This Week in Springfield – 100-25

RESTRICTIVE SCHEDULING
SALES TAX CONFIDENTIALITY & RESPONSIBILITY
STATE WORKERS’ COMPENSATION PROGRAM

This Week in Springfield lawmakers moved one step closer to providing confidential taxpayer information to for-profit third party audit firms and moved one step closer to restricting employee scheduling flexibility.

RESTRICTIVE SCHEDULING

Lawmakers are set to consider legislation that would remove employer and employee scheduling flexibility. As introduced, HB 5046 (Rep. Chris Welch, D-Westchester) would require a 72-hour notice of an employee’s weekly schedule and would impose statutory penalties if any part of the employee’s schedule is reduced or canceled after the notice. It applies to part time, full time, non-salaried, and salaried employees who make $50,000 or less. The legislation also prohibits an employer from dismissing an undocumented foreign national. Not since the Gross Receipts Tax debate have we seen such a collaboration of different industries collectively opposing a legislative initiative.

HB 5046 assumes that every restaurant, bar, grocery store, movie theatre, fitness center, pharmacy, hardware store, bank branch, school system, farm, manufacturer, construction project, municipality, daycare, park etc. operate in the exact same manner.  Different industries have unique business, employee, and regulatory variables to consider when providing schedules that promote and support their employees and HB 5046 undermines the ability of each industry to properly manage their business and support the various flexibility requests of their employees.

HB 5046 eliminates scheduling flexibility, forces employers to deny last minute requests, and creates confusion. A “one-size-fits-all” mandate fails to recognize the negative impact that the regulations will impose on employees. Once a regulation is in place, businesses are less able to respond to employee preferences and emergencies.  Restrictive scheduling constraints on flexible scheduling reduce the ability of employers to respond to changes in employee circumstances—this reduces the opportunities for employees. For instance the Full Service Workers Alliance of Seattle, which represents restaurant, retail, and hospitality workers, argues the regulations instituted by the Seattle City Council: (1) prohibit the flexible schedules they value (picking up shifts and dropping them as needed); (2) result in fewer work opportunities; (3) result in fewer benefits that are offered as perks by many establishments; and (4) create an unnecessary environment of stress between employers and employees.

A flexible scheduling model is used in various industries in order to attract and retain employees. High school, college, and post-secondary students are drawn to retail because of the opportunity to work and design a flexible schedule around their classes.  Many workers are attracted to retail positions on a seasonal basis because they can pick up a few hours in order to supplement income or pay for holiday shopping. Additionally, retailers provide flexible employment for defined populations such as youth at risk, people with disabilities, or senior citizens.  For instance, Beatrice Garza President and CEO of the Association for the Advancement of Mexican Americans (AAMA) represents at risk youth and opposes restrictive scheduling for the following reasons:

“Through our charter school, work readiness, training, and job placement programs, we help meet the stark challenges confronting at-risk youth.  Many live in single-parent homes where they are forced to shoulder financial burdens and family obligations at an early age.   Others must work part-time to finance their higher education.

These talented and deserving young Americans need flexible part-time work.  Earning income from an employer that understands their circumstances builds self-esteem and responsibility and gives them a paycheck that keeps their dreams alive.  Without part-time employment, many young people would be forced to give up their education or make other unfortunate sacrifices.

Critical to breaking the cycle of poverty is to open the door of opportunity to people from difficult circumstances.  While onerous scheduling practices benefit no one, neither do policies that punish employers willing to work with young Americans who want a brighter future.

We fear proliferation of laws recently enacted in San Francisco, and currently before city and state governments in Seattle, Washington, DC, and New York, that slash part-time work and straight-jacket the relationship between managers and their employees.  Employers across the country will eventually have fewer such positions available, and restrictive scheduling requirements will discourage the hiring of applicants with unusual life challenges.”

While considering the requests and preferences of employees, businesses must consider those through the framework of needs of the business.  A variety of data points that may be used include: employee requests, sales forecasts, productivity of the store, historic payroll and hour reports, workload, marketing or other in-store events, transportation (truck, train, barge, delivery, etc.), civic events, and guest traffic patterns. Despite a business’ best efforts to predict scheduling needs accurately in each location, the need for employees in any given location is subject to these external factors, and others, that may change frequently, unpredictably, and with little or no notice.

Finally, HB 5046 prohibits an employer from firing an undocumented foreign national that is in the U.S. illegally. Federal law prohibits employers from employing foreign nationals who are illegally present in the U.S. This would require businesses to choose between violating federal law or state law.

