will give us some time to figure out how to adjust to the next increase in the minimum wage, find ways to address the complexities of the paid sick leave and FMLA ordinance and prepare for any additional proposed regulations on the workforce.

The departmental budget overview will kick off on Monday, October 23rd with a public hearing on the budget scheduled for Wednesday, November 8th directly after the City Council meeting. CRMA will attend all departmental hearings that affect the retail industry and continue to update you on the budget process. All relevant budget documents can be found here.

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COOK COUNTY BUDGET PREVIEW

Cook County Board President, Toni Preckwinkle, issued her annual budget recommendation prior to the vote on the sweetened beverage tax (SBT) repeal. The $5 billion budget for 2018 originally included $200 million in revenue from the SBT. Before the vote to repeal the tax, President Preckwinkle warned each department that they would have to find 11% in cuts in their departments to make up the “lost” revenue. It is hard to imagine how in a $5 billion budget, a lost $200 million would necessitate cuts that deep, but it made headlines. Now that the SBT repeal vote is over, and the tax will actually be repealed on December 1, 2017, the Finance Chairman is asking each department to find 10% in cuts to kick off actual budget discussions.  

It is clear from the speeches made during the SBT repeal vote that Commissioners will be looking for ways to make the county leaner and more efficient before pursuing another tax. With 85% of the voters in Cook County expressing their opposition to the SBT, and frankly, to more taxes, Commissioners have their marching orders. They must find ways to maintain essential services, collaborate with the city of Chicago to save money and consolidate. The days of telling taxpayers that the County needs more revenue from them in order to survive, and then turning around and approving generous pay raises, increased benefits and future step pay increases are over. The taxpayers want a proper accounting for how the money is spent and for how the County plans to hold the line on spending. Employers want the same thing.

The County will be engaging in meetings through mid-November to hear from each department on how it plans to make cuts and increase savings. The budget will be adjusted throughout this process until a compromise is reached. Generally the County issues its budget before the Thanksgiving holiday, but this year, it may extend that process. Depending on how negotiations proceed, the County could issue its budget in February which is allowed by state law. We will keep members informed on the progress.

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CITY COUNCIL ORDINANCES AND RESOLUTIONS

INTRODUCTIONS

ORDINANCE – BAN ON REFUSING CASH AS PAYMENT FOR GOODS/SERVICES

Sponsors: Alderman Edward M. Burke (14th Ward) and Alderman Walter Burnett (27th Ward)

Committee: License and Consumer Protection

A recent Chicago Tribune article highlighted the “trend” of some retailers and restaurants moving away from allowing customers to pay with cash and instead only accepting card and mobile payments. The proposal cites concerns with escalating credit card balances and unnamed studies that suggest that when consumers pay with credit cards they are more likely to spend more. It also refers to a promotion offered by VISA that offered financial rewards to restaurants that met its “Cashless Challenge” by converting exclusively to cashless transactions. The proposal suggests that going cashless is a ploy to help enrich credit card companies while giving merchants access to consumer data with every swipe of the card. This data, according to the proposal, can then be susceptible to a breach, or it can be shared/sold for marketing purposes.

The proposal continues on to suggest that cashless transactions have a disproportionate effect on children under the age of 18 who are unable to apply for credit cards, as well as undocumented immigrants, the homeless and low-income consumers who are un-banked or under-banked. As evidence of this trend, the proposal names several restaurant chains where the price of a cup of tea can run $4.00 and a salad or sandwich averages $10.00. Hardly a place where the homeless or customers on a fixed income are frequenting.

Suggesting that this is a solution in search of a problem, the only other jurisdiction that has passed a law requiring merchants to pay with any acceptable form of legal tender is Massachusetts. That law was passed in 1978, prior to the internet being invented.

CRMA is currently developing its position on this matter.

 

ORDINANCE – EMPLOYEE DISCRIMINATION

Sponsors: Alderman Gilbert Villegas (36th Ward) and Alderman Carlos Ramirez-Rosa (35th Ward)

Committee: Human Relations

This proposal would prohibit employers from discharging, or otherwise discriminating against, an employee for changing or attempting to change their name, SSN or federal employment authorization document. It is unknown at this time if this is related to the city developing its own ID card for use with city services, but this section is being added to that section of the Municipal Code.

CRMA is currently developing its position on this matter.

 

ORDINANCE – ELECTRICAL CODE AMENDMENTS

Sponsor: Mayor Rahm Emanuel

Committee: Zoning, Landmarks and Building Standards

Most of the changes made here are not substantive and look like an attempt to clean up some of the Code and ensure that the correct citations to other parts of the Code are noted by reference. There is new language governing branch circuits, feeders, PVC, RTRC, luminaires, lampholders and lamps. Please ensure that persons in control of your building operations review the changes.

CRMA takes no position.

 

ORDINANCE – ENERGY PERFORMANCE RATING SYSTEM

Sponsor: Mayor Rahm Emanuel

Committee: Zoning, Landmarks and Building Standards

This proposal would set in place an energy performance rating system for covered buildings which assigns stars based on performance. A four star rating would be the highest and zero being the lowest. Buildings would be provided their rating on an annual basis and must disclose their score in any advertisement to sell the building. Water usage information could be made readily available to the public.

CRMA takes no position at this time. Please let us know if you have concerns.

The next City Council meeting is scheduled for Wednesday, November 8, 2017.

The next Cook County Board meeting is scheduled for November 15, 2017.

