This Week in Springfield – 101-02

February 1, 2019

This Week in Springfield the minimum wage debate began in earnest.

$15 STARTING WAGE

An effort to increase Illinois’s starting wage to $15 has gained early traction driven by the desire of Governor J.B. Pritzker to achieve passage sooner rather than later. TWIS readers will recall that the Governor made a $15 starting wage one of the cornerstones of his campaign.

Wednesday, during a subject matter hearing of the Senate Labor Committee, IRMA testified on the subject. It was noted that while IRMA is philosophically opposed to artificially imposed starting wages, we recognize that an increase is going to occur.

Proponents have noted that $15 starting wages in places like Seattle have not apparently led to significant job loss although research does point to lost hours particularly for low or unskilled workers. However, as even pro-wage increase researchers have noted, no one knows what the impact will be outside of urban centers like Seattle, New York City or Chicago and you cannot assume the experiences of a thriving city center will be the same experiences elsewhere as there are major economic differences. IRMA noted that the suburbs and downstate do not enjoy the concentration of economic dynamics that such urban centers enjoy. For example, Chicago benefits from robust tourism, a concentration of business headquarters, the daily influx of millions who spend money, and a concentration of wealth. No other location in Illinois even comes close to enjoying that combination of benefits.

IRMA also pointed to states like Oregon and New York that appeared to recognize such differences and took geographic-based approaches to increasing their starting wages.

In Oregon, the starting wages are higher in the Portland metro area, somewhat lower in their suburbs, and then even lower in the rest of the state. This is an approach that recognizes the substantial cost-of-living differences. It also recognizes the substantial differences that will occur between Illinois and every border state. With retail increasingly able to serve consumers regardless of where they are located, and 2/3rds of Illinois’ population within a 40-minute drive of a border, those disparities will have impact on employers.

New York increased the starting wage to $15 quickly in New York City, a bit more slowly in Long Island and Westchester County, and much more slowly in the rest of the state. In both cases, the increase to $15 started at a much higher rate in New York City. Similarly, Chicago will be at $13 July 1st while Cook County will be at $12. That is a significantly different starting point than the rest of Illinois which is currently at $8.25. A phase-in such as five years for the City of Chicago and Cook County, seven years for the collar counties and 10 years for the rest of the state is more realistic but will still be a large cost item for employers.

Even if the Illinois starting wages were increased from $8.25 to $15 over a 10-year period, the average annual increase would be just over 6% to the largest or single largest expense item of retail employers. That is why the tax credit currently proposed by the advocates to soften the blow on smaller employers is inadequate if policy makers insist on not taking an Oregon-like approach. First, the tax credit as currently proposed, only applies to employers with fewer than 50 employees at all locations. As IRMA noted, a single retail store can have more than 50 employees. Second, it treats franchisees as if they are owned by the franchisor. Franchisees are, in fact, small businesses so this inequality must be repaired. Third, the tax credit itself is not robust enough.

Additionally, the Illinois probationary/training wage allows employers to pay a trainee $0.50 less per hour than the current minimum wage. That was not very adequate at $8.25 but it is wholly inadequate at $15.00. The probationary/training wage needs to be in the neighborhood of $2.00 per hour less for the 90-day probationary/training period if employers are going to have any incentive to take the risk of hiring no-or-low-skilled employees.

While there are other issues, these are the primary issues under discussion. Additional considerations exist about impact on taxpayers. At $15, the State budget will be negatively impacted a few hundred million annually not to mention at least that kind of impact on local governments, higher education institutions, K-12 schools, park districts, etc.

IRMA will keep you posted as developments warrant.

 

This Week in Springfield – 100-34

END OF SESSION REPORT
BUDGET
LABOR
TAXES
PHARMACY
CONSUMER PROTECTION
TOBACCO
LIQUOR
FOOD
LICENSING
CANNABIS
MISCELLANEOUS

IRMA END OF SESSION REPORT

 

Illinois lawmakers are gearing up for the general elections this November. It is midterm elections on the federal level and historically midterms are where the party that is not in control of the White House makes some significant gains. This often leads to a “wave” of enthusiasm of various strength at the state level.  Conventional wisdom believes an anti-Trump, and in Illinois an anti-Rauner, wave will bolster any national Democratic wave. In states like Illinois this means that Republicans could be pushed further into the minority. As such, Illinois Democrats have been introducing populist legislation and “wedge” issues that attempt to put Republican lawmakers on bad votes they can use against them in the November elections.  This election year tactic generally leads to ant-business initiatives and this year was no exception.

There have been over 12,000 bills filed this Assembly. This does not include amendments. In the past, a number of bills were held in the House Rules Committee. This General Assembly, every bill was assigned to a substantive committee in large part to blunt criticism from the Governor that Speaker Michael Madigan, D-Chicago did not allow the House or Senate to consider proposals.

Below are bills of consequence to the retail industry that passed both chambers and will now be sent to the Governor for his consideration.


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BUDGET

 

With rarely seen bi-partisan margins in favor, the Fiscal Year 2019 budget was approved by the Assembly as contained in HB 109 (Rep. Gregory Harris, D-Chicago/Sen. John J. Cullerton, D-Chicago) the appropriation bill, and HB 3342 (Rep. Gregory Harris, D-Chicago/Sen. Heather Steans, D-Chicago) the Budget Implementation Bill (BIMP). It is a full-year budget for FY ’19 and a supplemental budget for FY ’18 to cover the inadequacies of the current year’s budget. The budget contains no tax increases. Revenues come from anticipated higher tax revenues from a growing economy, $200 million in fund transfers, $800 million in sweeps from various administrative funds, and over $400 million in pension reforms.  Some lawmakers and pundits contend that it is actually $1.5 billion short.

The pension changes are voluntary so they rely upon an estimation of the number of people in the pension system who will exercise the options. The pension changes are: (1) a buy-out for vested, inactive members who are now employed somewhere other than the state but have not retired. They will be offered a buyout at 60% of the value of their pensions (estimated savings = $41 million); (2) A buyout of the 3% annual cost-of-living-adjustment for Tier 1 pensioners (estimated savings = $382 million over time); and, (3) reduced salary spiking cap from 6% to 3% meaning any salary increases over 3% will be covered by local government employers.

The budget negotiations started months ago with the formation of a bi-partisan budget working group including representatives of the Governor’s office. The framework agreed to by these legislators was then moved to the four leaders and the Governor who made some adjustments and finalized the budget.

