This Week in Springfield – 101-15

STATE BUDGET AND CAPITOL
REMOTE SELLERS/MARKET PLACES
FINANCIAL INFORMATION
GRADUATED INCOME TAX CONSTITUTIONAL AMENDMENT
WORKPLACE SEXUAL HARASSMENT OMNIBUS BILL
MANDATORY BOARD REPORTING

At approximately 12:45 a.m. Saturday, June 1st the Illinois Senate adjourned until October 28th or the call of the Senate President. Prior to adjournment, the Senate passed everything they wanted or needed to pass including a Fiscal Year 2020 budget. At approximately 8:00 p.m., the House adjourned for the evening. The House returned on Saturday to pass a massive $45 billion-plus capital program that included gaming. Gaming is always difficult to bring together and more time was needed to see if significant disagreements could be overcome. After stops-and-starts overnight an agreement was ultimately reached later in the day on Saturday and the House concluded its action later that night. The Senate returned Sunday afternoon to finish. This brought an end to an extraordinarily active legislative session and a long final week with incredible peaks and valleys. All legislators and staff, Governor Pritzker and staff and many others are to be thanked for their persistence and patience.

Both chambers are now scheduled to return on Monday, October 28th for the fall Veto Session.

What follows is an overview of the major items that comprised the final budget and capital deals as well as legislation of note.

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STATE BUDGET AND CAPITAL

 

Agreement was reached on $40 billion-plus state budget for Fiscal Year 2020 as contained in SB 689 with an accompanying Budget Implementation bill (BIMP) contained in HB 3096. The FY 20 budget, which takes effect July 1st, received bi-partisan support and his balanced for the first time in years. Additionally, agreement was reached on a $45 billion infrastructure program dwarfing the previous program passed in 2009 at $30 billion. What follows is a summary of the major revenue sources:

  • Motor fuel tax increases from $0.19 to $0.38. The counties of DuPage, Kane, Lake, McHenry, and Will can currently impose a motor fuel tax of up to $0.04 per gallon. They can now impose up to $0.08 per gallon. Additionally, these taxes will increase by the rate of inflation as determined by the Illinois Department of Revenue utilizing CPI-U.
  • Driver’s license and vehicle registration fees were increased. Electric vehicles increased $250, all others increased $50 from $95 to $150 for first-class vehicles.
  • Cigarette taxes increase from $1.98 to $2.98 per pack or $29.80 per carton.
  • Electronic cigarettes will be taxed at 15%.
  • Gambling expansion including six new casinos (Chicago, Danville, Waukegan, Rockford, Southern Cook County, and Williamson County); expansion of max bets, top prizes and a 6th machine for video gaming operators, 15% tax on sports betting which is now legalized.
  • Tax on parking for fees or other consideration. Applies to private lots as well. Tax is 6% on hourly, daily, and weekly parking and 9% on monthly or annual fees.
  • An assessment on Managed Care Organizations (MCO’s) participating in the managed Medicaid program.
  • Legalized recreational cannabis.

Additionally, as part of the final agreement reached in the House, Illinois’ despised Franchise Tax will be phased-out over three years, the Manufacturers Purchase Credit will be enacted as will tax incentives for data centers.

IRMA would like to congratulation Governor Pritzker, Senate President John Cullerton, House Speaker Michael J. Madigan, Senate Republican Leader Bill Brady, House Republican Leader Jim Durkin, the many legislators who served on the various working groups who negotiated most of the components, and the legislative and gubernatorial staff. Agree or disagree with the ‘how’ but Illinois is has a balanced budget for the first time in many, many years and a robust plan to repair Illinois’s crumbling infrastructure.

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REMOTE SELLERS/MARKETPLACES

 

IRMA played a central role this year in finding new revenues for the state in a way that did not come at the expense of any other entity or sector and took a giant step toward creating sales tax parity for Illinois retailers vs. their remote competitors. It played a large role in the ability of the Assembly to put together their FY 20 budget and vertical capital plan. This was made possible by the Supreme Court of the United States’ (SCOTUS) Wayfair v South Dakota decision last summer. In short, SCOTUS ruled that for purposes of collecting and remitting sales tax, it doesn’t matter where a retailer has a physical presence. What matters is whether they are selling. IRMA’s proposal came in two parts.

The first part was contained in House Amendment #3 to SB 690 (Sen. Terry Link, D- Gurnee /Rep. Bob Rita, D- Blue Island) and takes effect next year on July 1, 2020. It requires remote sellers to collect and remit the Retailer’s Occupation Tax (ROT) instead of just the Use Tax (UT). As of July 1, 2020, this means remote sellers will no longer be collecting and remitting just the 6.25% but will be collecting and remitting the 6.25% plus any locally-imposed ROT. Under the provisions crafted by IRMA, remote sellers have the option of collecting and remitting on their own or utilizing a Certified Service Provider (CSP). CSP’s currently operate in every state in some capacity but collect and remit sales taxes in 24 states. CSPs are paid for their services because they keep the retail discount that would normally go to the remote retailer because the CSP is doing all the work for the retailer. This is a critical component of complying with the Wayfair decision. In their ruling, SCOTUS stated they would view any regulatory effort through the lens of complexity – the easier it is for the remote retailer to comply, the more likely the regulatory effort would be upheld. Not only is Illinois making it easy for remote retailers by giving them the option to utilize CSPs, they are ensuring no one can argue it is cost prohibitive because the CSP’s services are provided free-of-charge.

The second part of IRMA’s proposal was contained in House Amendment #3 to SB 689 (Sen. Toi Hutchinson, D- Chicago Heights/Rep. Gregory Harris, D- Chicago). This part requires marketplace facilitators (e.g. Amazon, Walmart, Facebook, etc.) to collect and remit the Illinois Use Tax on behalf of the sellers who sell their products through the on-line marketplaces. While IRMA had proposed the marketplaces collect and remit the ROT and not just the UT, IDOR prevailed over unspecified ‘constitutional concerns’. This means the same entities who will benefit under the collection of the ROT by remote sellers, will not meaningfully benefit from the marketplace requirement. It also means Illinois retailers will still be at an unnecessary competitive disadvantage vis-à-vis marketplace sellers.

Nevertheless, if Senate Bills 689 and 690 are signed into law by the Governor, Illinois will have taken a significant step toward creating long-sought parity. IRMA will work with the IDOR over the summer to elevate their understanding of the full implications of the Wayfair decision and bring full parity to Illinois.

IRMA would like to thank Senate President John Cullerton, Speaker Michael J. Madigan, Senate Republican Leader Bill Brady, House Republican Leader Jim Durkin and the many legislators and staff who took the time to truly understand the issue and ultimately embrace it.

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FINANCIAL INFORMATION

 

After an intense three-year debate, IRMA led a coalition of business interests into an agreement allowing third-parties to obtain limited sales tax information from local units of government on businesses within their jurisdiction. While the agreement as contained House Amendment #2 and House Amendment #5 in SB 1881 (Sen. Michael Hastings, D- Frankfort/Rep. Michael Zalewski, D- Riverside) passed the House, a last minute concern from the Office of the Illinois Attorney General caused the Senate to hold the legislation until the fall Veto Session.

As originally proposed over three-years ago, the proposal would have allowed third-parties to obtain nearly anything and use the information for any purpose including contingency-fee audits. The multi-year debate included IRMA conducting a FOIA and finding clear evidence of the primary proponent encouraging municipalities to break the law which currently prohibits any sharing. After that revelation, the discussions took on a more reasonable tenor. Ultimately, the IRMA-led coalition significantly narrowed the scope and obtained critical protections.

The provisions of SB 1881 creates a strict regulatory regime for third-parties receiving such information allow the following:

  • Third parties must be registered with the state and pay a registration fee. The registration can be revoked for violating the Act;
  • Third parties are subject to confidentiality agreements utilized by the Illinois Department of Revenue (IDOR);
  • Third parties can only use the information to ensure local units of government are receiving their correct allocation from IDOR and must destroy such information after 30 days;
  • A third party could refer a business to IDOR for possible audit but IDOR retains the last word as to whether or not a taxpayer needs to be audited.
  • Creates a Certified Audit Program. Ensures taxpayers have all the rights and protections they enjoy today.
  • Imposes strict penalties on third-parties for violations of the Act.

IRMA would like to thank Rep. Zalewski for his patient leadership as well as that of Sen. Mike Hastings.

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GRADUATED INCOME TAX CONSTITUTIONAL AMENDMENT & PROPOSED RATES

The Illinois General Assembly has passed a Senate Joint Resolution Constitutional Amendment 1 (Sen. Don Harmon, D- Oak Park/Rep. Rob Martwick, D- Chicago) to put before the voters whether or not to amend the Illinois Constitution to move Illinois from a “flat tax” state to a “graduated income tax” state.  SJRCA 1 will appear on the November 2020 ballot.