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Tanya TricheTanya Triche Dawood
Vice President, General Counsel
IL Retail Merchants Association
312-726-4600
ttrichedawood@irma.org

121 Report – CRMA – August 2017

CITY COUNCIL ORDINANCES AND RESOLUTIONS

INTRODUCTIONS

 

RESOLUTION – CALL FOR CITY TO FILE REQUEST FOR REVISED PROPERTY TAX ASSESSMENTS

Sponsor:  Alderman Anthony Beale (9th Ward)

Committee:  Finance

 A recent Chicago Tribune investigative report raised concerns that property in Cook County was being over-assessed in poor neighborhoods and under-assessed in more wealthy neighborhoods.  Suggesting that the system used to evaluate a property’s value was fundamentally flawed, the report indicated that a more fair and accurate system, developed by professors at the University of Chicago, was never implemented.  The report set off a media blitz questioning the direction of the Assessor’s office, led by Joe Berrios.  Subsequently, the Cook County Board held a meeting to question the Assessor regarding the allegations made in the Tribune report and have vowed to make changes.

This resolution asks for the city to file a request for the Assessor’s office to revise assessments made on Chicago’s homes and businesses if the assessment resulted in a more than 7% negative variance from the market value of the property.  In addition, the resolution requests that the assessor’s office write rules for how it will address the inequities highlighted in the report.  Lastly, it directs the city’s Corporation Counsel to review whether there were any civil rights violations as a result of the current assessment system.

 

ORDINANCE – REGULATION OF AUTOMATIC SHUT-OFF VALVES AT GAS STATIONS

Sponsor:  Alderman Raymond Lopez (15th Ward)

Committee:  Finance

Concerned that gas station owners are not being diligent in ensuring that the automatic shut-off valves in their pumps are in good working order, Ald. Lopez introduced this proposal to require more frequent inspections of gas stations and greatly increasing fines specifically for not having an appropriately operational automatic shut-off valve.  Today the fine is not less than $500 and no more than $1000 for each offense.  The new fine for automatic shut-off valves would increase to $2500 per offense per day until the problem is fixed.

 

ORDINANCE – REVISION TO THE ELECTRICAL CODE

Sponsor:  Mayor Rahm Emanuel

Committee:  Zoning, Landmarks and Building Standards

This over 200-page document seeks to update and revise the city’s electrical code.  It is an attempt to bring the code in line with the National Electrical Code.  The city’s code has not been updated in about 14 years, and as you can imagine, much has changed.  We encourage your real estate professionals and building teams to review the changes and contact us with questions or concerns.

The City Council and Cook County Board do not meet in the month of August.  The next City Council meeting is scheduled for Wednesday, September 6, 2017 and the Cook County Board is scheduled to meet on Wednesday, September 13, 2017.

 

Tanya TricheTanya Triche Dawood
Vice President, General Counsel
Illinois Retail Merchants Association
312-726-4600
ttrichedawood@irma.org

121 Report – CRMA – July 2017

In this issue

  • City Council Updates

More about CRMA

CITY COUNCIL ORDINANCES AND RESOLUTIONS

INTRODUCTIONS

RESOLUTION 

REGULATION OF EMPLOYEE SCHEDULES

Sponsors:  Alderman Scott Waguespack (32nd Ward) and Alderman Toni Foulkes (16th Ward)

Committee:  Human Relations

This resolution calls for hearings to help alleviate what the sponsors consider to be unfair employee scheduling and employment practices.  It particularly highlights employees being “forced” to work part-time, employees’ inability to provide input or exercise control over their schedules and employer-initiated changes to schedules.  It concludes that such practices harm productivity.  This issue was originally discussed as part of Mayor Emanuel’s Taskforce on Working Families.  IRMA was a member of that taskforce.  CRMA members will recall that the taskforce ultimately decided not to move forward with a mandate.

ORDINANCE

REGULATION OF EMPLOYEE SCHEDULES

Sponsors:  Alderman Scott Waguespack (32nd Ward), Alderman Toni Foulkes (16th Ward), Alderman Ameya Pawar (47th Ward) and 14 additional co-sponsors

Committee:  Committees, Rules and Ethics

The proposal seeks to mandate the following:

• Provide employees with a “good faith estimate” in writing of the employee’s work schedule that would include minimum hours and would presumably include more information such as what days per week an employee would expect to work

• The employee can request to modify the estimated work schedule prior to commencement of employment, and the employer can accept/reject the request as long as the communication is in writing

• Provide employees with a 2-week schedule by either posting it in the workplace or posting electronically as long as all employees are given access to the schedule at the workplace or remotely.  The employee can choose how they want their electronic schedule issued.  Upon initial hire, employers must provide employees an initial schedule to cover until the new schedule is issued

• If the employee changes their schedule after the schedule has been posted, there will be no ramifications under this ordinance

• Employees have the right to decline additional, previously unscheduled hours once the schedule has been issued; if the employee accepts the additional hours the employer must further compensate the employee with an additional hour of pay for the shift, including cases where an employee is asked to extend their current shift

• If an employer subtracts hours from a shift after the schedule has been issued or cancels a shift altogether, with less than 24 hours advanced notice, then the employer must pay the equivalent of 4 hours or the number of hours in the employee’s scheduled shift, whichever is less*

• If an employer moves a shift after the schedule has been issued, then the employee must be compensated*

• Penalty pay is not required when changes to schedules are made as a result of threats to employers, employees, property, or when civil authorities have recommended that work not continue; when the location is closed or business is interrupted due to public utilities’ failure to supply electricity, water or gas; failure in the sewer system; acts of nature, war, civil unrest, strikes or other issues outside of the employer’s control that cause operations to discontinue or mutually agreed upon shift swaps among employees

• Before hiring new employees, the employer must offer existing hours to current employees that are qualified to do the work; an employer is prohibited from not offering the hours because it may cause the employee to become eligible for employer-provided benefits under the ACA