It is an $80 billion budget, which includes federal monies, but the real focus is on the portion paid from General Revenue Funds which totals $38.5 billion. Here are some highlights:

  • Elementary and secondary education received an increase of $402 million as compared to FY ’18. TWIS readers will recall that last year, a comprehensive reform of the funding formula was enacted but it requires $350 million in additional monies each year for the next 10 years. Due to the fact a supplemental budget for FY ’18 was included in the budget deal, that $350 million threshold was met for the first two years.
  • Higher education received an increase of $60 million. In addition, a $25 million scholarship fund (AIM HIGH) was created to provide tuition assistance to in-state students wanting to continue their education at in-state institutions of higher learning. This $25 million must be matched by the various institutions.
  • Human service entities are funded including a 50-cent per hour wage increase for caregivers who work with developmentally disabled individuals, substance abuse providers, mental health providers, etc. Human service spending totals $13.835 billion of the GRF budget but even more goes to human services as a result of federal funds.
  • Public safety spending will cover two mental health treatment facilities and two life skills re-entry facilities as well as a new State Police cadet class.
  • A $2.9 billion pay-as-you-go capital program as well as nearly $9 billion to fund IDOT’s FY 19 road program.
  • Nearly $64 million in back wages owed to state employees. These cost of living increases were originally frozen by the Governor’s Office but a court ordered them to be paid.
  • A temporary reimbursement bridge for pharmacies with 10 or fewer locations in counties with less than 50,000 in population. This is a result of the shockingly low reimbursements being seen as a result of the Medicaid managed care rollout.
  • The sunset for on-line lottery is extended for another year. The new private lottery manager, Camelot, will assume control July 1st so this gives them time to put a program in place and recommend changes they would like to see. .
  • Prohibits cost of living increases for legislative and executive elected officials and appointees.
  • The bill backlog could be reduced by up to $1 billion under the provisions of SB 2858 producing additional interest savings to the state.

The Governor has already signed the budget into law.

IRMA POSITION: NEUTRAL

CANNABIS

SB 336 (Sen. Don Harmon, D-Oak Park/Rep. Kelly Cassidy, D-Chicago)  creates the Alternative to Opioids Act of 2018 which amends the Compassionate Use of Medical Cannabis Pilot Program Act by extending the legal use of medical marijuana to individuals who would conventionally be prescribed opioids. This would grant people who suffer from chronic pain, but not necessarily any of the conditions laid out in the current law, access to marijuana – with a prescription.

In addition to expanding medical marijuana access for patients and doctors seeking alternatives to opioid painkillers, SB 336 would also remove a barrier for Illinoisans who have a criminal record, a restriction put in place as part of Illinois’ original medical marijuana law. In the 2017 fiscal year, the Illinois Department of Public Health denied 635 requests for medical marijuana from qualifying patients. Some of these denials were made solely on the basis of failed background checks. SB 336 does away with such background checks and thus allows more individuals to access appropriate medical treatment. It also provides an avenue for a provisional card while an individual awaits a permanent card. This is in response to the nearly 6 month backlog for qualifying patients.

The bill passed with bipartisan majorities in the House with a vote of 72-38-1 and Senate with a vote of 44-3.

IRMA POSITION: SUPPORT


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CONSUMER PROTECTION

Rebate Cards Dormancy ChargesHB 4922 (Rep. Theresa Mah, D-Chicago/Sen. Cristina Castro, D-Elgin) which is intended to prohibit the issuance of product rebate cards that charge dormancy or other post-issuance fees. The initiative 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. The language only applies to multi-store cards utilized for rebates after the consumer completes the rebate submission process.

HB 4922 passes the House with a 67-44 vote and the Senate by a 35-17 vote.

IRMA POSITION: NEUTRAL

Credit FreezeHB 4095 (Rep. Greg Harris, D-Chicago/Sen. Bill Cunningham, D-Chicago) provides that a consumer reporting agency may not impose a charge on a consumer for placing a freeze, removing a freeze, or temporarily lifting a freeze. This is in the wake of the Equifax breach where reporting agencies were requiring consumers to pay a fee to lift the freeze on their reports.

IRMA POSITION: NEUTRAL

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FOOD

Food Service Sanitation Managers Certification (FSSMC)HB 5011 (Rep. Ryan Spain, R-Peoria/Sen. David Koehler, D-Peoria) grandfathers the FSSMC’s that were approved prior to last year’s passage of the legislation that removed the redundant state certification and fee on food retailers.  Last year, IRMA convinced lawmakers to remove the redundant state food certification and accompanying unnecessary fee on food retailers.  IDPH complied but has refused to acknowledge the expiration date of current FSSM certificates. This has required some employees to retake the federal tests before the expiration of the current 5 year certificates.  HB 5011 would grandfather those FSSM certificates approved before the change in the law.

HB 5011 was approved unanimously in the House by a vote of 111-0 and the Senate by a vote of 55-0.

IRMA POSITION: SUPPORT

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LABOR

Pay History—Similar legislation that was vetoed by the Governor and failed to be overridden by the Senate last year passed the House with by a vote of 87-24 and the Senate by a vote of 31-16-1.  Despite an avenue for compromise offered by the business community, the advocates chose to pursue the same path traveled before.

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 erodes 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 (e.g. employee already works for the business or salary is a matter of public record), IRMA remains opposed to arbitrarily restricting Illinois’ employer’s current limited defenses and increasing current statutory penalties.  Especially when the penalties provide more “protection” for prospective employees who would potentially be asked a question in violation of the proposed legislation than current employees who are paid less in violation of the current statute—a perplexing quirk that seems to undermine the proponents own stated purpose for the bill.

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, led by IRMA, were 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 that included an affirmative defense for employers. 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.

IRMA and a coalition of businesses went further and offered to remove the affirmative defense, passed in other states, from the legislation and just prohibit an employer from asking the question.  The current penalties would remain the same and apply to a violation of the new prohibition. This language is reflected in SB 3100 (Sen. Jennifer Bertino-Tarrant, D-Plainfield). This additional compromise was also rejected by the proponents.

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.

After the legislation passed the Senate, the sponsor filed a Motion to Reconsider. Therefore the Senate will hold the legislation and release it closer to the election in order to force the Governor to act. In other words, the Democrats are using HB 4163 as a “wedge” issue in an attempt to put the Governor in politically compromising position.