SJRCA 1 was approved by the Senate on a party-line vote on May 1st with all 40 Democrat members supporting and all 19 Republican’s opposing. On May 27th, SJRCA 1 passed the House with another party-line vote of 73-44.

While SJRCA 1 places an initiative on the ballot for the voters to decide, it does not set the rates for the graduate income tax if the ballot initiative is approved by voters.  Senate Amendment #1 to SB 687  (Sen. Toi Hutchinson, D- Chicago Heights/Rep. Michael Zalewski, D- Riverside) proposes income tax rates should voters approve the constitutional amendment in November 2020 allowing Illinois to impose a graduated income tax.  SB 687 passed the Senate with a 36-22 vote a few weeks ago and passed the House this week with a 67-48 vote. The Senate subsequently concurred with House changes and the bill has been sent to the Governor. It must be emphasized that should voters approve the amendment to the constitutionthese rates could be changed at any time by the Assembly.

The new proposed tax rates on personal income, which includes pass-through entities such as trusts and partnerships. In Illinois, pass-through entities also must apply a 1.5% tax on all income known as the Personal Property Replacement Tax. Therefore, the proposed effective rates are as follows:

INCOME TAX RATE EFFECTIVE TAX RATE WITH PPRT (1.5%)
$10,000 or less 4.75% 6.25%
$10,000.01 – $100,000 4.90% 6.40%
$100,000.01 – $250,000 4.95% 6.45%
$250,000.01- $350,000 7.75% 9.25%
$350,000.01 – $750,000 7.85% 9.35%
Over $750,000 7.99% 9.49%

 

For individuals with incomes over $750,000, the 7.99% rate applies to the entire income – not just the income over $750,000

What follows are the new proposed rates on corporate income. In Illinois, corporations must also apply a 2.5% tax on all income known as the Corporate Personal Property Replacement Tax. Therefore, the proposed and effective rates are as follows:

INCOME TAX RATE EFFECTIVE TAX RATE WITH CPPRT (2.5%)
$10,000 or less 4.75% 7.25%
$10,000.01 – $100,000 4.90% 7.40%
$100,000.01 – $250,000 4.95% 7.45%
$250,000.01 – $500,000 7.75% 10.25%
$500,000.01 – $1,000,000 7.85% 10.35%
Over $1,000,000 7.99% 10.49%

 

For corporations with incomes over $1,000,000 the 7.99% rate applies to the entire income – not just the income over $1,000,000.

This proposal represents an expansion of the rates as originally discussed. Initially, the discussion was to make the highest rate for individuals top out at 7.95% and $1 million. The top rate is higher and now applies to those making less than $1 million. This appears to be an effort to blunt criticism that the initially discussed rates did not solve the current budget problems. Even if these proposed rates do that, they still do not generate the revenue necessary to return Illinois to fiscal stability by addressing out-year commitments to schools and pensions as well as the proposed new spending.

There is also a $100 per child tax credit for those with children under 17 years of age. For those filing jointly making $100,000 or less. This credit phases out incrementally by $5 for every $2,000 in income beginning at $60,000 for those filing jointly. Those filing as individuals are eligible if they make $80,000 or less. The child credit begins reducing by $5 for every $2000 as income increases over $40,000.

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WORKPLACE SEXUAL HARASSMENT OMNIBUS BILL

Lawmakers passed a Workplace Sexual Harassment Omnibus bill in SB 75 (Sen. Melinda Bush, D-Grayslake/Rep. Ann Williams, D-Chicago).  Lawmakers, staff from the four caucuses, and industry came together to reach a reasonable compromise on the issues.  The bill address many different issues that include but are not limited to the following:

  • Prohibiting an employment agreement preventing or restricting an employee from reporting any allegations of unlawful conduct to officials for investigations;
  • Makes it clear that any contract or agreement restricting or prohibiting truthful statements of disclosures about unlawful employment practices or requires the individual to waive or arbitrate any existing or future claim is against public policy;
  • Allows an agreement to include conditions that would otherwise be against public policy if the agreement is in writing and demonstrates knowing and bargained-for consideration from both parties;
  • Outlines requirements that allow a confidentiality provision to be contained in a settlement or termination agreement;
  • Requires an employer report an adverse judgement or administrative ruling against it in the previous calendar year to Illinois Department of Human Rights (IDHR). IDHR is to use this information to publish an annual report aggregating the information provided. The data is confidential and exempt from FOIA.

The legislation also creates a sexual harassment training requirement for Illinois employees. IDHR is required to produce a model sexual harassment prevention training program. The model program shall be made available to employers and the public at no cost. In the alternative, every employer in the state shall use the model sexual harassment prevention training program created by IDHR or establish its own sexual harassment prevention training that equals or exceeds the starting standards.

Finally, the legislation requires additional training for restaurant and bar employees and requires every restaurant and bar operating in this State to have a sexual harassment policy provided to all employees.  IRMA has committed to work with IDHR to create a free online model specific to the restaurant industry.

IRMA would like to thank Senator Melinda Bush, Representative Ann Williams, and the staffs from all four caucuses for their hard work on this issue and for addressing industry concerns to the best of their ability. 

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MANDATORY BOARD REPORTING

As introduced, HB 3394 (Rep. Chris Welch, D-Chicago/Sen. Christopher Belt, D-Chicago) required publicly traded companies with principle executive offices in Illinois to maintain a starting number females and African American directors on its board of directors. As introduced, at least two legal arguments are presented by the legislation: (1) it violates equal protection by facially discriminating based on sex and race, and (2) because it applies to companies organized outside Illinois, it violates the dormant commerce clause and the “internal affairs doctrine,” which requires that internal company affairs be under the regulatory purview of only one jurisdiction. California passed a similar bill and the California Governor admitted that “There have been numerous objections to this bill and serious legal concerns have been raised. I don’t minimize the potential flaws that indeed may prove fatal to its ultimate implementation.”

Both sponsors worked on the bill and amended the initiative in the Senate. As amended, HB 3394 requires public corporations to report to the Secretary of State: (1) whether the corporation is a publicly held domestic or foreign corporation with its principal executive office located in Illinois; (2) data on specific qualifications, skills, and experience that the corporation considers for its board of directors, nominees for the board of directors, and executive officers; (3) whether each member of the corporation’s board of directors self-identifies as a minority person and, if so, which race or ethnicity to which the member belongs; and (4) other information. It also requires the Secretary of State to make the information public and requires the University of Illinois System to review the reported information and publish on its website a report that provides aggregate data on the demographic characteristics of the boards of directors and executive officers of corporations filing an annual report for the preceding year along with an individualized rating for each corporation.

IRMA appreciates the work Rep. Welch and Sen. Belt put into the legislation.

 

This Week in Springfield – 101-14

IN THIS ISSUE:

CAPITOL PLAN PROPOSED
BAG TAX
DATA PRIVACY
DOOR-TO-DOOR SALES PROTECTION
VIDEO INTERVIEW RESTRICTIONS
“SESAME” LABELING MANDATE
HUMAN RIGHTS “EXPANSION”
SNAP RESTAURANT MEALS PROGRAM
REBATE CARD DORMANCY FEES
BULK FOOD CONTAINERS
BPA
RESTAURANT FOOD ALLERGEN NOTICE
BABY CHANGING STATIONS

This Week In Springfield a capitol plan was unveiled along with proposed funding, data privacy was discussed, and the budget discussions intensified. The Assembly will return on Monday afternoon and is scheduled to be in session through May 31. Things will be very fluid.

CAPITOL PLAN PROPOSED

A Capitol plan is finally taking shape in Springfield. This week, the Governor’s office released a preliminary plan dubbed Rebuild Illinois that includes $41.5 billion in spending over six years.

The proposed plan is to be funded by the following taxes:

 

Source Proposal New Annual Revenue ($ millions)
 

Motor Fuel Tax

Current base motor fuel taxis19 cents per gallon for gas and diesel.This proposal would increase the rate by 19cents,effective July 1,2019. Base motor fuel taxes have not been increased since 1990. Along with $560 million in new annual state revenue, this proposal would increase local motor fuel tax revenues by over $650 million annually ($4 billion over the six years of the plan).  

$560

 

Vehicle Registration Fees

Current vehicle registration fees are $101 per vehicle. This proposal would increase fees at-tiered approach based on vehicle age. Annual fees for vehicles 3 years or newer would increase to $199, 4-6 years to $169,7- 11 years to $139, and vehicles 12 years and older to $109.

 

$490

Vehicle Registration Fees

-Electric

Current vehicle registration fees for electric vehicles are $34 per vehicle,every other year.  This proposal would increase the fees to $250 per year to help contribute to the maintenance of the state’s transportation network.  

$4

Real Estate Transfer Tax-Non-Residential Transactions Only Current taxis 50 cents per  $500 in market value of property transferred. This proposal would increase the tax to $1 per $500 for non-residential transactions only.This rate has not been changed since 1989.  