• Employees have 72 hours to accept/decline the hours before the employer can hire for the position; if the offer of additional work is for an expected duration of 2 weeks or less, then the employee will have 24 hours to accept/decline the offer; all offers must be in writing or posted wherever schedules are posted; acceptance must be in writing; such writings and acceptance must be kept for 3 years

• If an employee works during the 11 hours following the end of a shift, the employee must agree to such a schedule in writing and must be compensated one and a half times the employee’s regular rate for the hours that are scheduled less than 11 hours from the end of the last shift

• Employees have the right to request numerous adjustments to their schedules, whether it be changes in hours, job sharing arrangements, or even part-year employment.  The employer cannot retaliate against the employee for exercising this right

• A notice of employee rights in the ordinance must be posted at the workplace and written notification must be given at time of hire along with the employer’s name, address and telephone number

• Private right of action is included and fines will be assessed

A covered employee does not include anyone who is paid on a salary basis and whose rate of pay per week is greater than the 40th percentile of weekly earnings of full-time non-hourly workers in the Midwest Census Region as determined by the USDOL.  Regardless, it will include all employees making less than $50,000/year or less than $962 per week.

CRMA is opposed.

DRUG PRICING TRANSPARENCY

Sponsors:  Alderman Edward M. Burke (14th Ward) and Alderman Sophia King (4th Ward)

Committee:  Finance

Citing the rising costs of prescription drugs and recent cases of drug manufacturers involved in what some consider to be price-fixing and/or price-gouging, this proposal seeks to establish a Chicago Prescription Drug Price Review Board convened by the Commissioner of the Department of Public Health.  The Board would review trend anomalies in the list price of medications and highlight those trends in an annually published report.  That report might also suggest the need for legislative action on certain issues as informed by the data.  The Board will also issue public advisory opinions on its findings and establish a Pharmaceutical Price Watch Hotline for consumers to report increased prices.

The proposal would compel manufacturers that allow their products to be sold in Chicago to report all brand-name and generic drugs sold, and for brand-name drugs, the must report any WAC increase of 10% or more, or a 12-month price increase of $10,000 or more or a drug that has a 12-month WAC of $30,000 or more.  For generic drugs, WAC increases need to be reported if they are 25% or more, have a 12-month increase of $300 or more, or for new drugs, have a 12-month WAC of $3000 or more.  The city must be notified at least 90 days before a new drug is introduced to the market or before a price increase is instituted.  Justification for the price increase must also be produced.  Manufacturers found to be in violation of the ordinance shall have their names posted publicly by the department.

CRMA is developing its position.

 

ADOPTED ORDINANCES AND RESOLUTIONS

PUBLIC COMMENTS AT COUNCIL MEETINGS

Sponsors:  Ald. Edward M. Burke (14th Ward), Ald. Michelle Harris (8th Ward), Ald. Patrick O’Connor (40th Ward) and 3 additional co-sponsors

The city is amending its Rules of Order and Procedure to allow for the public to comment on any matter being considered at any full City Council meeting.  Comments will occur at the beginning of the meeting immediately after the roll call and invocation.  All persons requesting to speak must be physically present within the Council Chambers and must keep comments focused on a subject that appears on the agenda.  Remarks will be limited to 3 minutes.  The public comment period will last for 30 minutes.  This comment period will be in addition to the public comments period already in place for committee meetings.  Written comments can also be submitted to the full Council through the Sergeant-at-Arms.

EFFECTIVE DATE:  The ordinance will be in effect for the July City Council meeting.

 

MAINTAINING THE PREPAID WIRELESS 911 SURCHARGE

Sponsor:  Budget Director

As the May 31st deadline for the end of the legislative session came and went without passing a budget, the city received word that unless it proactively passed its own ordinance, it would no longer be able to collect revenue from the 911 surcharge.  The 7% tax on cell phones was scheduled to increase to 9% and the landline surcharge was scheduled to increase from $3.90 to $5.00 but the increases were tied up in the budget bill.  The Mayor moved to pass an ordinance to preserve the surcharge before the deadline of July 1st, so that the city could continue to collect the revenue regardless of whether the legislature passes a budget.  The legislature has since passed a budget that was vetoed by Governor Rauner and later overridden by both houses.

EFFECTIVE DATE:  Increases will occur beginning on September 1st. 

 

LICENSING OF MASSAGE ESTABLISHMENTS

Sponsors:  Ald. Matt O’Shea (19th Ward), Ald Michelle Harris (8th Ward), Ald. Michael Scott, Jr. (24th Ward) and 5 additional co-sponsors

This ordinance will require businesses that offer massage services to obtain a regulated business license in addition to their limited business license.  The license, approved by the Department of Business Affairs and Consumer Protection, requires each applicant to submit information on the types of massages offered, proof that employees are at least 18 years old, employment history of each applicant for the 3 years preceding the application, the previous experience of each applicant in the massage business, evidence of any previous business licenses for massage establishments revoked in any other jurisdiction, history of criminal violations and any lease information (if applicable).  Licenses will be denied to any person found to have violated certain sections of the Municipal Code, offenses involving sexual misconduct with children, trafficking of persons, other sexual offenses or any other felony not excused by the Commissioner.

As a condition of the license, licensees must keep the premises clean and sanitized, display prices in a written price list, require employees to wear nontransparent clothing of all sensitive areas, require clients to cover sensitive areas, launder sheets and towels after each use, refrain from touching any client in a sexual/genital area, keep physical facilities in good repair, keep a year’s worth of records of services rendered, have clear glass entrances to the establishment, separate entrances/exits from residences, post a sign identifying the name of the establishment, post an advisory notice for the benefit of customers, disinfect all massage tables, lavatories and floors, provide a toilet facility and provide closed cabinets for storage for towels and linens.