Different industries have unique business, employee, and regulatory variables to consider when providing schedules that promote and support their employees and HB 5046 undermines the ability of each industry to properly manage their business in support of their employees.

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SALES TAX CONFIDENTIALITY & RESPONSIBILITY

The confidential and sensitive tax information of businesses is one step closer to being handed over by local governments to unaccountable third-parties.

HB 2717 (Rep. Chris Welch, D- Westchester) seeks to allow local governments to share the specific financial information of businesses within their borders with third-parties. The justification is local governments are struggling to make ends meet and last year the state reduced some of the revenue they had shared with locals. These decisions should not result in exposing Illinois businesses to fishing expeditions using partial information, and risk spilling confidential information into the public domains.

Currently, local governments receive three reports from the Illinois Department of Revenue (IDOR). First, on an annual basis and free-of-charge, they receive a geo-location report of all the businesses in their jurisdiction. This report is available more frequently upon request. Second, on a monthly basis, they receive a report of any new Certificates of Registration (i.e. new businesses) that were issued to addresses within the local government. Third, they receive three times a year a report that contacts the business name, address, amount of sales tax distributed to the local government from sales at that business as part of the municipality’s 1% share of the 6.25% state sales tax, and the amount of sales tax distributed to the local government from any sales tax imposed by that local government on sales occurring at that business. This report is provided to the chief executive of the local government under a strict confidentiality agreement that carries misdemeanor penalties for violations. This third report is what HB 2717 seeks to allow third-parties to obtain.

During testimony, the proponents claimed HB 2717 would make the current process more confidential and that there are no protections currently in place. Both claims are demonstrably false. Under current law, the chief executive of a local government cannot share the financial information with anyone. The financial information is provided to the chief executive of the local government pursuant to a strict confidentiality agreement. We already know from the testimony of the proponents at a subject matter hearing on May 1st that some chief executives are, today, violating these confidentiality agreements and sharing the information with third parties. HB 2717 would legalize and reward their disregard for the law by removing the penalties. In other words, if HB 2717 were to pass, local governments and third parties could share this information without repercussion regardless of the existence of a confidentiality agreement. It takes a tremendous leap of faith to believe that allowing this information to be shared with other parties somehow makes it more confidential. If some local governments are willing to break the law, one can only imagine what a for-profit company would be willing to do with the information.

Given the admitted abuses and violations local governments have admitted are occurring today, the Assembly should be discussing revoking local government’s access to this information particularly given the fact they cannot justify a true need for it. Despite this, the opponents, led by IRMA, have offered two separate compromises. The only item we cannot agree to is allowing these sharing arrangements by contingency-fee. Contingency-fees incentivize casting the widest net possible. That is why entities such as the National Conference of State Legislators (NCSL), the Council on State Taxation (COST), and the American Institute of CPA’s have condemned the practice. Only one state, California, currently allows them and they are ranked dead last for ease of tax administration by COST.

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STATE WORKERS’ COMPENSATION PROGRAM

Lawmakers passed HB 4595 (Rep. Laura Fine, D-Glenview) out of the House Labor and Commerce Committee 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 by 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 4595 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.

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This Week in Springfield – 100-24

March 2, 2018

IN THIS ISSUE:

MARKETPLACE FAIRNESS
TAX ABUSE
PRE-JUDGEMENT WAGE LIENS
ATTORNEY GENERAL WORKER PROTECTION UNIT
PAY HISTORY COMPROMISE REMAINS ELUSIVE
MARIJUANA REFERENDUM PASSES SENATE
EMPLOYER RELOCATION PENALTIES
BUSINESS DAY SPEAKER

This Week in Springfield both Chambers were in session and discussions took place regarding guns, taxes, and employment issues.

MARKETPLACE FAIRNESS

States have long been unable to collect sales tax owed on tangible personal property sold by remote (e.g. Internet) sellers. State, including Illinois, have tried to do so. Standing in the way are two pre-Internet decisions by the Supreme Court of the United States (SCOTUS). The first, ironically enough, was National Bellas Hess vs IDOR (1967). A second case, Quill vs North Dakota (1992) affirmed the Bella Hess case. TWIS readers will note that both were prior to the use of the Internet as a significant commerce channel.

Briefly, both cases ruled that unless an entity had a physical presence within a state, that state could not require the remote seller to collect the state’s sales tax. It is important to note, however, that it is not as if the tax was not due. The liability shifted to the consumer. However, there was, and is, no efficient method of ensuring consumers remit the sales tax. With the advent of the Internet, the effect was a major selling channel competing with brick-and-mortar stores but with a significant advantage because they didn’t have to collect and remit sales tax. While many remote sellers continue to exploit the opportunity, others, like Amazon and Google, are already collecting and remitting sales tax to the states.