IRMA POSITION: OPPOSED

Employee ExpensesSB 2999 (Sen. Patricia Van Pelt, D-Chicago/Rep. Melissa Conyears-Irvin, D-Chicago) requires an employer to reimburse an employee for all necessary expenditures or losses incurred by the employee directly related to services performed for the employer. Necessary expenses” include all reasonable expenditures or losses including, but not limited to, uniforms, equipment, vehicle expenses, electronic devices such as cell phones, tablets, and computers, and any other expenditures or losses an employer requires an employee to incur in direct consequence of the discharge of employment duties. An employer is not liable under this Section unless the employer knew or had reason to know that the employee incurred the expenditure or loss.

This legislation is consistent with federal law. SB 2999 passed the Senate by a vote of 50-2 and the House by a vote of 114-1.

IRMA POSITION: NEUTRAL

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 69-47 and the Senate with a 35-16 vote.  The Governor has already vetoed the legislation. Neither chamber reached the 3/5 majority required to override the Governor’s veto.

IRMA POSITION: OPPOSED

Nursing Mother’s ActHB 1595 (Rep. Katie Stuart, D-Collinsville/Sen. William R. Haine, D-Alton) requires an employer to provide for reasonable break time during the first year after the child’s birth each time the employee needs to express milk. The break time may run concurrently with any break time already provided to the employee. An employer may not reduce an employee’s compensation for time used for the purpose of expressing milk or nursing a baby. An employer shall provide reasonable break time as needed by the employee unless to do so would create an undue hardship as defined by the Illinois Human Rights Act.

HB 1595 passed the House by a vote of 104-0 and the Senate by a vote of 49-0.

IRMA POSITION: NEUTRAL

Equal Pay African Americans –HB 4743 (Rep. LaShawn Ford, D-Chicago/Sen. Kimberly Lightford, D-Chicago) provides that no employer may discriminate between employees by paying wages to an African-American employee at a rate less than the rate at which the employer pays wages to another employee who is not African-American for the same or substantially similar work on a job that requires equal skill, effort, and responsibility and is performed under similar working conditions.

IRMA supports ensuring that any individual regardless of gender, race, sexual orientation, etc. receives the same consideration as any other individual when it comes to equal pay. The issue, however, is one of textbook discrimination which is already illegal under the Illinois Human Rights Act, the Civil Rights Act of 1963, Equal Employment Opportunity Commission guidelines regarding compensation discrimination, and the current Illinois Equal Pay Act which covers all minorities while not singling out one race.

HB 4743 passed the House by a vote of 66-11 and the Senate by a vote of 53-0.

IRMA POSITION: OPPOSED as drafted.

 

Human Rights “Expansion”—Currently, the Illinois Human Rights Act only applies to businesses with 15 or more employees. HB 4572 (Rep. Will Guzzardi, D-Chicago/Sen. Christine Castro, D-Elgin) would expand the coverage of the Act to apply to any business with one or more employees. The “Act” prohibits discrimination in Illinois with respect to employment, financial credit, public accommodations, housing and sexual harassment, as well as sexual harassment in education.

The legislation passed the House with a 64-37 vote and the Senate by a 33-13 vote.

IRMA POSITION: NEUTRAL


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LICENSING

 

Barber Pre-Graduation TestingSB 2877 (Sen. Chuck Weaver, R-Peoria/ Rep. Rita Mayfield, D-Chicago)/ HB 4883 (Rep. Rita Mayfield, D-Chicago/ Sen. Chuck Weaver, R-Peoria) allows students to take their state barber or cosmetology licensure examination after completing 80% of their educational studies. If someone fails their licensure examination while still enrolled in school, they can more easily get the extra help they need to pass the exam the second time and be formally licensed. Even if choosing to take the pre-graduation examination, individuals would still be required to complete their educational studies to ensure they obtain all statutorily required hours of study similar to every other licensure applicant. This is an initiative of IRMA having been brought to it by members in this part of the retail industry.

SB 2877 and HB 4883 both passed the General Assembly unanimously.

IRMA POSITION: SUPPORT

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 LIQUOR

 

Liquor Control CommissionSB 3022 (Sen. Tony Munoz, D- Chicago/Rep. Lou Lang, D-Skokie) seeks to undo a reform made by former Governor Rod Blagojevich who undertook a reorganization of several agencies that included moving the Illinois Lottery, Gaming Commission, and Liquor Control Commission (ILCC) under the Illinois Department of Revenue (IDOR). Today, only the ILCC remains under IDOR. Retailers and others long-chaffed under an ‘independent’ ILCC believing it was strongly tilted toward the interests of the wholesale tier of the three-tier system. There is a belief that by having ILCC under the auspices of IDOR has restored at least some semblance of balance which is appropriate as the ILCC is supposed to be a neutral arbiter and regulator.

Nevertheless, the legislation passed the Senate by a vote of 52-3 and passed the House by a vote of 92-12-1.

IRMA POSITION: OPPOSED

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MISCELLANEOUS

 

DronesSB 3291 (Sen. James Clayborne, D-East St. Louis/Rep. Marcus Evans, D-Chicago) would preempt home rule municipalities from passing regulations on the use of drones or unmanned aerial systems (UAS).  The Federal Aviation Authority (FAA) retains the authority to regulate private and commercial drone use. Despite this authority, local municipalities have been introducing ordinances that regulate drones.

The Federal Aviation Authority (FAA) has created rules for both commercial and private drone use and has made it clear that the FAA’s rules preempt local and state jurisdiction regarding the regulation of drones. Additionally, in 2015, Illinois created the Illinois Unmanned Aerial System Oversight Taskforce, to which IRMA was appointed, to provide oversight and input in creating comprehensive laws and rules for the operation and use of drone technology within Illinois. The Taskforce’s final report indicated that the state should provide guidance within the FAA guidelines and however well-intentioned, overly burdensome local regulations that discourage or unnecessarily obstruct the otherwise safe and lawful use of UAS should be avoided.

Per the Taskforce’s recommendations, SB 3291 would give the state, and specifically the Division of Aeronautics within the Department of Transportation, the authority to regulate drones in compliance with FAA guidelines.

The legislation passed the Senate by a 52-0 vote and the House by a 112-4 vote.