Massage therapists must be licensed by the state in order to work in the establishment, and licensees must keep a list of all employed massage therapists along with a copy of their license and state-issued photo ID.  The license must be displayed in the establishment and any advertisements must also show the city license number.  Licenses cannot be transferred.

EFFECTIVE DATE:  October 13, 2017

The next City Council meeting will be held on Wednesday, July 26, 2017.

CONTACT

Tanya TricheTanya Triche Dawood
Vice President, General Counsel
Illinois Retail Merchants Association
312-726-4600
ttrichedawood@irma.org

 

This Week in Springfield – 100-17

While most of Illinois, and all of America, is enjoying a long 4th of July holiday, Springfield ground on in an attempt to bring a multi-year budget/fiscal crisis to an end as the 2017 fiscal year came to an end on June 30th. The week was also noteworthy for an unusual, but not wholly unexpected, mid-session change in leadership.

TAX & BUDGET BILLS PASS – REFORMS MISSING

Illinois has not had a full budget in over two years – the only state with that historical notoriety and has watched its credit rating fall to one-step above ‘junk bond’ status with the credit rating agencies expected to move it into junk bond status Wednesday morning absent a solution. Meanwhile, spending continues at approximately $39 billion while receipts are closer to $32 billion. The result has been a bill backlog exceeding $15 billion and counting with state vendors threatening to cut off services or cutting of services.

On June 21st, Governor Bruce Rauner utilized his constitutional authority to call special session and promised to keep the Assembly in session until a balanced budget and meaningful reforms were agreed to and passed. This was the result of the Assembly and the Governor not agreeing on a budget by midnight on May 31st. Since then, there have been an endless series of discussions between working groups, formal and informal, of various legislators and leaders on budget, taxes, and some reforms including workers’ compensation, reducing local governmental units, and property taxes.

Friday, June 30th witnessed a comprehensive budget amendment adopted, but not formally passed, in the House with a bi-partisan 90 votes – well above the 71 needed for passage after May 31st. The proposal, contained in House Amendment #3 and House Amendment #4 to  S.B. 6 (Sen. Heather Steans, D- Chicago/Rep. Greg Harris, D- Chicago) seeks to authorize just over $36 billion in spending. That is approximately $2.5 billion less in spending than is being spent today without a budget.

Early in the evening of Sunday, July 2nd, the House considered and passed 72-45 a tax bill with 15 Republicans voting in favor. One House Republican voted for the spending but against the revenue to pay for it. Conversely, ten House Democrats considered politically vulnerable voted for the spending contained in the budget bill but did not vote for the revenues to pay for it in SB 9. This is a common practice for both parties but stands out in particular contrast this time given the actions of the 15 House Republicans. Contained in House Amendment #3 to S.B. 9 (Sen. Toi Hutchinson D- Chicago Heights/Rep. Greg Harris, D- Chicago), is a $4 billion-plus tax increase and includes the following provisions:

  • Increased personal income taxes from 3.75% to 4.95%;
  • Increased corporate income taxes from 5% to 7%;
  • Gasohol will be taxed at 100% while biodiesel, biodiesel blends, and majority blended ethanol, which were to be taxed at 100% after December 31, 2018, had their exemption extended to December 31, 2023. Gasohol is currently taxed at 80% and was scheduled to be taxed at 100% beginning January 1, 2019.
  • Rewrites the Unclaimed Property Act. While it retains the exemption for gift cards, it removes the business-to-business exemption. Unclaimed property receipts go to pension funds and this is estimated to bring in approximately $63 million more;

When SB 9 was originally passed by the Senate, it contained an expansion of the sales tax to include most services as well as a tax on cable, satellite and streaming. Those, and several other provisions, were not included in the amendment passed by the House.

Immediately after the passage of the tax bill, the budget bill, SB 6, was also called for a final vote and approved on a bi-partisan 81-34 roll call. Monday, July 3rd, the House passed the Budget Implementation Bill, otherwise known as the “BIMP”, 73-36 as contained in SB 42 (Sen. Donne Trotter, D- Chicago/Rep. Greg Harris, D- Chicago). The appropriation bill (SB 6) grants spending authority and is the budget, the revenue bill (SB 9) provides the funding mechanisms, and the BIMP (SB 42) makes statutory changes necessary to allow the agencies to implement the budget as passed.

Two of the bond rating agencies issues statements after the House action signaling their approval of their actions. Standard & Poor’s, in particular, noted that is it only a start but “even with a budget, however, it is likely that Illinois’ finances would remain strained and vulnerable to unanticipated stress.” The statement went on to note that “If a budget is enacted, the degree to which it closes the state’s structural deficit, provides a pathway for addressing the backlog of unpaid bills, and its impact on cash flows, will be important factors in our review of its effect on Illinois’ credit quality.” Many budget experts and observers have noted that while SB 6 predicts a surplus of between $353 and $377 million, and those monies can be used to finance bonds, likely around $3 – $3.5 billion, that is well short of dealing with the state’s $15 billion backlog.

Today, July 4th, the Senate voted to concur with the House on their amendments to Senate Bills 6 (roll call of 39-14) , 9 (roll call of 36-18), and 42 (roll call of 36-17), and sent the bills to the Governor. The bills were passed with primarily Democratic votes. One Senate Democrat voted for the budget and against the revenue. One Senate Republican voted in favor of the revenue bill and budget bill. Three other Senate Republicans voted against the revenue bill but voted for the budget bill. Republicans primarily voted ‘no’ based on the fact that the reforms Illinois needs were not included. Democrats counter that there are a number of bills they have passed to the Governor on workers’ compensation and property taxes in particular. However, the Republicans note those are the Democrats’ version of what constitutes a compromise and not an actual, negotiated compromise.