A few weeks ago, the US Supreme Court agreed to hear a case from South Dakota (South Dakota vs. Wayfair) which could overturn the National Bellas Hess and Quill decisions and require remote sellers to collect and remit state sales tax. A few Justices had publicly indicated their belief that the previous decisions should be reviewed. Depending on who you believe, the State of Illinois could realize revenues between $200 million and $800 million.

In order to position Illinois to be able to immediately benefit if the SCOTUS rules in favor of South Dakota, SB 2577 (Sen. Cristina Castro, D- Chicago) was introduced and is supported by IRMA. In short, SB 2577, as amended by Senate Amendment #1,  mirrors the language of South Dakota with slight modifications to reflect the fact that Illinois is an occupation and use tax state as opposed to a straight sales tax state. This week, the Senate Revenue Committee reported SB 2577 as amended by Senate Amendment #1 to the floor on an agreed bill list. It now awaits consideration by the full Senate.

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TAX ABUSE

As reported previously in TWIS, a broad coalition of entities organized by IRMA is fighting an attempt by a private business to seek access to the proprietary tax information of businesses. This discussion started nearly two years ago when a company, Azavar, initiated legislation designed to benefit their contingency-fee business model. Within the last year, a group of local governments formed and these local governments, number unknown, have now become the proponent. Azavar has allegedly disappeared from the conversation. Nevertheless, the legislation would benefit them. Companies like Azavar have played upon the frustrations of local governments and sold them on a get-rich-quick scheme. The proponents originally tried to pass their proposal through the Senate where it was twice defeated. They have now turned their attention to trying to force legislation out of the Illinois House. This week, their proposal, HB 2717 (Rep. Chris Welch, D- Westchester), was assigned to the House Revenue & Finance Committee and could be heard next week.

HB 2717 would allow municipalities to share private and protected business tax information with third party for-profit auditors. IRMA opposes any attempt at requiring the Illinois Department of Revenue (IDOR) to disclose tax information of businesses located with independent third-parties hired by such municipalities.

Currently, local governments receive from IDOR the following information: (1) business name; (2) business address; (3) the amount of sales tax distributed to the local government from sales at that business as part of the municipality’s 1% share of the 6.25% sales tax; and, (4) the amount of sales tax distributed to the local government from sales at that business as the result of any locally imposed sales tax administered by IDOR. This information is provided to the chief executive of the municipality pursuant to strict confidentiality requirements. Additionally, local governments receive on an annual basis a list of all businesses within their jurisdiction. This listing is available more frequently at the request of the local government. Finally, local governments also receive on monthly basis a listing of new businesses that have received a Certificate of Registration.

This proposal is an invitation to abuse and corruption because third parties are incented to make unsubstantiated accusations and trigger audits for which the businesses must pay. This is true because the third-parties are paid on a contingency-fee basis meaning there is no incentive for fairness.

Retailers are encouraged to contact their State Representatives and urge them to vote “NO” on HB 2717 or any bill that allows access to their tax information.

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PRE-JUDGEMENT WAGE LIENS

 HB 4324 (Rep. Chris Welch, D-Chicago) allows any employee to file a lien against an employer’s current and future acquired real and personal property based on a wage dispute—not an administrative or judicial finding of guilt.  The bill originates from a group known as Raise the Floor Alliance. It is meant to address the situation where unscrupulous companies, usually temporary businesses, dissolve and reorganize before a wage claim is brought or adjudicated.

While the business community is aware of these unscrupulous companies and committed, and provided language to address the issue, the pre-judgement lien would erroneously ensnare and impair legitimate operations without due process. The pre-judgement lien does not receive or require a hearing and is not adjudicated on the merits.  It takes effect five days after an employee files and posts notice of the lien.  As such, as drafted, once a lien is placed on business’ assets such as merchandise, rolling stock, grain, fertilizer, equipment, building materials etc., the assets become encumbered and may not be sold to consumers, used on a project, transported, processed, or otherwise converted until the lien is removed.  The lien also takes precedent over any other liens, debts or mortgages. For instance, retailers receive a line of credit to supplement payroll and to acquire goods for the current season and the upcoming season. The pre-judgement lien would take precedence over the line of credit for both the payroll and future goods and would impair the retailer’s ability to meet payroll and prepare for the upcoming season.