$34

Ride-Share Tax Ride sharing is not currently taxed at the state level.This proposal would introduce a per-ride fee of $1statewide. $214
 

Liquor Gallon age Tax

Current liquor gallon age taxes are 23.1 cents on beer and cider,$1.39 on wine and $8.55 on distilled liquor.  This proposal would increase the rate per gallon by 4.6 cents, 66 cents and $4.05, respectively.  

$120

Cable,Satellite and Streaming Tax Cable,satellite and streaming services  are not currently taxed at the state level. This proposal would introduce a 7% tax on these services,in line with the taxes charged to telecommunications.  

$150

Parking Garage Tax Parking garages are not currently taxed at the state level.This proposal would introduce a 6% tax on daily and hourly garage parking and  a 9% tax on monthly and annual garage parking. $60
 

Traded-In Property Exemption

Currently traded-in property provides a sales tax exemption on the purchase of property up to the value of the property traded-in.This proposal would introduce a $10,000 capper trade-in transaction.  

$60

 

Video Gaming Terminal Tax

Current video gaming terminal taxis 30% of net terminal income (gross revenue minus prizes paid). The structure for this proposal is to be determined,but a portion of the revenues from the current discussion store structure this industry can be allocated to the capital budget,on top of operating budget needs.  

$90

 

The $41.5 billion includes $28.6 billion in transportation projects, $5.9 billion in education projects, $4.4 billion in state buildings, $1 billion in environmental and conservation projects, $420 million in broadband deployment projects, $711 million in Economic and Community Development, and $440 million in Healthcare and Human services.

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BAG TAX

Back in 2011, IRMA and a coalition of business groups reached an agreement with the Environmental Community to implement a plastic film recycling statute in Illinois. The legislation would have helped keep over 400 million pounds of plastic film from the landfills, waterways, and farmland. After the legislation passed both the House and the Senate, Governor Pat Quinn vetoed the legislation. In a reversal, the environment community switched their position to oppose the legislation and as a consequence the legislation failed to reach the required votes to override the veto. Since 2011, only three municipalities in Illinois have addressed plastic bags and no state law or municipal law has addressed plastic film which constitutes 85% of the plastic waste stream. As a result, 400 million pounds of plastic film, a year since 2011 has entered the Illinois waste stream.

Once again Sen. Terry Link crafted a bill to address plastic waste-this time plastic bags. SB 1240 (Sen. Terry Link, D-Gurnee) places a $0.07 tax on paper and plastic bags in Illinois. Three cents would go to the State General Revenue Fund. Two cents goes to the retailer and two cents get sent to the municipality. The wholesaler is responsible for remitting the fee to the State. The two cents that goes to the municipality must be used to fund the collection household hazardous waste products that include but is not limited to mattresses, needles, paint, bags, batteries, bulbs, carpet, etc. Additionally, the legislation would preempt local municipalities from taxing or regulating bags. Oak Park, Evanston and Chicago currently have taxes or bans in place. It would also preempt any local municipality from taxing or regulating “auxiliary containers” in any manner.

A plastic bag tax was included in one of the Governor’s Transition Committee Reports, the Budget Presentation and is currently in the budget discussions. The legislation passed the Senate Revenue Committee after the sponsor agreed to hold it on the floor while the stakeholders continued discussions. The legislation did not meet the deadlines for actions and was re-assigned to the Assignments Committee. This week it was sent straight from Assignments to the Senate floor where discussion continue.

DATA PRIVACY

A proposed Illinois law would allow consumers to see or prohibit the use of their data by “big tech” companies that aggregate and sell consumer information. As drafted, HB 3358 (Rep. Art Turner, D-Chicago/Sen. Tom Cullerton, D-Villa Park) creates the Data Transparency and Privacy Act and provides that an entity that collects personal information about individual consumers through the Internet must make disclosures to the individual regarding the collection of the information. It also establishes that a consumer has a right to opt out of the sale of the consumer’s information. The bill passed the House by a 72-37-1 vote and passed the Senate Judiciary Committee. The sponsor agreed to bring back an amendment to committee after more discussions with stakeholders took place.

The legislation takes into account that retailers are required by state and federal law to collect, share, or process consumer information in order to complete a consumer transaction at retail, to submit sales taxes to the state, process a consumer transaction using a debit or credit card, provide Medicaid, WIC, or SNAP benefits, protect pharmacy patient information, develop a manifest to transport, ship or deliver goods, etc.  For instance, retailers are governed by no less than 43 different Illinois statutes that either require or specifically regulate the ability of a retailer to collect, process, or disclose a consumer’s personal information.  Please keep in mind this number does not include individual articles within those statutes or federal laws, rules, or regulations.

Due to reasonable questions and concerns from lawmakers, IRMA agreed to narrow the language to encompass ‘transactions’ rather than ‘entities’. An amendment including IRMA’s changes will most likely be heard in the Senate Judiciary Committee next week.

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DOOR-TO-DOOR SALES PROTECTION

 

Every year thousands of Illinois residents are victim to home repair schemes. Oftentimes, “home repair contractors” will visit a town recently devastated by violent weather and go door-to-door offering to repair the victims homes. Seniors, especially those who live alone, are prime targets for home repair scams. In some cases, con artists pose as inspectors, city officials or police and use scare tactics to force elders to have unnecessary repairs made to windows, furnaces, chimney, water heater or the electrical wiring, etc.

HB 2643 (Rep. Joyce Mason, D-Gurnee/Sen. Melinda Bush, D-Grayslake) gives individuals 65 years or older a 15 day cooling off period with a door-to-door home repair contract.  IRMA worked with lawmakers to provide protection for seniors who enter expensive home repair contracts unwittingly. This would not apply to a contract that was executed proactively by an individual who entered into a contract at the contractor’s physical place of business.

The initiative passed the House with a 96-9 vote and has been sent to the Senate for consideration. The legislation was amended in the Senate to make clear that the bill only applies to those contractors who appear uninvited to a senior’s home to solicit a contract. With the clarification the legislation passed the Senate with a vote of 51-0-2 and now goes back to the House for concurrence.

IRMA would like to thank Rep. Mason and Sen. Bush for working with IRMA on this important issue.

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“SESAME” LABELING PROTECTION

Food allergen labeling is governed by the Food Allergen Labeling Consumer Protection Act (FALCPA). FALCPA requires the labels of domestically manufactured or imported pre-packaged goods to include the eight major food allergens: milk, egg, peanut, tree nuts, soy, wheat, fish and crustacean shellfish. Together these foods cause the majority of allergic reactions in the U.S. Due to the rise of sesame seed allergen the United States Food and Drug Administration (FDA) is considering adding sesame seed to the food allergen labeling requirements. The majority of the largest manufactures already include sesame seed labeling on prepackaged food.

HB 2123 (Rep. Jonathan Carroll, D-Northbrook/Sen. Emil Jones, D-Chicago), as introduced, requires a state specific Illinois label to be placed on packaged food as well as ready to consume food. In the modern restaurant, there is no such thing as ‘standardized’ meal. Every offering can be customized to the customer’s desire and 75% of restaurant customers customize their orders. Using a coffee shop as an example, there are over 80,000 different ways to order a cup of coffee. Due to the movement of the FDA and manufacturers changing their current labeling practices to include sesame seed, Representative Carroll amended his bill to apply to prepackaged foods. As amended, the initiative passed the House with an unanimous 114-0-0. This week HB 2123 passed the Senate Agriculture Committee and the legislation has been sent to the Senate floor for consideration.

IRMA would like to than Rep. Carroll and Sen. Jones for their work on this important issue.

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HUMAN RIGHTS “EXPANSION

Currently, the Illinois Human Rights Act only applies to businesses with 15 or more employees. HB 252 (Rep. Will Guzzardi, D-Chicago/Sen. Cristina Castro, D-Elgin) would expand the coverage of the Act to apply to any business with one or more employees. This bill passed both Chambers last year before being vetoed by Governor Bruce Rauner.

The bill passed the House by a vote of 74-40. It was amended in the Senate to implement a delayed effective date and subsequently passed the Senate by a vote 36-18. The legislation is now back in the House for a concurrence vote.

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SNAP RESTAURANT MEALS PROGRAM

HB 3343 (Rep. Sonya Harper, D-Chicago/Sen. Omar Aquino, D-Chicago) expands Illinois’ Supplemental Nutrition Assistance Program (SNAP) to permit individuals who are elderly, persons with a disability, and homeless individuals to redeem their SNAP benefits at restaurants. The restaurants would have to contract with the Illinois Department of Human Services and the eligible meals would have to be discounted. The discount will vary restaurant to restaurant and will be determined in the restaurant’s application. If signed into law, this program would become effective January 1, 2020.

The legislation passed the House by a 75-18 vote and the Senate by a vote of 48-1 and now heads to the Governor for his consideration.