Governor Rauner had previously stated his intent to veto the bills as they lack the reforms he is seeking. Indeed, within two hours of the Senate concurring with the House on Senate Bills 6, 9 and 42, the Governor vetoed all three.  The Governor’s veto message stated his belief that the budget bill is $2 billion out-of-balance and that the reforms he is seeking and believes will return Illinois’ economic competitiveness are missing. The Senate promptly voted to override all three vetoes. Speaker Madigan announced that the House will not be considering override motions today as there are not enough House members in town – particularly those who would be needed to vote to override the Governor’s vetoes. At the moment, we anticipate House action tomorrow but that could change at any time.

It is also widely anticipated that the Governor will utilize his authority to call the Assembly into special session each day until reforms are enacted.

Missing from these votes are truly bi-partisan reforms. Particularly three non-revenue impacting reforms retail sought not to mention reforms such as workers’ compensation. At a joint press conference Monday afternoon, IRMA, the Illinois Manufacturers’ Association, and the Illinois Chamber of Commerce noted the progress on a budget but absent much needed reforms, the cycle that got Illinois into this fiscal and economic mess over the course of 20-plus years will continue. While the Democrats vowed to continue to work on these reforms, it remains to be seen if they, the Governor’s Office, and the legislative Republicans engage in meaningful discussions in the days to come.

ONE SENATE REPUBLICAN LEADER RETIRES….

Last week, then-Senate Republican Leader Christine Radogno (R-Lemont) announced her retirement effective July 1st. A social worker by education and profession, Radogno first won election as a trustee in the Village of LaGrange. She was elected to the Illinois Senate in November 1996 when she bested a long-time Republican incumbent in the primary and subsequently won the general election. An unsuccessful candidate for State Treasurer in 2006, Radogno secured a special place in Illinois legislative history in 2009. That was the year she was became Senate Republican Leader and the first women to lead one of the four legislative caucuses.

Known for her calm hand and reasonable approach to the legislative process, she was always a strong supporter of the retail sector. On behalf of Illinois’ retail sector, we thank her for her 20 years of sacrifice, dedication, and support and wish her nothing but every happiness.

…NEXT SENATE REPUBLICAN LEADER ELECTED

Within 24-hours of then-Leader Radogno’s retirement announcement, the Senate Republican Caucus unanimously coalesced around Senator Bill Brady (R- Bloomington) as its new Leader. A real estate developer and businessman by profession, Leader Brady is a veteran legislator having served in the Illinois House from 1993 – 2001 and in the Senate since 2002. A three-time candidate for Governor, Brady was the Republican nominee in 2010 when he lost to former Governor Pat Quinn by approximately 32,000 votes despite winning 98 of Illinois’ 102 counties. On behalf of the Illinois retail community, we congratulate Leader Brady, look forward to working with him, and wish him every success.

This Week in Springfield, – 100-16

In This Issue:

WHERE ARE WE NOW?
MINIMUM WAGE
PAID LEAVE
COMPENSATION HISTORY
WORKERS’ COMPENSATION
TELECOM MODERNIZATION
GEOLOCATION
RIGHT TO KNOW
EMPLOYEE TRANSPORTATION BENEFITS PROGRAM
CATFISH LABELING
FOOD ALLERGEN TRAINING

 

This Week In Springfield, the scheduled adjournment deadline of May 31st passed with the state no closer to the budget and economic reforms necessary to return Illinois to economic preeminence. Illinois has now gone over 700 days without a budget.

WHERE ARE WE NOW?

Based on the failure to yet again adopt a state budget, bond rating agencies awarded Illinois with yet another ignominious headline: lowest bond rating received by a state in US history. That puts Illinois literally one step above ‘junk bond’ status. The result is that Illinois’ borrowing costs will be significantly more expensive putting added pressure on the fiscal crisis. Illinois’ unpaid bill backlog now exceeds $14 billion. Additionally, there is little progress on reforms needed to return stability to Illinois. As IRMA has long noted, there is no stability without restraint. On the state level, that requires not only long term spending restraint but restraint on imposition of other unfunded cost mandates. The combination of tax increases and cost mandates can and will be crippling. Additionally, lawmakers must exercise their constitutional authority to impose restraint on local governments from doing the same. One need look no further than  the City of Chicago and Cook County and what they have done with devastating results particularly outside of the Loop and more affluent pockets.

As noted previously in TWIS, attempts at a bi-partisan ‘grand bargain’ failed to come to fruition in the Senate with each side pointing the figure at the other. The Senate Democrats eventually passed their own $37 billion budget (SB 6) funded by $5.4 billion in new revenue (SB 9). The House Democrats could not agree amongst themselves on the right combination of tax increases prior to June 1st. Among the numerous provisions they were considering was a minimum corporate income tax of $5,000 regardless of profitability as well as capping the Retail Discount. The latter is especially offensive as the retail sector has not special tax breaks/credits as do many other business sectors, the Discount is a reimbursement for services provided to the state and it is a partial reimbursement at best. The House appropriation committees will hold a series of budget-related hearings over the next few weeks starting next Thursday, June 8th. They hope is to get some sort of budget and tax package by the end of the state’s fiscal year on June 30th.