IRMA POSITION: SUPPORT

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PHARMACY

 

Pharmaceutical DisposalHB 1338 (Rep. Jonathan Carroll, D-Buffalo Grove/Sen. Julie A. Morrison, D-Deerfield) amends the Safe Pharmaceutical Disposal Act by providing that “unused medication” means any unopened, expired, or excess medication that has been dispensed for patient or resident care and that is in a liquid or solid form (rather than in just a solid form). It excludes medications contained in intraperitoneal solutions from language prohibiting a health care institution, or any employee, staff person, contractor, or other person acting under the direction or supervision of a health care institution, from discharging, disposing of, flushing, pouring, or emptying any unused medication into a public wastewater collection system or septic system.

With the rise of the opioid crisis, lawmakers are looking for new ways to combat the health epidemic.

IRMA POSITION: NEUTRAL

Pharmacy PrescriptionsSB 3170 (Sen. Steve Stadelman, D-Rockford/Rep. Litesa E. Wallace, D-Rockford amends the Pharmacy Practice Act and the Illinois Food, Drug and Cosmetic Act to provide that a prescription for medication other than controlled substances shall be valid for up to 15 months from the date issued for the purpose of refills, unless the prescription states otherwise.

The legislation passed the Senate by a vote of 46-0 and the House by a vote of 101-0.

IRMA POSITION: NEUTRAL

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TAXES

 

Online Sales Tax – SB 2577 (Sen. Christine Castro, D-Chicago/Rep. Anna Moeller, D-Elgin) provides that if a retailer or serviceman makes a sale to purchaser in Illinois from outside of Illinois, then that retailer or serviceman is considered to be “maintaining a place of business in this State” if (1) the cumulative gross receipts from sales of service to purchasers in Illinois are $150,000 or more; or (2) the retailer or serviceman enters into 200 or more separate transactions for sales of service to purchasers in Illinois.

The legislation was modeled after the South Dakota law that is currently being reviewed by the United States Supreme Court. SB 2577 passed the Senate by the 39-10-1 vote and has been sent to the House for consideration.

SB 2577 did not pass the House but it was included in the budget agreement that has been signed by the Governor.

IRMA POSITION: SUPPORT

 

Progressive Income Tax—On a partisan roll-call, Illinois House lawmakers narrowly passed a nonbinding resolution to replace Illinois’ current flat tax with a graduated or progressive income tax system.  Proponents argue that House Resolution 1052 provides for a fairer and progressive way for the state to generate revenue by reducing taxes on the middle and low class while increasing taxes on those some consider ‘rich’.  While the proponents of the resolution believe a graduated income tax is more equitable, the resolution did not provide for any suggested or specific rates.  Opponents of the resolution pointed out that the states that have progressive income taxes have higher rates for lower and middle class than Illinois’ current flat rate.

The nonbinding resolution passed the House with by a narrow margin of 61-52.

IRMA POSITION: OPPOSE

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TOBACCO

 

Tobacco 21SB 2332 (Sen. Julie Morrison, D-Deerfield/Rep. Camille Lilly, D-Chicago) prohibits anyone below the age of 21 from purchasing tobacco from a licensed Illinois retailer while removing any penalties for the underage possession or consumption of tobacco.  The initiative passed the Senate with a vote of 35-20-0 and initially failed to pass the House with a vote of 56-54-1.  But on a second try, the initiative passed the House by a vote of 61-49-1.

SB 2332 makes it legal  for a person under the age of 21 to: (1) possess tobacco, (2) consume tobacco, (3) sell tobacco, (4) buy tobacco from an unlicensed Illinois retailer or individual, or (5) buy tobacco from a licensed out-of-state retailer or online.  Additionally, the bill protects unlicensed, unregulated, and, untaxed individuals selling tobacco to minors while prohibiting licensed retailers from selling tobacco products to anyone below the age of 21.

Raising the age from 18 to 21 may not make as big of a difference as lawmakers hope, given that most smokers — nine out of 10 according to the Surgeon General— have already begun smoking by the age of 18. Additionally, the vast majority obtain their tobacco products from older family and friends. Three out of four minor smokers will become adult smokers.  Ironically, SB 2332 may actually encourage this behavior by removing the current statutory penalties for underage use and consumption of tobacco.

Moreover, advocates argue that the brain is still developing until the age of 21 and a person under that age cannot be expected to fully understand the decision they are making when choosing to use tobacco products. This makes an interesting argument since persons under age 21, among other things, are allowed to become a lawmaker, vote, join the military, enter into legally binding contracts, drive, serve on a jury, sue someone, get a tattoo or piercing, become a blood or organ donor, adopt a child, etc.  What makes this even more ironic is that some of the very same Illinois lawmakers that support this line of thinking also support lowering the age of voting to 16.

Finally, financially the “Tobacco 21” prohibition can easily be compared to what Illinois already knows about heavy handed regulation of tobacco products—it drives business and tax dollars to other states while creating a thriving black market in Illinois. For instance, Illinois has already experienced an outmigration of tobacco sales due to the high tobacco taxes. A Commission on Government Forecasting and Accountability (COGFA) report in 2006 found that after raising the tax on cigarettes the number of legal packs purchased in Illinois has fallen approximately 21% and prompted consumers to look elsewhere to purchase their cigarettes, such as bordering states, the Internet, or through illegal vendors.  Again in 2013, after another round of regulation, COGFA reported tobacco sales tax revenue was short of the projected return by $130 million as consumers purchased tobacco from bordering states, online, and illegal sources.  Not surprisingly, the Illinois Department of Revenue (IDOR) estimates $48 million in lost tax revenue to the state as a result of people finding alternative purchasing avenues (e.g. other states or the black market). Raising the age of the purchase of tobacco is just an additional incentive to exacerbate the current trend without any proven tangible benefit.

It is unclear whether the Governor will or will not sign the legislation.

IRMA POSITION: OPPPOSED

 

Tobacco Records and Unstamped CigarettesSB 3141 (Sen. Karen McConnaughay, R-West Dundee/Rep. Mike Zalewski, D-Riverside) prohibits a taxpayer from introducing into evidence any books or records within 5 days of a hearing.  It also shifts the burden on the retailer by creating a prima facie presumption that a retailer has violated the statute if the retailer cannot produce records upon request. It also shifts the burden on the retailer by creating a prima facie presumption that a retailer is dealing in unstamped cigarettes if unstamped cigarettes from an unlicensed distributor are found on the premises.  Finally, it prohibits the sale of ‘loosies’ by requiring that cigarettes be sold in packages of 20 or 25. IRMA reached agreement with the Sponsor and IDOR to remove IRMA’s opposition.  The legislation passed the Senate by a vote of 52-0 and the House by a vote of 78-35-1.