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REBATE CARD DORMANCY FEES

HB 2146 (Rep. Theresa Mah, D-Chicago/ Sen. Cristina Castro, D-Elgin) passed the House by a vote of 67-47. The bill is intended to prohibit the issuance of product rebate cards that charge dormancy or other post-issuance fees. The legislation only applies to rebate cards that can be used at multiple merchants. It exempts those closed-looped merchant cards that are distributed and used at one retailer-also known as “store cards”. The language only applies to multi-store cards utilized for rebates after the consumer completes the rebate submission process. The legislation was amended in the Senate to address the concerns of the Community Bankers Association. As amended it passed the Senate Commerce and Economic Development Committee and now is on the Senate floor for consideration. If it passes the Senate, the legislation will be required to head back to the House for concurrence. 

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BULK FOOD CONTAINERS

HB 3440 (Rep. Will Guzzardi, D-Chicago/Sen. Heather Steans, D-Chicago) permits retailers to allow consumers to fill personal containers with dry bulk foods and prohibits counties and municipalities from disallowing the practice. This practice is already allowed in Illinois but is currently prohibited in Chicago. IRMA is neutral on the legislation because it is permissive and maintains the current status quo of allowing retailers either to implement or prohibit the practice on their premises.

Most retailers do not currently allow the practice for many different reasons. Currently, Illinois law does not define what may be used for a personal container or who is liable if the consumer gets sick from an unsanitary personal container brought from home. Additionally most retailers provide a uniform variety of single use containers in the store and the tare weights are pre-programmed into the point of sale and scale system. It would be impracticable to allow a consumer to bring a random personal container for which the retailer does not have the weight pre-programmed into the point of sale. Moreover, if the retailer cannot accurately ascertain the weight of the personal container prior to the consumer adding bulk food, then the retailer cannot accurately charge the correct price or proper tax for the item. This opens retailers up to frivolous lawsuits for imposing an improper tax. Similar to the plethora of the lawsuits filed during the short run of the ill-fated sugar sweetened beverage tax in Cook County. Hence, the importance of allowing retailers to decide whether or not to allow the practice.

HB 3440 passed the House by a 91-6-0 and passed the Senate by a vote of 54-0-0. While in the Senate the Illinois Department of Public Health requested an amendment to clarify the bill in consideration of current regulations. With the adoption of the amendment HB 3440 heads to the House for a concurrence vote.
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BPA

Environmentalist contend that bisphenol-A (BPA) found in receipts cause adverse reactions to those individuals who handle the receipts. HB 2076 (Rep. Karina Villa, D-Batavia/Sen. Ann Gillespie, D-Arlington Heights) prohibits the use of business documents, including receipts that contain BPA. The majority of Illinois retailers stopped using receipts that contained BPA many years ago. This decision was not based on any scientific studies but public opinion and capitalism. Retail sales of “BPA free” products increased so therefore retailers offered and used more “BPA” free products including paper products.

IRMA worked with the Sierra Club to craft language that reflects the current practices while filtering out the usage of BPA in business documents. The legislation prohibits the manufacturing of thermal paper when BPA is added to the coating by January 1, 2020. Because thermal paper with BPA is in current circulation businesses would be allowed to use, sell, or transfer thermal paper that was manufactured prior to January 1, 2020. The legislation previously passed the House with a 76-37-1 vote. With the amended language, the legislation passed the Senate Environment and Conservation Committee and now heads to the Senate floor for consideration.

IRMA would like to thank the Sierra Club, Rep. Villa, and Sen. Gillespie for addressing IRMA’s concerns.

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 RESTAURANT FOOD ALLERGEN NOTICE

IRMA worked with lawmakers to produce legislation that continues to advance Illinois as a leader in addressing food allergies. Researchers estimate that 32 million Americans have food allergies, including 5.6 million children under age 18. Eight major food allergens – milk, egg, peanut, tree nuts, wheat, soy, fish and crustacean shellfish – are responsible for most of the serious food allergy reactions in the United States. Illinois is one of the few states that require a restaurant to have a person who has had additional allergen training to be on duty at all times. Massachusetts, Maryland, Rhode Island and Virginia also require notices to consumers to make sure they notify the restaurant that they may have an allergy to a certain food. HB 3018(Rep. Joyce Mason, D-Gurnee/Sen. David Koehler, D-Peoria) provides the same notice to consumers.

The legislation allows those restaurants that already have a notice as required by another state, internal policy, or national standard to continue to use that notice. Additionally, the legislation requires the Illinois Department of Public Health (IDPH) to create a sign for those restaurants that do not currently use a notice. The notice will be provided as a downloadable document and free of charge to restaurants. Finally, the legislation creates a flexible notice while requiring the employee who receives an allergen warning from a consumer to communicate that warning to the person in charge or the certified food protection manager on duty. This legislation provides flexibility for the retailer without creating regulatory hurdles while also providing an extra layer of protection for the consumer who suffers from food allergies.

The legislation passed the House by a vote of 110-0-1 and passed the Senate Public Health Committee this week. The legislation now moves to the Senate floor for further consideration.

IRMA would like to thank Rep. Kifowit, Rep. Mason, and Sen. Koehler for working with IRMA on this important issue.

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BABY CHANGING STATIONS

Representative Delia Ramirez/Sen. Rahm Villavalam, D-Chicago introduced HB 3711 in response to complaints prompted by viral videos of a father attempting to change the diaper of a child on the floor of a bathroom. As drafted, HB 3711 would require a “retailer” or “restaurant” that serves on average more than 50 people to have a baby changing platform in both the women and men’s restroom.

After IRMA discussed the practical issue of the requirement as drafted, the sponsor agreed to work with IRMA to make the legislation consisted with other states’ requirements and current Illinois law, conform with the American with Disabilities Act, and the current building codes of each jurisdiction. In the House, the sponsor adopted an amendment that:

  1. Requires a baby changing station in a bathroom accessible to women, one that is accessible in a bathroom accessible to men, or a publicly accessible baby diaper changing station that is accessible to both men and women;
  2. Restricts the changes to new buildouts or renovations of restaurant and retailers that exceed 50% of the building that includes a bathroom open and accessible to the public;
  3. Restricts the changes to a retailer of more than 5,000 square feet and has a bathroom that is open to the public;
  4. Restricts the changes to a restaurant with an occupancy of at least 60 people as determined by the fire marshal that has a bathroom open to the public;
  5. Exempts a retailer that does not allow minors on the premise; and
  6. Allows a building inspector to determine that the installation of a baby diaper changing station is not feasible or would not comply with applicable building standards governing the right of access for persons with disabilities.

The new language only applies to renovations of 50% or more of a building or new construction that is completed AFTER the passage of the legislation and meet the aforementioned requirements. HB 3877 passed the House by a vote of 110-0-0 and is in the Senate Public Health Committee by a 11-0-1 vote. The legislation is now on the Senate floor for further consideration.

IRMA would like to thank Rep. Ramirez and Sen. Villavalam for addressing IRMA’s concerns.

This Week in Springfield – 101-13

May 3, 2019

IN THIS ISSUE:

BUSINESS DAY 2019
GRADUATED INCOME TAX
PAID SICK LEAVE
“SESAME” LABELING MANDATE
REBATE CARD DORMANCY FEES

This Week in Springfield, IRMA held its annual Business Day. The Senate passed a resolution to change the constitution to implement a Graduated Income Tax and followed that up with proposed rates that were more expansive than the Governor’s proposal. After burdening employers with a $15 minimum wage earlier in session, the Senate has doubled down on employer mandates and passed a paid sick leave mandate that includes a requirement that businesses pay an employee to attend a court date for any illegal act of the employee.

BUSINESS DAY 2019

On Wednesday, May 1st, approximately 400 employers met in Springfield for IRMA’s annual Business Day. This gathering represents the largest annual gathering of employers and is held in conjunction with the Illinois Manufacturers’ Association. We appreciate the support of our sponsors and partners who make this day an annual success.

Governor JB Pritzker addressed the opening luncheon laying out his vision for moving Illinois forward. This included returning fiscal stability, repairing and improving infrastructure, and investing in education. Key to these plans is his goal of amending the state’s constitution to allow for a graduated income tax. IRMA appreciated the Governor’s willingness to share his thoughts with attendees who may not agree on every proposal but agree on the need to move Illinois forward.

Adding a refreshing twist to the event, attendees experienced three subject-specific panels. These panels focused on data privacy, recreational cannabis, and the proposed graduated income tax, respectively.