Additionally, the pre-judgement lien would simultaneously be put on the business “owners” personal real property in the county of the alleged wage theft. In a meeting with the advocates, it was explained the lien would be placed on the individual’s personal property that is responsible for managing the employee.  It is unclear if this would mean the shift manager, store manager, district manager, or regional manager of a national company—or all of the aforementioned.

The Department of Labor is currently taking more than a year to adjudicate wage claims and if this bill were to pass the lien would remain until the claim is adjudicated. Filing a lien of such significance without first proving the merit of wage dispute allegations will basically subject employers to constant extortion in order to avoid dealing with a lien on their business and personal property.

A business coalition met with the advocates and committed to providing language that would address the issue. The coalition’s draft required the Illinois Department of Labor (DOL) to adjudicate wage claims within 30 days of receiving the complaint.  If an employee filed a wage claim in a reasonable time, this would make it impossible for a company to dissolve, reorganize or transfer assets to avoid a violations. Furthermore, the coalition’s draft provided that if the company is found guilty, a lien would be placed on the company’s current and future assets pursuant to the current procedures under the Illinois Civil Procedure Code. The draft also allowed the DOL or the Illinois Attorney General to freeze the assets and enter into supplementary proceedings to discover the companies previously acquired, current, and future assets.  Within hours of providing the draft to the advocates an amendment was filed that was not shared with the coalition and did not include any language from the coalition’s suggestions.

The legislation passed committee on a partisan roll call and will be held on second reading while the amendment is brought to committee for consideration. The amendment does not address the aforementioned issues and all opponents remain opposed. Return to Top

ATTORNEY GENERAL WORKER PROTECTION UNIT

SB 193 (Sen. Kwame Raoul, D-Chicago)/Rep. Jay Hoffman, D-Belleville) allows the Attorney General (AG) to simultaneously litigate or re-litigate an issue that is being investigated or has already been adjudicated by the Illinois Department of Labor (DOL).  This would include claims under the Prevailing Wage Act, the Employee Classification Act, the Minimum Wage Law, the Day and Temporary and the Labor Services Act, and the Wage Payment and Collection Act.  Under current law the (DOL) investigates and adjudicates claims under these Acts.  Once the claim is adjudicated the DOL may forward the judgement to the AG for enforcement.  SB 193 would allow the AG the power to simultaneously investigate and bring suit against an employer. As such, an employer could be responsible for both a DOL and AG investigation and lawsuit. Additionally, the AG may re-litigate a case the DOL has already ruled upon.  For instance, if the DOL rules in favor of a business and closes the case and the AG is not satisfied with the outcome, the AG may independently open the case and re-litigate the complaint.

SB 193 passed the House with a 65-048-0 and the Senate with a 35-016-0 vote.

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PAY HISTORY COMPROMISE REMAINS ELUSIVE

Similar legislation that was vetoed by the Governor and failed to be overridden by the Senate has passed the House again.  Despite an avenue for compromise offered by the business community the advocates chose to pursue the same path traveled before. In the meantime additional jurisdictions have passed the compromise offered by the business community.

HB 4163 (Rep. Anna Moeller, D-Elgin/Sen. Christine Castro, D-Elgin) prohibits an employer from asking an employee about previous wage, salary and other compensation.  It also limits the current statutory defenses for Illinois employers while expanding the statutory penalties.  While IRMA has, from the beginning, agreed to prohibit the question as long as there are common sense exemptions, IRMA remains opposed to arbitrarily restricting Illinois’ employer’s current limited defenses and increasing current statutory penalties.

Illinois currently only has three defenses to an unequal wage claim (1) seniority system; (2) merit system; and (3) a system that measures earnings by quantity or quality of production. The advocates argue that limiting the current defenses and increasing the penalties will deter employers from violating the Equal Pay Act. In the past 11 years (excluding 2010 and 2011 where there is no available data), under the current limited defenses, there have been only 51 recorded violations of the Equal Pay Act. In that same time period approximately 707 investigations were conducted by the Illinois Department of Labor. Less than 7.5% of all claims in the last 11 years have resulted in a violation.  According to the U.S. Small Business Administration there are over 1.2 million businesses in Illinois. Assuming that a different company was responsible for each violation only .0000425% of Illinois businesses have been responsible for an Equal Pay Act violation in 11 years.  This is a 99.9999575% compliance rate.