IRMA POSITION: NEUTRAL

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This Week in Springfield – 100-33

IN THIS ISSUE:

BUDGET
PRE-JUDGEMENT LIENS
PAY HISTORY
EMPLOYEE EXPENSES
NURSING MOTHER’S ACT
PHARMACY BENEFIT MANAGERS
TOBACCO 21
FOOD SERVICE SANITATION MANAGERS CERTIFICATE
LIQUOR CONTROL COMMISSION”>
DRONES
PROGRESSIVE INCOME TAX

The Second Spring Session of the 100th General Assembly adjourned on schedule with a full-year budget agreed to by both parties and final action on numerous items.

Budget

With rarely seen bi-partisan margins in favor, the Fiscal Year 2019 budget was approved by the Assembly as contained in HB 109 (Rep. Greg Harris (D-Chicago)/ Sen. John Cullerton (D-Chicago), the appropriation bill, and HB 3342 (Rep. Greg Harris/Sen. Heather Steans (D-Chicago), the Budget Implementation Bill (BIMP). It is a full-year budget for FY ’19 and a supplemental budget for FY ’18 to cover the inadequacies of the current year’s budget. The budget contains no tax increases. Revenues come from anticipated higher tax revenues from a growing economy, $200 million in fund transfers, $800 million in sweeps from various administrative funds, and over $400 million in pension reforms.

The pension changes are voluntary so they rely upon an estimation of the number of people in the pension system who will exercise the options. The pension changes are: (1) a buy-out for vested, inactive members who are now employed somewhere other than the state but have not retired. They will be offered a buyout at 60% of the value of their pensions (estimated savings = $41 million); (2) A buyout of the 3% annual cost-of-living-adjustment for Tier 1 pensioners (estimated savings = $382 million over time); and, (3) reduces salary spiking cap from 6% to 3% meaning any salary increases over 3% will be covered by local government employers.

The budget started months ago with the formation of a bi-partisan budget working group including representatives of the Governor’s office. The framework agreed to by these legislators was then moved to the four leaders and the Governor who made some adjustments and finalized the budget.

It is an $80 billion budget but the real focus is on the portion paid from General Revenue Funds which totals $38.5 billion. Here are some highlights:

  • Elementary and secondary education received an increase of $402 million as compared to FY ’18. TWIS readers will recall that last year, a comprehensive reform of the funding formula was enacted but it requires $350 in additional monies in each year for the next 10 years. Due to the fact a supplemental budget for FY ’18 was included in the budget deal, that $350 million threshold was met for the first two years.
  • Higher education received an increase of $60 million. In addition, a $25 million scholarship fund (AIM HIGH) was created to provide tuition assistance to in-state students wanting to continue their education at in-state institutions of higher learning. This $25 million must be matched by the various institutions.
  • Human service entities are funded including a 50-cent per hour wage increase for caregivers who work with developmentally disabled individuals, substance abuse providers, mental health providers, etc. Human service spending totals $13.835 billion of the GRF budget but even more goes to human services as a result of federal funds.
  • Public safety spending will cover two mental health treatment facilities and two life skills re-entry facilities as well as a new State Police cadet class.
  • A $2.9 billion pay-as-you-go capital program as well as nearly $9 billion to fund IDOT’s FY 19 road program.
  • Nearly $64 million in back wages owed to state employees. These cost of living increases were originally frozen by the Governor’s Office but a court ordered them to be paid.
  • A temporary reimbursement bridge for pharmacies with 10 or fewer locations in counties with less than 50,000 in population. This is a result of the shockingly low reimbursements being seen as a result of the Medicaid managed care rollout.
  • The sunset for on-line lottery is extended for another year. The new private lottery manager, Camelot, will assume control July 1st so this gives them time to put a program in place and recommend changes they would like to see. .
  • Prohibits cost of living increases for legislative and executive elected officials and appointees.
  • The bill backlog could be reduced by up to $1 billion under the provisions of SB 2858 producing additional interest savings to the state.

The budget has been sent to the Governor for his consideration.

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Pre-Judgement Liens

HB 4324 (Rep. Emanuel Chris Welch, D-Westchester/Sen. Kimberly Lightford, D-Chicago) originated from a union-funded group known as the Raise the Floor Alliance. As introduced, HB 4324 would allow any employee to file a lien against an employer’s real and personal property simply on the basis that the employee believes he or she has a valid wage claim against the employer.  The lien would have taken precedence over almost any other lien or judgment, including mortgages, and could have been filed for single employee wage claims that amount to several hundred dollars in damages and/or class action lawsuits and representative wage claims that allege millions of dollars in damages. Filing a lien of such significance without first proving the merit of their allegations would have subjected employers to constant extortion in order to avoid dealing with a lien on their property.

A business and banking coalition led by IRMA worked with Rep. Chris Welch and Rep. Jay Hoffman (D-Belleville) to reach an agreement ultimately adopted in House Floor Amendment #2 that addresses the issues presented by the advocates.  Currently, the Department of Labor (DOL) is taking 18 months to adjudicate a claim. The agreed upon language requires the DOL to adjudicate wage claims within 30 days of receiving the claim. This would address the issue of unscrupulous companies dissolving, reorganizing, or disappearing before a claim is adjudicated. If the company is found guilty, exhausts its appeals, and still does not pay, a lien will be placed on it assets according to current lien practices.  Finally, if a claim is verified, an employer will be required to submit an escrow of 10% of the claim for the duration of the 30 day adjudication. If, after the 30 days the employer is found innocent, the funds will be returned to the employer.  This agreement passed the House by a vote of 88-3.

The proponents of the legislation filed Senate Committee Amendment #1 in an attempt to renegotiate the terms of the bill by removing the time limit on the escrow account in contravention of the original agreement. While the bill with the amendment passed the Senate by a vote of 31-18-1, Rep. Welch filed a motion to non-concur as a result of the non-agreed amendment.

IRMA would like to thank Rep. Welch and Rep. Hoffman for their leadership on this issue.