Data privacy panel: The data privacy panel featured Aaron Tantliff, a Partner at the law firm of Foley & Lardner, who has a substantial practice advising employers on how to comply with current privacy laws and how to stay ahead of changes in legislation through adopting best practices.  Aaron provided attendees an understanding of how data privacy has been approached at the macro level by detailing the most relevant portions of the European Union’s General Data Privacy Regulations (GDPR) and describing the significant difference between how the EU and the United States have addressed regulation. Mr. Tantliff agreed that legislation could be a powerful tool in privacy protection if truly balances the desire to protect consumers from harm and the desire to allow for the continued expansion of innovation.  Case in point, he cautioned legislators to examine what we have learned from the passage of Illinois’ Biometric Information Privacy Act (BIPA).  The Act was put in place years ago to help ensure that appropriate notification and permission was given before a person’s biometric identifiers were collected and used for business purposes.  Unfortunately, the effect of the law has been a boon to the plaintiff’s bar which has used the law to ensnare businesses who were, by all accounts, substantively in compliance, and bring class action lawsuits against them based on technicalities.  These filings have cost the employer community in Illinois plenty in settlements, but hasn’t significantly increased protections by the same factor.  Mr. Tantliff strongly encouraged the General Assembly to fix what is broken with BIPA and to not make the same mistake if it chooses to move forward with other laws in this area.  Attendees received very critical information on best practices and helpful information on how to communicate with lawmakers on preserving the ability to use data to promote the growth, expansion and competitiveness of Illinois’ employer community.

Recreational cannabis panel: The recreational cannabis panel included Representative Kelly Cassidy, D-Chicago, a primary mover behind the proposal along with Senator Heather Steans, and Scott Cruz from the law firm of ClarkHill. Mr. Cruz specializes in employment and labor law.

While many residents focus on the legalization aspect and policymakers primarily focus on the legalization and revenue aspects of cannabis, employers are focusing on the use or possession of cannabis in the workplace. Under the current Illinois Compassionate Use of Medical Cannabis Pilot Program Act an employer may adopt a drug free or zero tolerance drug policy.  Mr. Cruz explained that while cannabis may become illegal on the state level, currently it remains illegal on the federal level.  As such, employers should be cognizant of federal employment and safety standards.  Rep. Cassidy explained that the intent is to maintain the employer’s complete control of the workplace and complete discretion in regards to the drug possession or use policy.  In some states, exception to employment policies are made for those individuals that have received a medical cannabis card as a result of a debilitating disease of malady.  Currently, the intent is to provide no exceptions to the employer’s ability to maintain a drug free workplace regardless of the situation of the employee.

Graduated income tax panel: The final panel of the day focused on the proposed graduated income tax. Coincidentally, as the panel was meeting, the Senate passed a graduated income tax package.  This panel featured Ralph Martire, Executive Director of the Center for Tax and Budget Accountability and Jared Walczak, Senior Policy Analyst with the Tax Foundation. Mr. Martire made the case that a graduatd income tax is fairer in that those who earn more, pay more. However, he noted that without enacting other changes, such as sales tax on services, Illinois would continue to struggle with instability.

After the panels, attendees then spent time at the Capitol meeting with legislators. IRMA’s Board of Directors and some invited guests met with Senate President John Cullerton, Senate Republican Leader Bill Brady, and House Republican Leader Jim Durkin. Those meetings focused on a number of issues including expressing frustration that elected officials continue to consider engaging in theft of services by reducing or eliminating the Retail Discount. Such a move, if enacted, would have retailers paying for the tax credits and dedicated spending benefiting other business sectors. Retailers should not have to pay for even more costs imposed on them by the state so that other business sectors can pay less.

The day concluded with a revised and expanded Party Under the Tent which has become a ‘not-to-be-missed’ event.

IRMA would like to thank all those who made this day possible.

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GRADUATED INCOME TAX

While employers attended Business Day, the legislative process ground on and the focus was on the Senate as they passed a package focused on the graduated income tax.

First up was Senate Joint Resolution Constitutional Amendment 1 (Sen. Don Harmon, D- Oak Park/Rep. Rob Martwick, D- Chicago). This would put a question on the November 2020 ballot asking voters whether they want to amend the Illinois Constitution to allow for a graduated income tax. SJRCA 1 was approved by the Senate on a party-line vote with all 40 Democrat members supporting and all 19 Republican’s opposing. As the Chicago Sun-Times headline noted, the Senate took less time to pass this proposal than it takes to play the Led Zepplin song “Stairway to Heaven”.

Then came Senate Amendment #1 to SB 687 (Sen. Toi Hutchinson, D- Chicago Heights/Rep. Michael Zalewski, D- Riverside) proposes income tax rates should voters approve the constitutional amendment in November 2020 allowing Illinois to impose a graduated income tax. The new proposed tax rates on personal income, which includes pass-through entities such as trusts and partnerships. In Illinois, pass-through entities also must apply a 1.5% tax on all income known as the Personal Property Replacement Tax. Therefore, the proposed effective rates are as follows:

INCOME TAX RATE EFFECTIVE TAX RATE WITH PPRT (1.5%)
$10,000 or less 4.75% 6.25%
$10,000.01 – $100,000 4.90% 6.40%
$100,000.01 – $250,000 4.95% 6.45%
$250,000.01- $350,000 7.75% 9.25%
$350,000.01 – $750,000 7.85% 9.35%
Over $750,000 7.99% 9.49%

For individuals with incomes over $750,000, the 7.99% rate applies to the entire income – not just the income over $750,000.

What follows are the new proposed rates on corporate income. In Illinois, corporations must also apply a 2.5% tax on all income known as the Corporate Personal Property Replacement Tax. Therefore, the proposed and effective rates are as follows:

INCOME TAX RATE EFFECTIVE TAX RATE WITH CPPRT (2.5%)
$10,000 or less 4.75% 7.25%
$10,000.01 – $100,000 4.90% 7.40%
$100,000.01 – $250,000 4.95% 7.45%
$250,000.01 – $500,000 7.75% 10.25%
$500,000.01 – $1,000,000 7.85% 10.35%
Over $1,000,000 7.99% 10.49%

For corporations with incomes over $1,000,000 the 7.99% rate applies to the entire income – not just the income over $1,000,000.

This proposal represents an expansion of the rates as originally discussed. Initially, the discussion was to make the highest rate for individuals top out at 7.95% and $1 million. The top rate is higher and now applies to those making less than $1 million. This appears to be an effort to blunt criticism that the initially discussed rates did not solve the current budget problems. Even if these proposed rates do that, they still do not generate the revenue necessary to return Illinois to fiscal stability by addressing out-year commitments to schools and pensions as well as the proposed new spending.

There is also a $100 per child tax credit for those with children under 17 years of age. For those filing jointly making $100,000 or less. This credit phases out incrementally by $5 for every $2,000 in income beginning at $60,000 for those filing jointly. Those filing as individuals are eligible if they make $80,000 or less. The child credit begins reducing by $5 for every $2000 as income increases over $40,000.

Next came Senate Amendment #1 to 689 (Sen. John Cullerton, D-Chicago/Michael Zalewski) proposing to repeal the Illinois estate tax. The state would lose $300 million a year. This was an attempt to incentive Republican support and be more attractive, particularly to agricultural interests. The legislation passed the Senate by a 33-24 vote. The House Progressive Caucus immediately released a statement that panned the repeal of the estate tax.

Finally, came Senate Amendment #1 to SB 690 (Sen. Andy Manar, D-Bunker Hill/Michael Zalewski) proposing property tax freezes in years in which the state fully funds the education funding formula and categoricals. It is rare the state has ever fully funded these items so how effective this will be remains to be seen. If the state were to fully fund, this would further highlight that the proposed graduated income tax rates in SB 687 are inadequate to meet known fiscal needs.

SJRCA 1, and Senate Bills 687, 689, and 690 now proceed to the House for further consideration.

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PAID SICK LEAVE

SB 471 CA#2 (Sen. Toi Hutchinson, D-Chicago Heights) creates the Healthy Workplace Act and would require and employer to provide a minimum of 5 paid sick days a year to each employee.  Those members who have locations in Chicago, and/or the various municipalities in Cook County that have not opted out of the Cook County sick leave ordinance, should note that if this bill passes and is signed into law the Chicago and Cook County ordinances would remain in effect.  The legislation passed the Senate by a 35-14 vote.

The Specifics of the bill are as follows:

  • Employees can accrue up to 5 paid sick days in a 12 month period (1 hour for every 40 hours worked) calculated from the date of hire or the effective date of the bill, and use can begin after 180 days of employment;
  • Minimum increments for use of sick leave cannot be more than 4 hours;
  • Leave can be used for the employee’s illness, an employee’s family member’s illness, medical care, school closings, to visit family in jail, to attend their own court hearing, or for reasons related to domestic violence;
  • Paid sick days must be paid out at an employee’s regular base wage;
  • If the employee is a tipped employee, then the wage is at least the full IL minimum wage, not the discounted minimum wage for employees that receive gratuities;
  • An employer can only require proof of need for sick days if the employee requests more than 3 consecutive days off;
  • Employees cannot be required to find a replacement if taking a sick day and must give the employer notice if the sick day was foreseeable (scheduled doctor’s appointment; scheduled surgery, etc.);
  • Unused sick days must carry over, but an employee is limited to the use of no more than 40 hours in one 12-month period unless the employer has a more generous use policy;
  • Paid sick days do not have to be paid out upon termination/separation;
  • If the employee separates from employment and is re-employed within a 12-month period with the same employer, then the employee will receive any accrued, but unused, sick leave obtained prior to the separation;
  • For employees that are currently covered under a collective bargaining agreement (CBA), this bill will not change that agreement; however, at the next negotiation, the CBA can waive paid sick leave as long as it’s in writing;
  • Paid sick leave does not apply to anyone working in the construction industry covered by a CBA;
  • Employers must keep records for 3 years;
  • Employers with paid time off (PTO) policies will not need to change those policies if employees are allowed to take the time in accordance with what is required in this bill;
  • Employers must keep the written requirements in this bill on file on the premises for employee review or post the requirement on the premises wherever like postings are located;
  • If the employer has employees that are not literate in English, the employer must provide the employee with a written explanation in the language in which the employee is literate;
  • Retaliation is prohibited; and
  • Employees have a private right of action.