Despite this compliance rate some business associations are willing to take a proactive step to support expanding the current Equal Pay Act to prohibit an employer from asking about a prospective employee’s wage and salary. A year ago, these associations suggested using a compromise that was accepted by all parties in Massachusetts. Since that time, Oregon, Delaware, California, and Puerto Rico have passed legislation prohibiting asking about an employee’s previous wage and salary. Oregon and Puerto Rico have adopted the Massachusetts model. So three of the five major jurisdictions support a compromise model.  Additionally, this model has been introduced in Rhode Island, Connecticut, Montana, Georgia, and Texas. Despite over 700 investigations over the past 11 years of available data 99.99% of all Illinois employers have already proven to be compliant with the current law.

It stands to reason that a reasonable compromise would be to take a proactive step forward by prohibiting the salary inquiry while recognizing the overwhelming majority of Illinois businesses have proven to promote and support both men and women in the workforce.

HB 4163 passed the House by a vote of 87-24-0 and moves to the Senate for consideration.

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MARIJUANA REFERENDUM PASSES SENATE

SB 2275 (Sen. Bill Cunningham, D-Chicago) creates the Marijuana Legalization Referendum Act. It requires the State Board of Elections to cause a statewide advisory public question to be submitted to the voters at the November 6, 2018 general election asking whether individuals support the legalization of possession and use of marijuana by persons who are at least 21 years of age, subject to regulation and taxation that is similar to the regulation and taxation of tobacco and alcohol.

The legislation passed the Senate with a vote of 37-13-1 and has been sent to the House for consideration.


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EMPLOYER RELOCATION PENALTIES

Introduced by unions that represent call center workers, HB 4081 (Rep. Michael Halpin, D-Rock Island) creates the Call Center Worker and Consumer Protection Act and requires an employer that intends to relocate a call center or portions of a call center from Illinois to another state or a foreign country to provide notice to the State Treasurer at least 120 days before the relocation or face a $10,000 per day penalty.  The company would also be required to repay current state tax incentives and forego any future state grants, loans, or tax incentives.  The legislation fails to take into consideration real world business decisions in determining how, when, and where a business should be located or operated. It also discourages businesses from moving to Illinois.

The legislation passed the House Economic Opportunity Committee by an 8-5 vote.

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BUSINESS DAY SPEAKER

Register now to attend Business Day 2018! Jim Vandehei, co-founder and CEO of Axios and co-founder and former CEO of POLITICO, will be keynote the opening luncheon of Business Day 2018 on Wednesday, May 9th in Springfield. In 2017, Vanity Fair listed Vandehei among the 100 most powerful ‘Information Age’ thinkers while Entrepreneur magazine named him one of 2017’s “50 Most Daring Entrepreneurs”. Exercising his entrepreneurial background and long history covering politics in Washington, D.C., Mr. Vandehei will pull back the curtain and address what audiences really need to know about the White House, Congress, politics, and the media. Mark your calendars now to attend Business Day 2018 on Wednesday, May 9th in Springfield!

Business Day Registration, Click Here

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This Week in Springfield – 100-23

GOVERNOR’S BUDGET ADDRESS

 At Noon on Wednesday, Governor Bruce Rauner delivered his annual Budget Address to a joint session of the Illinois General Assembly. His proposal contains a $75 billion spending plan from all sources. The general funds portion accounts for $37.6 billion. General funds are monies derived from state imposed revenue sources (e.g. income tax, sales tax, excise taxes, etc.).

The Governor struck an overall theme of emphasizing essential public services over benefits. As such, his proposal included shifting nearly $700 million in pension costs the state currently covers for local schools and institutions of higher learning back to those institutions. This shift would be done over four years – 25% per year. Accountability was the key to the Governor’s argument here noting that it is easy for these entities to enact salary increases when they bear no responsibility for the pension costs. Such a move would significantly increase pressure on property taxes. However, the Governor argued the burden to schools would be softened because of (1) increased funding through the education formula, (2) the power to dissolve or consolidate units of local government which would provide more tax revenue for schools, and (3) greater flexibility in contracting, bidding, and sharing services. Additionally, he renewed his ‘best and final offer’ in negotiations with public section unions to remove group health insurance from collective bargaining thereby allowing the state to unilaterally impose cost controls. His office estimates savings from this change to be approximately $560 million. Additionally, the Governor proposed a pay-as-you-go capital program of $2.2 billion for infrastructure.

Cuts are also a part of the Governor’s proposal including another 4% cut to Medicaid providers although it is unclear at this time if this applies to all Medicaid providers or certain Medicaid providers. The Governor noted the need to end the historic process of spending more than state government takes in which has contributed to the State’s current fiscal crisis. In his words, “to reduce government expense but not customer service.”