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MINIMUM WAGE

Compared to its border states, Illinois already has the highest minimum wage. Now Illinois is on the verge of having the highest in the nation, along with California and New York, as lawmakers passed a $15 minimum wage in the closing hours of the regular session.  SB 81 narrowly passed the House with a 61-53-2 vote and the Senate with a 30-23-2 vote.  The legislation increases the minimum wage from the current $8.25 to $15 by 2022. It also includes an income tax credit designed to appear to provide relief for employers with fewer than 50 employees. After decades of denial, this is the first time the proponents have admitted a minimum wage increase imposes costs. However, the proposed credit is so complicated as to effectively discourage its use.

It is clear the vote has little to do with realistically raising the minimum wage and more to do with the toxic political atmosphere that is consuming Illinois. The 2018 election cycle is already in full swing. As Democratic State Representative Scott Drury (D- Highwood) noted during debate on the House floor, the Democrats had majorities or super-majorities in the House and Senate as well as the governorship from 2008-2014 and did not pass a $15 minimum wage but did so with a Republican governor in office.

IRMA testified numerous times in opposition as well as organized the coalition in opposition. We will now turn our attention to attempting to secure a veto. What the proponents cannot address is how they expect employers to grow sales to account for the new mandates and taxes being imposed by local governments, and eventually the state, when tens of thousands of consumers are leaving Illinois each year.

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PAID LEAVE

HB 2771 SA #1 and SA #2 (Rep. Christian Mitchell, D-Chicago/Sen. Toi Hutchinson, D-Chicago Heights) seeks to impose paid leave requirements statewide. It narrowly passed the Senate 31-17 and is awaiting concurrence by the House. A significant flaw is that employers will not be able to tie benefits to their fiscal year.  Instead, companies will have to tie benefits and carry those benefits over either on January 1st or the date that the employee started working for the employer.

Changing how companies distribute benefits so that it will be more costly and complicated to administer may not be the goal of the advocates and sponsors, but it will be the result.  No other paid leave policy in the country, other than, of course, Chicago and Cook County, has such a mandate.  Only in Illinois are things made unnecessarily complicated.

IRMA opposes the substance of the bill that adds more costs to the employer without accounting for a corresponding increase in revenue to the business. Again, Illinois’ population continues to decline raising the question of who employers are expected to increase sales to account for these unfunded cost mandates. The House recessed without voting on the motion to concur. While the bill has had its deadline extended until June 30th, a super-majority will be required in the House meaning at least four Republicans will have to vote for it.

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COMPENSATION HISTORY

Illinois will soon prohibit an employer from viewing, asking about, or requesting the previous salary, wage, benefits or other compensation of any applicant for employment if, as expected, HB 2462 (Rep. Anna Moeller, D-Elgin/Sen. Daniel Biss, D-Skokie) is signed into law

While IRMA opposes discrimination in any form, there are legal questions surrounding prohibiting an employer from asking a prospective employee about previous wage and salary.  The City of Philadelphia passed an ordinance with similar language that prohibits an employer from asking a prospective employee about their previous wage and salary. Subsequent to passage, a lawsuit was filed in federal court on the grounds that the ordinance violates the First Amendment and the Commerce Clause of the United States Constitution.  If adopted, the Illinois statue would face the same deficiencies.  The statute prohibits a business from asking a simple question which in of itself does not discriminate or harm an individual so would not rise to the time, place, manner analysis which is required of a free speech prohibition. Additionally, the statute impacts commerce that takes place outside of Illinois boundaries. For instance, if a Missouri resident is interviewed in Missouri for a job in Illinois, does the statue apply? Or vice-versa, if an Illinois resident is interviewed in Illinois for a job in Missouri does the statute apply? If the answer is yes, then the statute arguably attempts to control activity outside of Illinois’ border and is subject to a federal Commerce Clause analysis. Additionally, the 9th U.S. Circuit Court of Appeals in California cited a 1982 ruling by the court that said employers could use previous salary information as long as they applied it reasonably and had a business policy that justified it.

Finally, the initiative assumes it will deter the bad actors from discriminating against a woman. Let us assume, for sake of argument that Company A is going to intentionally pay a woman less than a man for the same position. If the goal is to prevent Company A from paying the woman less, how does not knowing the previous salary of the prospective employee achieve that goal? Or consider the example of a woman who has a relatively high salary and shares her salary expectations with a prospective employer. Consider the other female candidate does not. Will the employer assume that the candidate who did not share her current salary information is paid less and make a corresponding offer? The bottom line is HB 2462 does not prevent someone from offering a lower wage to a woman for the same position then they would offer a man. If anything, it makes it easier therefore furthering what inequity exists rather than solving it.

Despite the aforementioned basic questions and concerns, HB 2462 (Rep. Anna Moeller, D-Elgin/Sen. Daniel Biss, D-Skokie) passed the House with a 91-24 vote and the Senate with a 35-18-1 vote and has been sent to the Governor for his signature.

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WORKERS’ COMPENSATION

Democratic lawmakers passed workers’ compensation reform that is expected to be vetoed by the Governor. HB 2525 (Rep. Jay Hoffman, D-Belleville/Sen. Kwame Raoul, D-Chicago) codifies current case law of “in the course of employment” & “arising out of the employment” maintaining the “any” cause standard established by the Sisbro Inc. v. Illinois Industrial Commission that has helped increase the cost of workers’ compensation.  It also codifies Venture-Newberg Prini Stone & Webster v. Illinois Workers’ Compensation Commission by establishing factors for determining traveling employee status and expands liability by also establishing a traveling employee through a reasonable and foreseeable standard.  It resolves the Will County Forest Preserve District v. Illinois Workers’ Compensation Commission that separated the shoulder from the arm when determining awards after one hundred years of precedence. Additionally, the legislation mandates insurance rate regulation increases fraud penalties, and adds new electronic billing penalty and new penalties for delay of authorization of medical care.  The legislation passed on a partisan Senate vote of 35-19 and House vote of 64-51.