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Pay History

Similar legislation that was vetoed by the Governor and failed to be overridden by the Senate last year passed the House with by a vote of 87-24 and the Senate by a vote of 31-16-1.  Despite an avenue for compromise offered by the business community, the advocates chose to pursue the same path traveled before.

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 erodes 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 (e.g. employee already works for the business or salary is a matter of public record), IRMA remains opposed to arbitrarily restricting Illinois’ employer’s current limited defenses and increasing current statutory penalties.  Especially when the penalties provide more “protection” for prospective employees who would potentially be asked a question in violation of the proposed legislation than current employees who are paid less in violation of the current statute—a perplexing quirk that seems to undermine the proponents own stated purpose for bill.

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, led by IRMA, were 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 that included an affirmative defense for employers. 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.

IRMA and a coalition of businesses went further and offered to remove the affirmative defense, passed in other states, from the legislation and just prohibit an employer from asking the question.  The current penalties would remain the same and apply to a violation of the new prohibition. This language is reflected in SB 3100 (Sen. Jennifer Bertino-Tarrant, D-Plainfield). This additional compromise was also rejected by the proponents. SB 3100 passed the Senate Executive Committee by a 13-1-2 vote and sits on 3rd Reading in the Senate.

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.

IRMA would like to thank Sen. Jennifer Bertino-Tarrant and all Senators who were willing to find common-sense, fact-driven compromise. HB 4163 now goes to the Governor for his consideration.

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Employee Expenses

SB 2999 (Sen. Patricia Van Pelt, D-Chicago/Rep. Melissa Conyears-Irvin, D-Chicago) requires an employer to reimburse an employee for all necessary expenditures or losses incurred by the employee directly related to services performed for the employer. Necessary expenses” include all reasonable expenditures or losses including, but not limited to, uniforms, equipment, vehicle expenses, electronic devices such as cell phones, tablets, and computers, and any other expenditures or losses an employer requires an employee to incur in direct consequence of the discharge of employment duties. An employer is not liable under this Section unless the employer knew or had reason to know that the employee incurred the expenditure or loss.

This legislation is consistent with federal law. SB 2999 passed the Senate by a vote of 50-2 and the House by a vote of 114-1.  The legislation will be forwarded to the Governor for his consideration.  IRMA is neutral with the legislation and would like to thank Sen. Van Pelt and Rep. Conyears-Irvin for their work with the business community on this issue.

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Nursing Mother’s Act

HB 1595 (Rep. Katie Stuart, D-Collinsville/Sen. William R. Haine, D-Alton) requires an employer to provide for reasonable break time during the first year after the child’s birth each time the employee needs to express milk. The break time may run concurrently with any break time already provided to the employee. An employer may not reduce an employee’s compensation for time used for the purpose of expressing milk or nursing a baby. An employer shall provide reasonable break time as needed by the employee unless to do so would create an undue hardship as defined by the Illinois Human Rights Act.

HB 1595 passed the House by a vote of 104-0 and the Senate by a vote of 49-0.  The legislation will be sent to the Governor for his signature.  IRMA is neutral.

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Pharmacy Benefit Managers

HB 3479 (Rep. Sara Feigenholtz, D- Chicago/Sen. Andy Manar, D- Bunker Hill) initially sought to provide significant new reimbursements to pharmacy. The cost of doing so was over $200 million and legally questionable as it would have meant unilaterally changing the contracts negotiated and signed by the managed care organizations.  With these questionable requirements, the House passed the legislation by a vote of 87-16-1 while recognizing changes would be needed as the legislation worked its way through the process.  As a result, Senate Amendment #5 was filed and took a different approach by, seeking to regulate PBM’s, require the reporting of certain reimbursement information to the State, regulate PBM audits of pharmacies, and prohibit gag clauses and the ability of PBM’s to use the Medicaid contract and the contract serving state employees to force pharmacies to participate in other unrelated contracts.

HB 3479 remains on second reading so that the parties can continue to discuss the issues over the summer.

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Tobacco 21

SB 2332 (Sen. Julie Morrison, D-Deerfield/Rep. Camille Lilly, D-Chicago) prohibits anyone below the age of 21 from purchasing tobacco from a licensed Illinois retailer while removing any penalties for the underage possession or consumption of tobacco.  The initiative passed the Senate with a vote of 35-20-0 and initially failed to pass the House with a vote of 56-54-1.  After some political trading took place the initiative passed the House by a vote of 61-49-1.

As currently drafted SB 2332 makes it legal  for a person under the age of 21 to: (1) possess tobacco, (2) consume tobacco, (3) sell tobacco, (4) buy tobacco from an unlicensed Illinois retailer or individual, or (5) buy tobacco from a licensed out-of-state retailer or online.  Additionally, the bill protects unlicensed, unregulated, and, untaxed individuals selling tobacco to minors while prohibiting licensed retailers from selling tobacco products to anyone below the age of 21.

Raising the age from 18 to 21 may not make as big of a difference as lawmakers hope, given that most smokers — nine out of 10 according to the Surgeon General— have already begun smoking by the age of 18. Additionally, the vast majority obtain their tobacco products from older family and friends. Three out of four minor smokers will become adult smokers.  Ironically, SB 2332 may actually encourage this behavior by removing the current statutory penalties for underage use and consumption of tobacco.

IRMA is opposed to the bill which will drive sales away from licensed retailers to illegal sellers and to out-of-state retailers which will reportedly, according to the Department of Revenue, cost the state $48 million a year.

SB 2332 will now be sent to the Governor for his consideration. It is unclear whether the Governor will or will not sign the legislation.

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Food Service Sanitation Managers Certification (FSSMC)

HB 5011 (Rep. Ryan Spain, R-Peoria/Sen. David Koehler, D-Peoria) grandfathers the FSSMC’s that were approved prior to last year’s passage of the legislation that removed the redundant state certification and fee on food retailers.  Last year, IRMA convinced lawmakers to remove the redundant state food certification and accompanying unnecessary fee on food retailers.  IDPH complied but has refused to acknowledge the expiration date of current FSSM certificates. This has required some employees to retake the federal tests before the expiration of the current 5 year certificates.  HB 5011 would grandfather those FSSM certificates approved before the change in the law.

HB 5011 was approved unanimously in the House by a vote of 111-0 and the Senate by a vote of 55-0.  It has been sent to the Governor for his consideration where he is expected to sign the legislation. IRMA supports the legislation.