Finally, the Governor claimed that if the Assembly adopted a consideration reform model for state pensions and the Thompson Center were finally sold, the state could afford to begin to roll-back the income tax increases enacted over his veto last year. According to the Governor’s proposal, the income tax could be reduced by ¼ of 1%.

Democratic response immediately focused on their belief that his proposal is out of balance by as much as $1.5 billion because he is relying upon passage of items they claim legislative Republicans will not support such as shifting the pension payments back to local schools and universities/colleges. Additionally, while the Governor’s proposal does set aside several hundred million to help pay off back-bills owed to those who have supplied goods and services to the State, those back bills currently total nearly $9 billion.

In response to the speech, IRMA issued the following statement: “Retail serves as an important economic engine for the state, and yet we continue to see razor thin margins as regulations, mandates and taxes continue to squeeze Main Street retailers. IRMA is concerned about the continued cuts and devaluing of Medicaid providers as well as its impact on the populations they serve. Pharmacies serve on the front lines when it comes to treating Medicaid patients, especially in areas with few medical options. IRMA stands ready, as it always has, to work with both Governor Rauner and legislative leaders on both sides of the aisle in passing a budget that will best serve Illinois’ constituents and restore its stability and competiveness,” said Rob Karr, president & CEO, IRMA.

This address begins the long budget process that may, or may not, conclude with a budget near the scheduled adjournment at the end of May.

BUSINESS DAY SPEAKER

Register now to attend Business Day 2018! Jim Vandehei, co-founder and CEO of Axios and co-founder and former CEO of POLITICO, will be keynote the opening luncheon of Business Day 2018 on Wednesday, May 9th in Springfield. In 2017, Vanity Fair listed Vandehei among the 100 most powerful ‘Information Age’ thinkers while Entrepreneur magazine named him one of 2017’s “50 Most Daring Entrepreneurs”. Exercising his entrepreneurial background and long history covering politics in Washington, D.C., Mr. Vandehei will pull back the curtain and address what audiences really need to know about the White House, Congress, politics, and the media. Mark your calendars now to attend Business Day 2018 on Wednesday, May 9th in Springfield!

Business Day Registration, Click Here

This Week in Springfield – 100-22

IN THIS ISSUE:

TOBACCO 21
OPIOID RELIEF
BUSINESS DAY 2018

This week in Springfield lawmakers advanced legislation to restrict sales of tobacco and advanced legislation that attempts to provide relief to the opioid crisis.

TOBACCO 21

 Legislation to increase the legal age to purchase tobacco from 18 years of age to 21 years of age advanced out of committees in both chambers this week. IRMA testified in opposition at both hearings. Advocates predict the increase will lead to a decrease in the ability of teens to obtain cigarettes noting that teens get most of their cigarettes from social sources (i.e. friends and family members). However, there is a large contradiction in the legislative proposals that tell teens it is okay to have and use cigarettes because both proposals eliminate existing penalties for possession of cigarettes.

Under current law, someone under 18 years of age who is in possession of cigarettes can face the following penalties:

  •        A $50 fine and 25 hours of community service for the first offense;
  •        A $75 fine and 50 hours of community service for a second offense in a 12-month period;
  •        A $200 fine and 50 hours of community service for a third offense in a 12-month period.
  •       Additionally, a court may, at its discretion, and upon recommendation of the State’s Attorney, order that a minor and his/her parent(s) or legal guardian(s) attend a smoker’s education or youth diversion program. Such participation is credited against the community services.

If HB 4297 (Rep. Camille Lilly, D-Oak Park) or SB 2332 (Sen. Julie Morrison, D- Deerfield) is enacted in their current forms, all of these provisions would be stricken meaning teens are free to possess and use cigarettes.

Proponents argued that these penalties are not currently enforced so they should be removed. However, teen smoking rates are trending down significantly nationwide without laws like these. We all drive through school zones where students are standing across the street openly consuming cigarettes. Imagine how much lower teen smoking rates would go if current law was enforced? It calls into the question why a new law is needed if a current law is not being enforced?

There is also the significant sales shift that occurs even as Illinois retailers struggle to increase sales to pay for current costs, additional cost mandates by state and local governments, anticipated additional mandates by state and local governments, and the fact that Illinois’ population loss means retailers are trying to sell more to fewer consumers yet costs – artificially imposed by government and otherwise – show no signs of abating.

Both bills now proceed to the floors of their respective chambers for additional consideration.