Additionally, lawmakers passed HB 2622 (Rep. Laura Fine, D-Glenview/Sen. Daniel Biss, D-Skokie) that would take $10 million in employer money from the Workers’ Compensation Commission Operations Fund to create a state-run Illinois Employers Mutual Insurance Company to compete with the over 300  private insurance companies already competing in Illinois.  Illinois changed its workers’ compensation system in 2011 limiting payments for carpal tunnel syndrome and for employees who can still work but whose injuries force them into lower-paying jobs.  There was also a 30 percent cut to payments for doctors, hospitals and pharmacies treating those injured on the job.  As a result, Illinois experienced a 13 percent decline in workers’ compensation medical costs between 2010 and 2014.

Despite these changes, Illinois insurers’ and self-insured companies paid an estimated $2.75 billion in workers’ compensation benefits in 2014, according to the National Academy of Social Insurance. By contrast, employers in Indiana paid an estimated $589.2 million. Additionally, Illinois’ employers pay $2.23 for every $100 in payroll, while those in Indiana pay $1.05—the national median is $1.84. Today, Illinois is tied for having the eighth-most expensive premiums in the nation. Supporters of HB 2622 argue that workers’ compensation costs are still high for companies because insurance companies have not passed on the savings realized from the 2011 changes. They argue that in 2015, 332 insurance companies underwrote workers’ compensation policies in Illinois, more than in any other state, collecting $2.83 billion in premiums. In 2010, insurers reported losses of nearly 11 percent; four years later, they reported the same in profits. The insurance companies contend that while the 2011 changes likely decreased the insurers’ losses, insurers in Illinois only averaged 6.1 percent profit annually between 2011 and 2014.

HB 2622 passed the House with a partisan vote of 67-51 and the Senate with a vote of 32-20-1. Both initiatives are expected to be vetoed by the Governor.

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TELECOM MODERNIZATION

The telecommunication modernization bill passed both chambers In the waning hours of May 31st. SB 1839 (Sen. Bill Cunningham, D-Chicago/Rep. Brandon Phelps, D-Harrisburg) allows telecommunications carriers to stop spending resources on old copper wire infrastructure and instead focus all their resources on fully developing  a modern flexible telecommunications infrastructure that provides for today’s ever evolving mobile technologies.   It also includes an amendment that would stabilize Illinois’ 911 infrastructure.

The statute that currently implements the funding for 911 systems was set to expire on June 30th. If the statute expired, 911 call centers would be left without money for basic operations which would potentially have left Illinois residents without a 911 system. Rather than only extending the sunset, lawmakers also requested additional fees and taxes which included an increase in Chicago from $3.90 to $5 per phone line, assuming the City Council approves such an increase, and a downstate increase from 87 cents to $1.50 per phone.  The measure passed both chambers with overwhelming bipartisan support. Specifically, SB 1839 passed the House with a vote of 81-27-2 and the Senate with a vote of 53-3-1.

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GEOLOCATION

HB 3449 SA #4 and SA #5 (Rep. Ann Williams, D-Chicago/Sen. Thomas Cullerton, D-Villa Park) sought to require companies that use geolocation services to provide a way for persons to affirmatively consent to the use of those services if the company is collecting, disclosing or otherwise using the precise location of the customer for any purpose.  But this requirement would not apply to everyone.  In fact, the list of entities exempt from the bill is almost as long as the bill itselfThose exempted include political parties, political campaigns, candidates for public office, financial institutions, and private detective/alarm companies.  Altogether, the bill DOES NOT apply to the following entities:

  • covered entities subject to HIPAA,
  • financial institutions and affiliates subject to Gramm-Leach-Bliley,
  • internet, wireless and telecommunications service providers,
  • video service providers,
  • certain governmental entities,
  • persons licensed under the Private Detective, Private Alarm, Private Security, Fingerprint Vendor, and Locksmith Act of 2004,
  • persons licensed under the Land Surveyor Act
  • persons licensed under the Professional Engineering Services Act,
  • public utilities
  • candidate political committees,
  • political party committees,
  • political action committees,
  • ballot initiative committees; and
  • independent expenditure committees

All of the above entities CAN collect, use and disclose a person’s geolocation information without first obtaining their consent.

For everyone else, the consent must be obtained through a hyperlink or other action that will require the consumer to actively agree to the specific use.  Therefore, mentioning in the company’s privacy policy that geolocation services are used is not enough to satisfy the requirement in the bill.

This is yet another example of Illinois regulating where regulation wasn’t needed. The power to control geolocation services is already literally in the user’s hand.  Such services can be turned off on a person’s device both through each individual  app, through the phone or tablet itself, or both.  This bill is an unnecessary burden to businesses that have already given the user the choice to use geolocation services.  It will require that the user give his/her consent upon first time use of the app, and also give consent whenever there is a material change to the specific purposes for which the information is collected, used or disclosed.

IRMA was a part of a coalition of groups opposed to the bill.  After debate on adopting the concurrent amendments made in the Senate, the vote failed in the Cybersecurity, Data Analytics and IT Committee with a vote of 5-2-3.  IRMA would like to thank those who voted against this unnecessary regulation.