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Liquor Control Commission

SB 3022 (Sen. Tony Munoz, D- Chicago/Rep. Lou Lang, D-Skokie) seeks to undo a reform made by former Governor Rod Blagojevich who undertook a reorganization of several agencies that included moving the Illinois Lottery, Gaming Commission, and Liquor Control Commission (ILCC) under the Illinois Department of Revenue (IDOR). Today, only the ILCC remains under IDOR. Retailer and others long-chaffed under an ‘independent’ ILCC believing it was strongly tilted toward the interests of the wholesale tier of the three-tier system. There is a belief that by having ILCC under the auspices of IDOR has restored at least some semblance of balance which is appropriate as the ILCC is supposed to be a neutral arbiter and regulator.

Nevertheless, the legislation passed the Senate by a vote of 52-3 and passed the House by a vote of 92-12-1.  SB 3022 now goes to the Governor for his consideration.  IRMA is opposed to the legislation.

 Drones

SB 3291 (Sen. James Clayborne, D-East St. Louis/Rep. Marcus Evans, D-Chicago) would preempt home rule municipalities from passing regulations on the use of drones or unmanned aerial systems (UAS).  The Federal Aviation Authority (FAA) retains the authority to regulate private and commercial drone use. Despite this authority local municipalities have been introducing ordinances that regulate drones.

The Federal Aviation Authority (FAA) has created rules for both commercial and private drone use and has made it clear that the FAA’s rules preempt local and state jurisdiction regarding the regulation of drones. Additionally, in 2015, Illinois created the Illinois Unmanned Aerial System Oversight Taskforce, to which IRMA was appointed, to provide oversight and input in creating comprehensive laws and rules for the operation and use of drone technology within Illinois. The taskforce’s final report indicated that the state should provide guidance within the FAA guidelines and however well-intentioned, overly burdensome local regulations that discourage or unnecessarily obstruct the otherwise safe and lawful use of UAS should be avoided.

Per the taskforce’s recommendations, SB 3291 would give the state, and specifically the Division of Aeronautics within the Department of Transportation, the authority to regulate drones in compliance with FAA guidelines.

The legislation passed the Senate by a 52-0 vote and the House by a 112-4 vote. SB 3291 now goes to the Governor for his consideration.  IRMA supports the legislation.

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Progressive Income Tax

 

On a partisan roll-call, Illinois House lawmakers narrowly passed a nonbinding resolution to replace Illinois’ current flat tax with a graduated or progressive income tax system.  Proponents argue that House Resolution 1052 provides for a fairer and progressive way for the state to generate revenue by reducing taxes on the middle and low class while increasing taxes on those some consider ‘rich’.  While the proponents of the resolution believe a graduated income tax is more equitable the resolution did not provide for any suggested or specific rates.  Opponents of the resolution pointed out that the states that have progressive income taxes have higher rates for lower and middle class than Illinois’ current flat rate.

 The nonbinding resolution passed the House with by a margin of 61-52.

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This Week in Springfield – 100-32

IN THIS ISSUE:

BUDGET
PHARMACY BENEFIT MANAGER
EQUAL PAY

The House and Senate have adjourned until Monday afternoon but there will be a lot going on this weekend as scheduled adjournment is May 31st.

Budget

A great deal of focus is on a potential budget for the 2019 fiscal year. Last year, a budget that included a $5 billion tax increase was adopted over the veto of Governor Bruce Rauner (R) when 15 House Republicans voted for the override. That budget ended a two-and-a-half year period in which Illinois had no budget. This year, there appears to be a mutual interest in putting place a budget. The alignment appears to come in the form of the Governor wanting a budget so the state continues to operate and the Democrats wanting a budget so social service agencies and schools receive funding. Additionally, both sides seem to want a deal so that no matter who is victorious in November, the winner is not immediately facing a crises upon their inauguration in early January.

While they appear to continue to make progress in discussions, they are scrambling to find sufficient revenue to pay bills, $350 million for schools as required by the education funding bill enacted last year, and $65 million in back wages owed to state workers as a result of the period where there was no budget. Additionally, Democrats have suggested additional spending on certain programs. This has members of both parties looking for additional revenues. However, neither side wants to enact something that has the appearance of a tax increase. While the retail discount, the 1.75% that retailers are allowed to retain as a partial reimbursement for their costs of serving as the sales tax administrator and collector for the state, has been under pressure for several years, given the pressures noted above, the danger has never been greater. IRMA has been working non-stop, including suggesting other alternatives, in an attempt to retain the discount.

We will be in touch with leaders and staff throughout the weekend. We will keep you posted as events warrant but we are not likely to have a definitive answer until any budget that is ultimately agreed to is introduced.

Pharmacy Benefit Managers

An intense debate has been simmering just below the surface for some time now over the State’s transition to managed care for Medicaid and the roles of pharmacy benefit managers. This is particularly true of reimbursements within managed care and the State’s apparent lack of ability to ensure accountability citing the fact the State’s contracts are with the managed care organizations and not the PBMs.  Additionally, there have been historic concerns over certain PBM practices most notably audits.

The House had previously approved HB 3479 (Rep. Sara Feigenholtz, D- Chicago/Sen. Andy Manar, D- Bunker Hill) with the understanding the bill would undergo further revisions in the Senate. As originally passed by the House, HB 3479 would have rewritten the State’s contracts with managed care organizations – a legally dubious proposition – and was estimated to cost the state at least $200 million if enacted.

This week, Senator Manar filed Senate Amendment #5 to HB 3479. This amendment seeks to create State oversight of PBMs by requiring the reporting of specific information to the Illinois Department of Insurance (IDOI) and requiring PBMs to be licensed by IDOI. Additionally, the amendment creates audit protections long-sought by the pharmacy community. Finally, the amendment allows pharmacists to share the contents of their contracts with whomever they choose and would prohibit the practice of forcing pharmacists to accept other contracts in order to participate in one or more other contractual programs. The provisions of Senate Amendment #5 apply to the State’s employee insurance program as well as Medicaid.

The amendment was filed late Friday morning and has not yet been assigned for a hearing. It is anticipated it will be heard early next week in the Senate. If it were to pass the Senate, it would still have to go to the House for concurrence and then the Governor for his consideration. In short, it has a long way to go and a short time to get there.