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OPIOID RELIEF

The Senate Executive Committee successfully advanced SB 336 SCA#1 (Sen. Don Harmon, D-Oak Park) which amends the Compassionate Use of Medical Cannabis Pilot Program Act (“Act) to allow individuals who have been prescribed opioids for a medical condition to apply for a temporary medical cannabis card.

Those that apply for a temporary medical cannabis card would be exempt  from the fingerprinting and background check requirements in the Act. Additionally, SB 336 requires an expedited approval or denial of an application within 14 days.

The legislation proceeds to the Senate floor for further consideration.

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BUSINESS DAY SPEAKER

Jim Vandehei, co-founder and CEO of Axios and co-founder and former CEO of POLITICO, will be keynote the opening luncheon of Business Day 2018 on Wednesday, May 9th in Springfield. In 2017, Vanity Fair listed Vandehei among the 100 most powerful ‘Information Age’ thinkers while Entrepreneur magazine named him one of 2017’s “50 Most Daring Entrepreneurs”. Exercising his entrepreneurial background and long history covering politics in Washington, D.C., Mr. Vandehei will pull back the curtain and address what audiences really need to know about the White House, Congress, politics, and the media. Mark your calendars now to attend Business Day 2018 on Wednesday, May 9th in Springfield!

REGISTER FOR BUSINESS DAY HERE

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This Week in Springfield – 100-21

IN THIS ISSUE

2018 STATE OF THE STATE
EQUAL PAY
BUSINESS DAY

This Week In Springfield, the second spring session of the 100th Illinois General Assembly got underway and Governor Bruce Rauner’s annual State of the State address was the feature event.

2018 STATE OF THE STATE

As required by the State Constitution, Governor Bruce Rauner delivered his fourth State of the State Wednesday to a joint session of the General Assembly. The Governor covered the expected themes including restoring the public trust and growing the economy and jobs.

In terms of restoring the public trust, the Governor focused on actions he took to ensure the agencies under this administration are more transparent and accountable when it comes to sexual discrimination, his desire to reform Illinois’ property tax assessment system, his call to prohibit legislators who are attorneys from practicing before property tax appeals boards, and enacting term limits.

When it comes to growing the economy, the Governor proposed reforming the state’s pension systems, controlling spending, investing in job training, and rolling back the recently enact income tax increase. The Governor also stated that he would present a balanced budget during his budget address scheduled for February 14th this year. Pointing to other similarly politically situated states, he encouraged Illinois to follow Rhode Island’s lead on pension reform, California’s lead on term limits, and Massachusetts’ lead on group health plans and workers’ compensation rates.

The Governor further used his time to highlight Illinois’ historic legacy of economic invention, highlighted Illinois’ strengths by noting Illinois graduates ten percent of the nation’s computer scientists and more engineers than MIT, Stanford, and CalTech combined.

As in other speeches, unity was another major theme of his address as it has been throughout his term. The Governor called on lawmakers to ‘bring Illinois back” by “rolling up their sleeves’ noting that restoring Illinois would take “a forget about the politics and roll-up-our sleeves kind of approach’. He likened restoring Illinois as a much bigger Amazon-like opportunity – referring to Illinois’ efforts to attract Amazon’s HQ2.

With an eye on re-election Governor Rauner touted his achievements which included putting 120,000 people to work, signing the Future Energy Jobs Act, supporting and encouraging entrepreneurship, cutting red tape on small businesses, increasing education funding, and criminal justice reform that he said has reduced the prison population by 15%.

In closing, Governor Rauner asked lawmakers to avoid partisan bickering and work in a bipartisan manner to improve the job climate in Illinois by continuing to cut regulatory red tape, cut state spending and roll back the tax increase that was passed over his veto just last year. Unshackled by these unnecessary burdens, Governor Rauner believes Illinois will become an economic leader by attracting talented workers and businesses back to Illinois

IRMA issued a reaction to the speech stating; “As we have throughout our history, IRMA stands ready to work with Governor Rauner and legislative leaders on both sides of the aisle to create policies that help Main Street retailers and restore Illinois’ stability and competitiveness, said Rob Karr, president & CEO, IRMA.”

The reactions to the Governor’s speech from the four legislative caucuses fell along party lines. The reaction of Republican leaders was supportive of the Governor’s call for cooperation and his ideas to promote growth in the state’s economy. The Democratic leaders took issue with many of the activities the Governor claimed as accomplishments arguing others had done them and noting that he hasn’t introduced a truly balanced budget since he’s been in office. Speaker Madigan suggested the Governor should continue to sit on the sidelines and pretend he’s not in charge (referring to a comment the Governor himself made several weeks ago) while legislators continue to work together. Senate President Cullerton questioned the sincerity of the Governor’s calls for bipartisan cooperation after three years of political attacks.