IRMA is opposed.

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‘SESAME’ LABELING MANDATE

An initiative to address the growing issue of sesame seed allergens passed the House with an unanimous 114-0-0 vote. Food allergen labeling is governed by the Food Allergen Labeling Consumer Protection Act (FALCPA). FALCPA requires the labels of domestically manufactured or imported pre-packaged goods to include the eight major food allergens: milk, egg, peanut, tree nuts, soy, wheat, fish and crustacean shellfish. Together these foods cause the majority of allergic reactions in the U.S.  Due to the rise of sesame seed allergen the United States Food and Drug Administration (FDA) is considering adding sesame seed to the food allergen labeling requirements. The majority of the largest manufactures already include sesame seed labeling on prepackaged food.

HB 2123 (Rep. Jonathan Carroll, D-Northbrook/Sen. Emil Jones, D-Chicago), as introduced, requires a state specific Illinois label to be placed on packaged food as well as ready to consume food. In the modern restaurant, there is no such thing as ‘standardized’ meal. Every offering can be customized to the customer’s desire and 75% of restaurant customers customize their orders. Using a coffee shop as an example, there are over 80,000 different ways to order a cup of coffee.

IRMA worked with Representative Carroll to draft an amendment that reflects the changing federal standards while also protecting those that suffer from food allergies.

HB 2123 passed the Senate Agriculture Committee by a vote of 7-0.

IRMA is neutral as amended and appreciates the consideration of Rep. Carroll.

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REBATE CARD DORMANCY FEES

HB 2156 (Rep. Theresa Mah, D-Chicago/Sen. Cristina Castro, D-Elgin) passed the House by a vote of 67-47. The bill is intended to prohibit the issuance of product rebate cards that charge dormancy or other post-issuance fees. The legislation only applies to rebate cards that can be used at multiple merchants. It exempts those closed-looped merchant cards that are distributed and used at one retailer—also known as “store cards”. The language only applies to multi-store cards utilized for rebates after the consumer completes the rebate submission process.

IRMA has worked with the sponsors to address retailers’ concerns. IRMA would like to thank Rep. Mah and Sen. Castro for addressing those concerns.

IRMA is neutral.

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This Week in Springfield – 101-12

April 17, 2019

IN THIS ISSUE:

BUSINESS DAY 2019: BE HEARD
GRADUATED INCOME TAX
DATA PRIVACY
INTERNET CONNECTED DEVICES
PHARMACY BENEFITS MANAGERS
LIQUOR DELIVERY
RESTAURANT FOOD ALLERGEN NOTICE
RETAIL RESTROOM BABY CHANGING PLATFORM PASSES HOUSE
INTERNET LOTTERY
BPA BUSINESS RECORDS
COVERNANTS NOT TO COMPETE
CARPET TAX

Last week in Springfield the 3rd Reading deadline for the House and Senate expired. The members of both chambers are now back in their respective districts for a two-week in-district work break. They will return Tuesday, April 30th – the day before Business Day 2019.

BUSINESS DAY 2019: BE HEARD!

Graduated income tax, retail discount, felony retail theft threshold, paid leave mandates, and many more issues will be decided between now and the end of May. Wednesday, May 1st is a day of action for employers like you. A day to make your collective voices heard and to inquire of policy leaders and experts on issues of interest.

If you have not yet done so, register today and make your voice heard!

The day starts with an address from Governor Pritzker at the opening luncheon, subject panels on privacy, recreational marijuana, and the graduated income tax follow the luncheon with plenty of time after to interact with your elected officials at the Capitol and the Party Under the Tent.

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GRADUATED INCOME TAX

Last Wednesday, the Senate Executive Committee voted along party-lines to advance Governor Pritzker’s proposed graduated income tax constitutional amendment to the floor. Both the Senate and House must approve the proposal amendment by 3/5ths votes. If that happens, the amendment will go to the voters in the November 2020 election. If 60% of the voters voting on the question approve, it will be adopted. In brief, the plan allows for a graduated income tax. The highest tax on corporations cannot exceed the highest tax on personal income tax by more than an 8 to 5 ratio. As an example, if the highest personal rate is 10%, the highest corporate rate cannot exceed 16%. This would not include the additional 2.5% Personal Property Replacement Tax which would move the effective rate to 18.5%.

The Senate is expected to undertake consideration upon its return the first week of May.

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DATA PRIVACY

A proposed Illinois law would allow consumers to see or prohibit the use of their data by “big tech” companies. Behind the drive for a law is rising concern over the compromise of private data held by Facebook, Google and other tech giants that aggregate consumer information for commercial purposes. The industry traditionally has been lightly regulated and has resisted closer oversight.

These companies use analytic products to determine a user’s browsing path around the internet. By linking that information to an IP address and an associated account, a complete profile of a person can be assembled without the knowledge of the consumer. These companies then monetize the information and sell it to third parties outside the scope of the business transaction or business purpose that it was originally collected. As drafted, HB 3358 (Rep. Art Turner, D-Chicago/Sen. Tom Cullerton, D-Villa Park) creates the Data Transparency and Privacy Act and provides that an entity that collects personal information about individual consumers through the Internet must make disclosures to the individual regarding the collection of the information. It also establishes that a consumer has a right to opt out of the sale of the consumer’s information.

The legislation takes into account that retailers are required by state and federal law to collect, share, or process consumer information from sales at retail to submit sales taxes to the state, process a consumer transaction using a debit or credit card, provide Medicaid, WIC, or SNAP benefits, protect pharmacy patient information, develop a manifest to transport, ship or deliver goods, etc.

The bill passed the House by a 72-37-1 vote.

IRMA is neutral to the legislation as it passed the House and would like to thank Deputy Majority Leader Art Turner and the advocates for working to address IRMA’s concerns.

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INTERNET CONNECTED DEVICES

Laws at the federal and state level have long prohibited the unauthorized use of a device to record a person’s communications. Drafter’s of the federal Wiretap Act and Illinois’ existing wiretapping law focused on the activity prohibited rather than the technologies that are used to engage in the activity. The drafters understood that technological advancements would continue to provide convenience for individuals, but individuals’ actions regarding the use of the technology needed to be regulated.

Any product can become dangerous, illegal, or intrusive if used improperly. SB 1719 (Sen. Christina Castro, D-Elgin/Rep. Justin Slaughter, D-Chicago) flips that rational upside down and assumes a product is illegal if the person bought it but did not consent to the intended use of the product for which it was bought. It makes the incorrect assumption that the product can distinguish between the owner and an authorized user and has the capability to derive consent, and be able to produce a schedule and calendar of use, categories it has recorded, and how it will collect and disseminate the information.

SB 1719 passed the Senate by a 39-14 vote and now goes to the House for additional consideration.

IRMA is opposed to the legislation as currently drafted.

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PHARMACY BENEFIT MANAGERS

Among its many provisions, HB 465 (Rep. Greg Harris, D- Chicago/Sen. John Cullerton, D- Chicago) seeks to provide accountability and transparency into the operations of pharmacy benefit managers (PBM’s). HB 465 licenses PBMs, provides for suspension or revocation of those licenses, requires contracts between health insurers and PBM’s to update MAC pricing information at least every 7 days, provides access to the PBM’s MAC list to each pharmacy or PSAO, provides a process for appeals, etc. Additionally, a drug on the MAC list must be a generically equivalent drug, available for purchase by each pharmacy in the state from national or regional wholesalers, not obsolete; etc.

HB 465 was approved by the House unanimously and now moves to the Senate for additional consideration.

IRMA would like to thank House Majority Leader Harris and Sen. Manar for their leadership.