Equal Pay

Similar legislation that was vetoed by the Governor and failed to be overridden by the Senate last year has once again passed the Senate Labor Committee. Despite an avenue for compromise offered by the business community the advocates chose disagreement. 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 that included an affirmative defense for employers. 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.

HB 4163 now awaits consideration by the full Senate.

This Week in Springfield – 100-31

In This Issue:

RETAIL DISCOUNT & BUDGET
TOBACCO 21
DRONE
WORKERS’ COMPENSATION
HUMAN RIGHTS EXPANSION
BUSINESS DAY THANK YOU

This Week in Springfield both chambers met to discuss legislation from the opposite chamber while lawmakers continued to discuss the budget in working groups.

RETAIL DISCOUNT & BUDGET

There are 13 scheduled days of regular legislative session remaining on the calendar. If the Assembly has not adjourned by midnight on May 31st, a super-majority in each chamber is required to pass anything. At the very least, that would give Republicans in the House serious leverage.

A bi-partisan, and relatively large, Budget Working Group has been meeting for several weeks. They have shared ideas on how to close the gap between revenue and spending and discussed estimating how much revenue there is to spend for Fiscal Year 2019.

Last year, a $5 billion income tax increase was utilized to help pay down approximately half of the bill backlog which had grown as high as $16 billion, as well as to get monies flowing again to agencies and the myriad programs they operate. While another tax increase is unlikely in an election year, policymakers are casting about for other pots of money. That means the Retail Discount is once again being discussed.

A few years ago, IRMA prepared this overview of the Discount. We have updated it and are once again sharing it with members of the Budget Working Group, legislative leaders, staff, and the Governor’s Office. One of the options that was discussed was a Kentucky-style approach to reducing the discount. In short, retailers would receive 1.75% of the first $1,000 in sales taxes collected and 1.5% of any amount over $1,000 but the total received would be capped at $50 per reporting period (i.e. per month). IRMA has prepared and shared an overview of the annual sales a business would reach before being capped under a Kentucky-style methodology.

This issue was raised in meetings directly with three of the four legislative leaders and the Governor last week during Business Day 2018. IRMA will continue to advocate to protect the partial reimbursement that is the Retail Discount in Illinois.

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TOBACCO 21

SB 2332 (Sen. Julie Morrison, D-Deerfield/Rep. Camille Lilly, D-Chicago) prohibits anyone below the age of 21 from purchasing tobacco from a licensed Illinois retailer while removing any penalties for the underage possession or consumption of tobacco.  The initiative passed the Senate with a vote of 35-20-0 and passed the House Health & Healthcare Disparities Committee by a 3-1 vote.

As currently drafted SB 2332 makes it legal for a person under the age of 21 to: (1) possess tobacco, (2) consume tobacco, (3) sell tobacco, (4) buy tobacco from an unlicensed Illinois retailer or individual, or (5) buy tobacco from a licensed out-of-state retailer or online.  Additionally, the bill protects unlicensed, unregulated, and, untaxed individuals selling tobacco to minors while prohibiting licensed retailers from selling tobacco products to anyone below the age of 21.

Advocates argue that the brain is still developing until the age of 21 and a person under that age cannot be expected to fully understand the decision they are making when choosing to use tobacco products. This makes an interesting argument since persons under age 21, among other things, are allowed to vote, join the military, enter into legally binding contracts, drive, serve on a jury, sue someone, get a tattoo or piercing, become a blood or organ donor, adopt a child, etc.

Raising the age from 18 to 21 may not make as big of a difference as lawmakers hope, given that most smokers — nine out of 10 according to the Surgeon General— have already begun smoking by the age of 18. Additionally, the vast majority obtain their tobacco products from older family and friends. Three out of four minor smokers will become adult smokers.  Ironically, SB 2332 may actually encourage this behavior by removing the current statutory penalties for underage use and consumption of tobacco.  And if it is a good idea to remove underage penalties for tobacco products should the state also remove underage use and consumption penalties for other age restricted products such as alcohol?

IRMA is opposed to the bill which will drive sales away from licensed retailers to illegal sellers and to out-of-state retailers.

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DRONES

 SB 3291 (Sen. James Clayborne, D-East St. Louis/ Rep. Marcus Evans, D-Chicago) would preempt home rule municipalities from passing regulations on the use of drones or unmanned aerial systems (UAS).  The Federal Aviation Authority (FAA) retains the authority to regulate private and commercial drone use. Despite this authority local municipalities have been introducing ordinances that regulate drones.

The Federal Aviation Authority (FAA) has created rules for both commercial and private drone use and has made it clear that the FAA’s rules preempt local and state jurisdiction regarding the regulation of drones. Additionally, in 2015, Illinois created the Illinois Unmanned Aerial System Oversight Taskforce, which IRMA was appointed, to provide oversight and input in creating comprehensive laws and rules for the operation and use of drone technology within Illinois. The taskforce’s final report indicated that the state should be provide guidance within the FAA guidelines and however well-intentioned, overly burdensome local regulations that discourage or unnecessarily obstruct the otherwise safe and lawful use of UAS should be avoided.

SB 3291 passed the Senate by a 52-0 vote and the Transportation: Regulation, Roads & Bridges Committee by a 11-0 vote. IRMA supports SB 3291.

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WORKERS’ COMPENSATION

The State Medical Society is introducing legislation that will increase workers’ compensation rates for Illinois employers. SB 904 House Amendment #1 (Sen. Michael E. Hastings, D-Frankfurt/Rep. Jay Hoffman, D-Belleville) will result in increased interest rates of 24 percent per year on medical claims for businesses and insurance companies.  Additionally, employers and insurers will also face penalties of up to $1,000 per claim for failure to comply with the electronic billing requirements under the proposal.  The amendment will be heard next week in the House Labor Committee.  IRMA is opposed.

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HUMAN RIGHTS EXPANSION

Currently, the Illinois Human Rights Act only applies to businesses with 15 or more employees. HB 4572 (Rep. Will Guzzardi, D-Chicago/ Sen. Cristina Castro, D-Elgin) expands the coverage of the Act to apply to any business with one or more employees. The legislation passed the House with a 64-37 vote and the Senate with a 33-13 vote. It now goes to the Governor for his consideration.

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THANK YOU

IRMA would like to publicly thank those who helped make Business Day 2018 a tremendous success again this year. On behalf of all the members of IRMA, thank you for your generous support!