The State of the State speech, and the reactions to it, have all the appearances of everyone being in full campaign mode with the 2018 elections well underway undergirded by a lack of communication and trust. While we remain hopeful for bipartisan agreements on key issues affecting the state, it remains to be seen how that will happen in an election year dedicated to campaigns that will play to very different bases.

EQUAL PAY

Despite the existence of a compromise already enacted in Massachusetts and supported in that state by the advocates and employers alike, the path of unnecessary conflict is being pursued in Illinois for no explainable reason.

 HB 4163 (Rep. Anna Moeller, D-Elgin) seeks to prohibit an employer from asking job applicants their wage or salary history, increases penalties, and removes current statutory defenses to unequal pay claims. This bill is identical to legislation that was vetoed by the Governor last year and the veto was subsequently upheld when the Senate failed to override the veto with a vote of 029-017-001.

IRMA supports prohibiting employers from asking prospective employees about their previous salaries within the exemptions currently provided in the proposal. Those exemptions would allow asking about a previous salary if:

  • the prospective employee’s wage, salary, or other compensation history is a matter of public record;
  • the prospective employee is a current employee of the employer and is applying for a position with the same employer; and
  • the prospective employee has voluntarily disclosed such information.

Additionally, IRMA supports prohibiting an employer from requiring an employee to sign a contract preventing the employee from talking about his/her own salary, prohibiting a human resources employee from releasing another person’s confidential employee information to other employees or other businesses without that person’s consent, and encouraging businesses to implement internal protocols to reduce and eliminate real wage disparities regardless of the form it may take.

IRMA does NOT support:

1.     Removing, undermining, or weakening the four current statutory defenses to an unequal pay claim. Those statutory defenses are seniority, merit, and quality or quantity of production.

Every state allows these defenses and most have additional defenses. Courts have repeatedly upheld these defenses as legitimate business measures that protect and promote employees. HB 4163 prohibits an employer from using these common sense and practical measures as defenses if an employee can find any “alternative practice” used by any company in the United States for a similar job.

The proponents of the bill claim that the opponents and IRMA misinterpret the provision. Here is the language: “Such defense shall not apply if the employee demonstrates that an alternative employment practice exists that would serve the same business purpose without producing such differential and that the employer has refused to adopt such alternative practice.”

During the committee hearing, the proponents of the bill admitted that this would allow an employee to provide a different example and the company would have to accept it.

2.     Including penalties in excess of the current statutory penalties that include compensatory damages, punitive damages, and special damages in addition to allowing the claimant to pursue a simultaneous federal claim, i.e. double dipping.

Why are excessive and redundant state and federal penalties required? What is wrong with the current statutory penalties?

According to substantiated verifiable numbers, the current statutory penalties have been proven to more than adequate deterrent as only 13 wage claims out of 266 claims in the last four years have proven to have any merit—a rate of 4.89%. Putting that into context 95% of wage claims have been found to have no merit. Businesses are spending more money defending against frivolous claims than actual unequal pay claims are awarded by the courts. Arbitrarily increasing the penalties would incentivize additional frivolous claims in the hopes of forcing a company to settle rather than go through a lengthy legal process.

The proponents have not offered any verifiable facts or statistics to the contrary. Nor have they offered any legitimate reasoning for the increased and excessive penalties. If less than 5% of all claims are found to have any merit and less than ½ of 1% of all Illinois businesses are found to have violated the statute why is there a need for these over-the-top penalties?

Reducing and eliminating wage disparity is a win for everyone. IRMA will support a clean bill that prohibits the question and encourages businesses to implement internal protocols to reduce and eliminate wage disparity without changing current penalties and current defenses. If compromise is a goal, the path is available.

BUSINESS DAY SPEAKER

Jim Vandehei, co-founder and CEO of Axios and co-founder and former CEO of POLITICO, will be keynote the opening luncheon of Business Day 2018 on Wednesday, May 9th in Springfield. In 2017, Vanity Fair listed Vandehei among the 100 most powerful ‘Information Age’ thinkers while Entrepreneur magazine named him one of 2017’s “50 Most Daring Entrepreneurs”. Exercising his entrepreneurial background and long history covering politics in Washington, D.C., Mr. Vandehei will pull back the curtain and address what audiences really need to know about the White House, Congress, politics, and the media. Mark your calendars now to attend Business Day 2018 on Wednesday, May 9th in Springfield!

BUSINESS DAY REGISTRATION HERE