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  RIGHT TO KNOW

SB 1502 HA #1 (Sen. Michael Hastings, D-Frankfort/Rep. Art Turner, D-Chicago) is now known as the Illinois Right to Know Data Transparency and Privacy Protection Act although it confuses ‘personally identifiable’ and ‘personal information’.  While it has not yet passed, it establishes a troubling standard. This bill will require any company with an online presence that collects data from consumers to identify the categories of information collected.  Therefore, this bill will apply to most companies that have a website although it will not apply to companies with no physical presence in Illinois.  Companies will also have to provide a description of the customer’s rights if such information is shared or sold to 3rd parties.  In addition, the bill requires that companies who share or sell information to 3rd parties, unless it fits into an exemption, disclose what information was shared and with whom.  The bill sets out 26 categories of personal information that must, if shared, be highlighted.

The proposal seeks to expand what constitutes ‘personal information’ to the breaking point. Under the proposal, personal information could be a person’s age or a person’s educational background, etc.  There is no requirement that any of the information be tied to an actual person that could be identified.  As an example, if a manufacturer of washing machines asks each of the retailers that sell its products what the age of the purchaser is, this would viewed as ‘personally identifiable information’ even though it is not tied to any individual. There is no way that sharing personally unidentifiable information can be construed as personal that would require some heightened level of privacy or care.

After many rounds of negotiations, the bill now allows the company to choose to either respond directly to customer requests or generally list all categories of personal information that the company shares or sells about any customer and list all of the third parties that receive such information unless they qualify under an exemption.  This way, a company will not have to respond to each individual request and can make the choice to provide all of the information up front either in its privacy policy or elsewhere in its agreement with the customer.

SB 1502 is loosely based on the state of California’s “Shine the Light” law which is more narrowly focused in scope.  That law requires disclosure to persons that have an established business relationship if information is shared for direct marketing purposes.

The latest amendment also addresses an issue raised repeatedly by IRMA which would have required companies to enforce prohibitions on 3rd parties sharing information.  It deletes this requirement because it was basically unenforceable.  Lastly, it inserts a cure period of 15 days and adds yet another exemption, this time for hospitals.

Information should be able to be tied to an actual person if it is to be protected and considered personal.  IRMA maintains that this bill is an overreach that could and should be narrowed in scope.  The bill was called for a vote on the House floor and failed to receive enough votes to pass.  The sponsor moved for postponed consideration and now the deadline will be extended to June 30th.

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EMPLOYEE TRANSPORTATION BENEFITS PROGRAM

HB 2802 SA #2 (Rep. Theresa Mah, D-Chicago/Sen. Martin Sandoval, D-Cicero) seeks to require employers located in specific areas of the Regional Transportation Authority (RTA) with at least 25 or more full-time employees in those designated areas to set up a program that would allow all employees to take a pre-tax benefit in order to purchase their transit passes or to pay for parking at or near their place of business.  If the employee chooses not to take the benefit pre-tax, there will be no obligation by the employer to pay for the benefit outright.  The benefit would kick in for the first check issued after the employee has been on the job for 120 days.

This bill is based off of similar legislation that exists in New York City, Washington, DC and San Francisco.  Illinois would be the first state to pass such a mandate.  Companies are allowed to voluntarily participate in these programs today in Illinois, and the RTA and CTA have their own program set up for employers.

There has been significant push back from the employer community as this bill largely affects employers in Cook County.  Those same employers are currently working to implement a series of complicated and costly mandates recently leveled onto them by the city of Chicago and the Cook County Board.  Having to consider implementing another mandate is more than they can handle right now.  Especially, since more work could be done simply in marketing the RTA and CTA programs to employers.  The House sponsor has agreed to hold this issue while we continue to have talks during the summer about what more could be done to market the existing programs and understand the current challenges facing the employer community in Cook County and surrounding affected areas.  The latest amendment was unanimously adopted onto the bill in the Senate Transportation Committee with the understanding that we would continue to work on the issue over the summer.

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CATFISH LABELING

SB 312 (Sen. Emil Jones, III, D-Chicago/Rep. Melissa Conyears-Ervin, D-Chicago) will give the state Department of Public Health and local departments of public health the authority to check restaurant invoices to ensure that if catfish is featured on the restaurant’s menu, the restaurant can prove that it received catfish from a federally regulated processor or manufacturer.  The sponsor has expressed concerns that catfish served in some fried fish restaurants and soul food restaurants around the state are selling Vietnamese catfish, which must be labeled “Swai” according to federal law, but are labeling it “Catfish” on the restaurant menu.  If a consumer complaint is filed with the Department of Public Health, the inspector will check the invoices of the restaurant to see if it can prove that it indeed purchased catfish.  If proof cannot be produced, then the restaurant will be given time to correct the menu.  If the restaurant fails a second inspection, then a fine will be issued.  Further violations could result in suspension of the restaurant’s license.

The bill passed the House with a vote of 82-23-0 and, now that it has passed both houses, it will be sent to the Governor for approval.

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FOOD ALLERGEN TRAINING

Illinois joins Virginia, Massachusetts, Michigan and Maine as the only states that require additional food allergen training for restaurant workers. The current food safety sanitation manager certificate (FSSMC) training already contains a 90-minute segment that includes, but is not exclusively focused on, training on allergens.  HB 2510 (Rep. Sarah Feigenholtz, D-Chicago/ Sen. Antonio Munoz, D-Chicago) would require an individual receiving a FSSMC to receive and pay for a separate allergen training course.  The requirement only applies to local Illinois restaurants. Multi-state restaurants and franchisees are exempt if they have an internal food handling program on file with the Department of Public Health by August 1, 2017; if they have an internal food allergen training program that meets the requirements of the statute; or if they have a food allergen training program approved in another state.  The legislation passed the House with a 77-32 vote and the Senate with 34-16 vote and now goes to the Governor for his consideration.
 
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