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LIQUOR DELIVERY

SB 54 (Sen. Don Harmon, D-Chicago/Rep. Michael Zalewski, D-Riverside) expressly allows retailers to deliver liquor to consumers. The retail industry is ever evolving and growing as technology offers more conveniences for consumers. One innovative step has included the use of mobile phone apps, telephone and online orders, and curbside pickup to facilitate the purchase of groceries, including alcohol. Illinois currently

Inconsistency has risen as some local municipalities have been prohibiting it while others have been expressly allowing it through ordinance. The Senate passed the legislation to the House to continue the discussions with the industry. In order to encourage continued innovation and establish a consistent policy, the House will consider an amendment that will:

  1. Allow grocery stores, liquor stores, and convenience stores to continue using any of the aforementioned delivery methods and ordering platforms to deliver alcohol within 30 miles of the retailer;
  2. Clarify that curbside pick-up of alcohol is allowed;
  3. Require consumer safeguards; and
  4. Prohibit municipalities from restricting consumers for accepting the delivery of alcohol.

A plethora of business interests support the potential amendment, which include IRMA, Associated Beer Distributors of Illinois (ABDI), Illinois Licensed Beverage Association (ILBA), Illinois Food Retailers Association (IFRA), the Wine Institute, MillerCoors, Anheuser-Busch, etc.

IRMA would like to thank Sen. Harmon for his continued work on this issue.

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RESTAURANT FOOD ALLERGEN NOTICE

Researchers estimate that 32 million Americans have food allergies, including 5.6 million children under age 18. Eight major food allergens – milk, egg, peanut, tree nuts, wheat, soy, fish and crustacean shellfish – are responsible for most of the serious food allergy reactions in the United States. Illinois is one of the few states that require a restaurant to have a person who has had additional allergen training to be on duty at all times. Massachusetts, Maryland, Rhode Island and Virginia also require notices to consumers to make sure they notify the restaurant that they may have an allergy to a certain food. HB 3018(Rep. Joyce Mason, D-Gurnee/Sen. David Koehler, D-Peoria) provides the same notice to consumers.

The legislation allows those restaurants that already have a notice as required by another state, internal policy, or national standard to continue to use that notice. Additionally, the legislation requires the Illinois Department of Public Health (IDPH) to create a sign for those restaurants that do not currently use a notice. The notice will be provided as a downloadable document and free of charge to restaurants. Finally, the legislation creates a flexible notice while requiring the employee who receives an allergen warning from a consumer to communicate that warning to the person in charge or the certified food protection manager on duty. This legislation provides flexibility for the retailer without creating regulatory hurdles while also providing an extra layer of protection for the consumer who suffers from food allergies.

The legislation passed the House by a vote of 110-0-1.

IRMA would like to thank Representatives Stephanie Kifowit and Joyce Mason for working with IRMA to create the current compromise.

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RETAIL RESTROOM BABY CHANGING PLATFORM PASSES HOUSE

Representative Delia Ramirez introduced HB 3711 in response to complaints prompted by viral videos of a father attempting to change the diaper of a child on the floor of a bathroom. As drafted, HB 3711 would require a retailer or a restaurant that serves on average more than 50 people to have a baby changing platform in both the women and men’s restroom.

After IRMA discussed the practical issue of the requirement as drafted, the sponsor agreed to work with IRMA to make the legislation consistent with other states’ requirements and current Illinois law, conform with the American with Disabilities Act, and the current building codes of each jurisdiction. Subsequently, Rep. Ramirez adopted an amendment that includes the following:

  1. Requires a baby changing station in a bathroom accessible to women, one that is accessible in a bathroom accessible to men, or a publicly accessible baby diaper changing station that is accessible to both men and women;
  2. Restricts the changes to new buildouts or renovations of restaurant and retailers that exceed 50% of the building;
  3. Restricts the changes to a retailer of more than 5,000 square feet and has a restroom that is open to the public;
  4. Restricts the changes to a restaurant with an occupancy of at least 60 people as determined by the fire marshal that has a restroom open to the public;
  5. Exempts a retailer that does not allow minors on the premise; and
  6. Allows a building inspector to determine that the installation of a baby diaper changing station is not feasible or would not comply with applicable building standards governing the right of access for persons with disabilities.

With the adoption of the amendment, HB 3877 passed the House by a vote of 110-0-0 and now moves to the Senate for consideration.

IRMA is neutral on the legislation and would like to thank Rep. Ramirez for working with IRMA on this important issue.

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INTERNET LOTTERY

Currently, subscribers can play the three big jackpot lottery games (i.e. MegaMillions, Powerball, and Lotto) via the Internet. There has been a desire for some time to expand the Internet offerings and allow “play as-desired” as opposed to via subscription. As introduced, HB 3661 (Rep. Chris Welch, D-Chicago/Sen. Kimberly Lightford, D-Westchester) would have allowed the Illinois Lottery to offer not just the draw (i.e. jackpot) games but all games the Lottery offers via the Internet. This would have applies to scratch-off as well. After discussions with Representative Welch, IRMA, the private lottery manager, and others, HB 3661 was amended on the House floor to allow only draw games to be offered via the Internet.

After the adoption of the amendment, the legislation passed the House by a 101-13-0 vote. HB 3661 now moves to the Senate for consideration.

IRMA would like to thank Rep. Welch for addressing our concerns.

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BPA BUSINESS RECORDS

Environmentalist contend that bisphenol-A (BPA) found in receipts causes adverse reactions to those individuals who handle the receipts. HB 2076 (Rep. Karina Villa, D-Batavia/Sen. Ann Gillespie, D-Arlington Heights) would prohibit the use of business documents, including receipts that contain BPA.

The majority of Illinois retailers stopped using receipts that contained BPA many years ago. This decision was not based on any scientific study, only public opinion and capitalism. Retail sales of “BPA free” products increased, therefore retailers offered and used more “BPA” free products, including paper products. Testimony from a union representative that employees of specific retailers are currently handling receipts that contain BPA is factually incorrect as those listed retailers do not currently use receipts that contain BPA.

Even though retailers do not use BPA receipts, the legislation has issues as drafted. The legislation prohibits the use of any document that contains any level of BPA. Therefore, without a de minimis standard, this would preclude the ability to use recycled paper because it contains traces of BPA due to the mixing of paper during the recycling process. Additionally, the Illinois Environmental Protection Agency (IEPA) only employs one toxicologist and does not currently have the equipment to test for BPA. Even though retailers moved away from the use of BPA, the ability of the IEPA to adequately monitor or enforce the prohibition would be impractical. Finally, the legislation does not contain an adequate “use through provision” to allow businesses to deplete current stock and phase in for the orderly transition to BPA free paper.

The sponsor agreed to address the opponents’ concerns in an amendment in the Senate and bring an agreed amendment back to the House Environment Committee for consideration.

In order for IRMA to agree to the amendment it has to include the following language:

  1. It has to contain a standard or level of measurement to determine if the level of BPA in the paper exceeds current US EPA safe handling guidelines;
  2. It has to include a “use through” provision;
  3. It has to include an “archived records” exemption; and
  4. It has to include an exemption for recycled paper that contains BPA.

With the pledge to bring an agreed upon amendment back to the House committee, HB 3018 passed the House by a 76-37-1 vote.

IRMA would like to thank Rep. Karina Villa for working with IRMA to address our concerns.

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COVENANTS NOT TO COMPETE

Legislation that would prohibit legal covenants not to compete in the state of Illinois failed to pass the House. Last year, lawmakers passed an agreed bill that prohibited covenants not to compete between an employer and an employee who is making minimum wage. The rational was to remove a potential barrier for low-wage workers from moving from job-to-job.

HB 2565 (Rep. Anne Stava-Murray, D-Downers Grove) would expand the prohibition to ALL employers and employees in Illinois. The sponsor testified in committee that a covenant not to compete restricted the ability of a family member to transfer from a job where they were being illegally mistreated by a supervisor. The legislation was voted out of committee after the sponsor agreed to consider to restrict the legislation to covenants not to compete be voided upon the illegal conduct of a supervisor.

Subsequently, the sponsor did not limit the scope of the bill. As a result, HB 2565 failed to pass the House by a 37-62-3 vote.

IRMA was opposed to the legislation.

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CARPET TAX

SB 557 (Sen. Melinda Bush, D-Grayslake/Rep. Michael Zalewski, D-Riverside) seeks to require producers to impose a 4-cent fee on every yard of carpet (nylon, polypropylene, and wool) and a 6-cent fee on every yard of PET, PTT, and blended carpet sold in the state of Illinois to pay for the collection and recycling of carpet. A producer is anyone who has legal ownership of the brand, brand-name, or co-brand of the carpet or the importer if the producer has no physical presence in Illinois. The legislation seeks to create a clearinghouse to operate the program. The clearinghouse not only administers the entire program but also sets goals. Additionally, the clearinghouse would discuss and could provide recommendations on a number of fronts including carpet design. Retail participation as a take-back location is voluntary but if the retailer is an importer or has private-label brand, that retailer would be a producer and subject to the requirements of the act.

With promises from the sponsor to continue discussion in the House, SB 557 passed the Senate by a unanimous vote of 56-0-0.

IRMA is opposed to the legislation as currently drafted.

This Week in Springfield – 101-11

April 5, 2019

IN THIS ISSUE

FALSE CLAIMS
PROPERTY TAX
ANTI-THEFT WAGE THEFT AND STATE CONTRACTS
SESAME SEED LABELING COMPROMISE ADVANCES
DOOR-TO-DOOR CONSTRUCTION CONTRACT “COOLING OFF PERIOD” COMPROMISE
LATEX GLOVES BAN COMPROMISE PASSES COMMITTEE
ALLERGEN AWARENESS TRAINING REQUIREMENTS PASSES HOUSE

 

This Week in Springfield both chambers continued the march to  their own 3rd Reading Deadline next Friday, April 12th. As such, floor debate began in earnest.

FALSE CLAIMS

IRMA testified at a subject matter hearing of the Senate Judiciary Committee in favor of SB 1564 (Sen. Dan McConchie, R-Lake Zurich) which seeks to reform Illinois’s False Claims Act. It would require third-parties to bring sales tax-related suspicions to the Illinois Department of Revenue (IDOR) who is the only authority with the power and knowledge to properly investigate. If the IDOR does not agree the suit should go forward, the Illinois Attorney General’s Office can override. This reform would interject accountability and end abuses by speculative third-parties but preserve the rights of true whistleblowers. One particular law attorney, Steve Diamond, who testified in opposition to the reform, has filed hundreds of lawsuits against retailers alleging violations of the False Claims Act over the application of sales tax on shipping and delivery charges. These were filed despite the fact retailers were following the laws of the State of Illinois and the rules and regulations of the IDOR. It was an insidious game to try and convince small-to-medium retailers to settle by threatening exposure on much larger amounts.

IRMA provided the history of the problem created by the misapplication of the False Claims Act. The Act was borrowed from the federal government which does not allow claims to be brought for suspected violations of the Internal Revenue Code. The federal False Claims Act exists to give whistleblowers a vehicle, and incentive, to root out government program and contracting abuses. When Illinois borrowed the statute, they over-looked the fact the federal government has no sales tax and failed to exempt it. As such, suits can be brought by third-parties under the Act related to sales tax despite the fact the IDOR is supposed to have sole authority over tax regulation.

The bottom line: no one should be sued for following the law. SB 1564 inserts accountability while ensuring true whistleblowers are still empowered and incented to come forward with suspected wrong-doing. SB 1564 did not advance as it was a subject-matter only hearing meaning the abuses can continue. IRMA would like to thank Senators McConchie and Chuck Weaver (R- Peoria) for working to shed light on this much needed reform.

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PROPERTY TAX

Cook County Assessor Fritz Kaegi is seeking passage of highly controversial legislation that would require non-owner occupied commercial and industrial property, including residential units with more than six units, to turn over their financial information to his office on an annual basis. Failure to do so would results in a significant financial penalty. The stated theory is this will increase the accuracy of assessments. While an improved assessment process is desirable, there is no guarantee this proposal will provide it and the burden on, and risks to, taxpayers could be significant. Further, the longer this proposal is scrutinized, the more problematic it becomes and the more opponents it gains. Recently, initial supporters including the Chicago Federation of Labor removed their support.

Some examples of the problems with the current proposal include its lack of clarity on what information must be reported (e.g. rent and building expenses, financial information of tenants, etc.), who must report (e.g. what constitutes owner/occupied), what properties are covered, protection of financial data, etc.  Another of the implied arguments is that passage would lead to more commercial development, particularly on the south side of Chicago/Cook County AND property tax relief for residential property owners. However, if there is relief for residential property owners, the tax load they previously carried has to be shifted to commercial and industrial meaning they will pay even more property tax which will lead to less commercial and industrial development.

SB 1379 (Sen. Toi Hutchinson, D-Chicago Heights) passed the Senate but only after the sponsor convinced the Senate it needed to move to keep the discussions going, that is a work in progress, and will have to come back to the Senate. IRMA is part of a broad and growing group of opposition.

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ANTI-THEFT WAGE THEFT AND STATE CONTRACTS

HB 1653 (Rep. Celina Villanueva, D-Summit) would prevent any employer who is convicted of wage theft from contracting with the state for five (5) years.  The intent of the legislation is to address the issue of temporary and seasonal employers who underpay their workers.  It is a rare instance for most mainstream retailers to be convicted of wage theft. Additionally, retailers are authorized to provide Medicaid, Supplemental Nutrition Assistance Program (SNAP), and special supplemental nutrition program for women, infants, and children (WIC) benefits to consumers in Illinois. If a mistake were to occur in a statewide workforce a retailer that has hundreds of locations throughout the state would be prohibited from providing Medicaid, SNAP, or WIC benefits for five (5) years. The legislation as introduced would prevent the ability of the state from reliably distributing state and federal benefits to consumers in Illinois. House Committee Amendment #1 addresses the aforementioned concern by exempting entities that have contracts with the state to provide Medicaid, SNAP, or WIC benefits to Illinois consumers from the requirements of the bill. As amended, the legislation passed the House with a vote of 69-43.  It now moves to the Senate for consideration.

With the adoption of the amendment IRMA is neutral to the legislation.  IRMA would like to thank Rep. Villanueva for bringing IRMA, AFSCME and LiUNA together to reach this agreement.

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SESAME SEED LABELING COMPROMISE ADVANCES

An initiative to address the growing issue of sesame seed allergens passed the House with a unanimous 114-0-0 vote. Food allergen labeling is governed by the federal government under the Food Allergen Labeling Consumer Protection Act (FALCPA). FALCPA requires the labels of domestically manufactured or imported pre-packaged goods to include the eight major food allergens: milk, egg, peanut, tree nuts, soy, wheat, fish and crustacean shellfish. Together these foods cause the majority of allergic reactions in the U.S.  Due to the rise of sesame seed allergen, the United States Food and Drug Administration (FDA) is considering adding sesame seed to the food allergen labeling requirements. The majority of the largest manufactures already include sesame seed labeling on prepackaged food.

HB 2123 (Rep. Jonathan Carroll, D-Northbrook), as introduced, required a state specific Illinois label to be placed on packaged food as well as ready-to-consume food. In the modern restaurant, there is no such thing as ‘standardized’ meal. Every offering can be customized to the customer’s desire and 75% of restaurant customers customize their orders. Using a coffee shop as an example, there are over 80,000 different ways to order a cup of coffee.  Due to the movement of the FDA and manufacturers changing their current labeling practices to include sesame seed Representative Carroll amended his bill to apply to prepackaged foods.

IRMA would like to thank Representative Carroll for working with us to reach an agreement on this important consumer safety issue.

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ALLERGEN AWARENESS TRAINING REQUIREMENTS PASSES HOUSE

HB 2060 (Rep. Mike Murphy, R-Springfield) repeals the stand alone requirement for allergen training and includes it in the current food handling training. Under current requirements, one person per shift has to take additional allergen training outside of the already required 8 hours of food training. HB 2060 includes the allergen training in the mandatory 8 hours of training that every food handler must complete.  The Illinois Restaurant Association (IRA) opposes this legislation because it has an agreement with the ServSafe and they get a percentage of the proceeds from the required additional allergen training. If the allergen training were to be included in the 8 hours of training, IRA would not receive additional funds for the additional training.

This common sense legislation passed the House by a vote of 96-1-7.

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Latex Gloves Ban Compromise Passes Committee

Many consumers suffer from latex allergies and there are concerns that latex could be transmitted from an employee’s gloves while handling consumer food. HB 2831 (Rep. Michelle Mussman, D-Schaumburg) would prohibit the use of latex gloves while preparing or serving food for consumption. The legislation still allows the use of latex gloves for other purposes in and around the retailer.

With the adoption of the agreed upon committee amendment, HB 2831 passed the House by a unanimous 112-0-0 vote and now heads to the Senate for further consideration.

IRMA would like to thank Representative Mussman for amending the bill and addressing retail concerns and supports the amended bill.

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DOOR-TO-DOOR CONSTRUCTION CONTRACT “COOLING OFF PERIOD”

COMPROMISE PASSES THE HOUSE

Every year thousands of Illinois residents are victim to home repair schemes. Oftentimes, “home repair contractors” will visit a town recently devastated by violent weather and go door-to-door and offer to repair the victims homes. Seniors, especially those who live alone, are prime targets for home repair scams. In some cases, con artists pose as inspectors, city officials or police and use scare tactics to force elders to have unnecessary repairs made to windows, furnaces, chimney, water heater or the electrical wiring, etc.

HB 2643 (Rep. Joyce Mason, D-Gurnee) gives individuals 65 years or older a 15 day cooling off period with a door-to-door home repair contract.  This provides protection for seniors who enter expensive home repair contracts unwittingly. This would not apply to a contract that was executed proactively by an individual who entered into a contract at the contractor’s physical place of business. The initiative passed the House with a 96-9 vote and has been sent to the Senate for consideration.

IRMA would like to thank Representative Mason for working with IRMA to address this important constituent issue.