Amicus Brief Filed with US Supreme Court in Wayfair v. South Dakota

 FOR IMMEDIATE RELEASE                                                                                                          CONTACT:

March 6, 2018                                                                                                                                  Julie Larsen, 847-946-9332

julie@macstrategiesgroup.com

                             

Amicus Brief Filed with US Supreme Court in Wayfair v. South Dakota

Filing Seeks Fairness in the Collection of Sales Tax by All Retailers

 

The Illinois Retail Merchants Association (IRMA) issued the following statement from Rob Karr, president & CEO, regarding the filing of an amicus curiae brief with the United States Supreme Court in the case of Wayfair v. South Dakota by the Council of State Retail Associations, of which IRMA is a member and Mr. Karr is Vice-Chairman. Specifically, the brief requests the U.S. Supreme Court to revisit their decision in Quill Corp. v. North Dakota absolving retailers with no physical presence from collecting state sales tax.

“It has been over 25 years since the Quill decision and much has changed in our economy since 1992. The internet was in its infancy and consumers were still making more of their purchases in stores, not by clicking a link on their smartphone. Regardless of where a sale occurs, a sale is a sale, and sales tax should be applied to every sale made to an Illinois consumer. Main Street retailers – that employ your neighbors, pay property tax, and support the little league team and high school band – should be on a level playing field with out-of-state retailers that use our roads and landfills but do not have to collect the sales tax that is used to pay for this infrastructure. It is estimated that Illinois loses over $200 million in sales tax each year to remote sales where sales tax is owed but not collected. These are revenues that could be used to stabilize Illinois’ fiscal situation.

“IRMA is pleased the United States Supreme Court is revisiting the Quill decision by agreeing to hear the Wayfair case. We urge the United States Supreme Court to overturn Quill and recognize the global economy in which we live. Overturning Quill will reinstate some equity into our economy rather than continuing to reward companies with an unfair advantage as they compete with Illinois businesses while contributing nothing to Illinois’ economy.”

Tim Lehan, Chairman of the IRMA Board of Directors and a pharmacist and owner of Lehan Drugs said, “As a Main Street retailer with locations in DeKalb, Sycamore and Rockford, I can tell you that my commitment is to the communities we serve. I believe that the Supreme Court has an opportunity to level the playing field for me, and other retailers like me, who have been at a disadvantage compared to internet retailers who aren’t required to collect sales tax.” Lehan expressed his hope for the Supreme Court to reconsider its outdated decision.

About the Illinois Retail Merchants Association (IRMA)

One of the largest state retail organizations in the United States, IRMA serves as the voice of retailing and the business community in state government. Founded in 1957, IRMA represents more than 20,000 stores of all sizes and merchandise lines. From the nation’s largest retailers to independent businesses in every corner of the State, merchants count on IRMA to fight for the best possible environment in which to do business in Illinois.

 

 

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Retailers File Temporary Restraining Order and Preliminary Injunction to Block Cook County’s Sweetened Beverage Tax

FOR IMMEDIATE RELEASE CONTACT:
June 27, 2017

CONTACT

Ryan McLaughlin, 312-969-0255
ryan@macstrategiesgroup.com

Retailers File Temporary Restraining Order and Preliminary Injunction to Block Cook County’s Sweetened Beverage Tax

Vague regulations and policy’s lack of uniformity violate the state’s constitution

SPRINGFIELD – Today, the Illinois Retail Merchants Association, on behalf of Cook County retailers, filed a temporary restraining order and is seeking a preliminary injunction in the Cook County Circuit Court challenging the sweetened beverage tax saying it violates the uniformity clause of the Illinois Constitution and is impermissibly vague. The ordinance is designed to place a penny-per-ounce tax on sweetened beverages and is poised to go into effect in only a matter of days on Saturday, July 1st. The lawsuit was filed by the law firm of Horwood Marcus & Berk who specialize in state and local tax as well as business and finance law.

The sweetened beverage tax creates classifications of taxable sweetened beverages that violate the uniformity clause of the state’s constitution, which requires taxing bodies to draw reasonable classes of taxable categories and imposes a uniform tax within the classes. Specifically, the ordinance taxes ready-to-drink, pre-made sweetened beverages, but generally excludes sweetened beverages made on demand. Not only are these sweetened beverages the same other than how they are served, but when considering the purpose of the ordinance, to promote public health and decrease obesity rates, the classification bears no reasonable relationship to accomplishing those goals. The argument can be made that Cook County has failed to meet the minimum standards in creating classes of taxable sweetened beverages.

Example of a violation of the uniformity clause:
A ready-to-drink sweetened iced tea served out of a chilled beverage urn is taxable, but a sweetened iced tea that is shaken behind the counter before giving it to the customer is not taxable. The beverages are substantially similar, except for the “shake” before giving it to the customer.

Additionally, the ordinance is impermissibly vague and fails to provide precise application under the circumstances it is intended to operate, creating a burden on retailers to accurately calculate the proper amount of tax.

Example of vagueness in the ordinance:
A retailer is responsible for collecting the Sweetened Beverage Tax for fountain sodas based on the amount it will sell in a certain-sized cup. In practice, however, by adding ice, the retailer is actually serving less sweetened beverage than the tax which was collected from the customer. A similar problem is possible in the refill context when the tax could be under-collected based on additional ounces consumed, with either scenario leaving the retailer legally exposed in an untenable situation.

Causing further complication, there has been an unavailability of guidance on the issue with the County changing the rules just days before the tax goes into effect making it impossible for retailers to properly implement in such quick order.

Ever-changing rules for SNAP may result in retailers being pushed out of program
SNAP does not allow a state or local unit of government to collect local sales taxes on purchases made under this program. Many retailers may not be able to correctly charge the Sweetened Beverage Tax, especially since the rules have been changed approximately two weeks prior to the date retailers must begin collecting the tax. If retailers do not comply they might be in jeopardy violating the terms of their SNAP contracts. In some cases, SNAP represents a significant portion of their business.

“As it stands, this ordinance is incomplete and it’s a perfect example of the disaster that awaits when policies are hurried through without serious thought to how they might impact the businesses that have to try to comply with these policies. To implement this tax correctly by the July 1 deadline is inconceivable with rules and regulations that are so poorly defined and continually changing. If enacted, Cook County retailers would be unfairly exposed to lawsuits for failure to comply and that’s a situation we’re not willing to accept for the retailers in Cook County,” said Rob Karr, president and CEO of IRMA.

Retailers are urging the court to block implementation of the ordinance due to the lack of clarity in how to properly apply and administer the tax and its unequal application.

 

About the Illinois Retail Merchants Association (IRMA)
One of the largest state retail organizations in the United States, IRMA serves as the voice of retailing and the business community in state government. Founded in 1957, IRMA represents more than 20,000 stores of all sizes and merchandise lines. From the nation’s largest retailers to independent businesses in every corner of the State, merchants count on IRMA to fight for the best possible environment in which to do business in Illinois.
About Horwood, Marcus & Berk
Horwood Marcus & Berk is a Chicago law firm that represents a wide range of clients from Fortune 500 corporations, to mid-sized and closely-held companies. While serving a number of different industries, the firm is specializing in state and local tax as well as business and finance law. In recent years, the firm has fought on the side of retailers in Qui tam lawsuits, which whistleblowers have used to unfairly target companies under the False Claims Act.

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BUSINESS GROUPS LABEL 2017 SESSION “ONE OF THE WORST FOR EMPLOYERS”

FOR IMMEDIATE RELEASE

May 31, 2017

CONTACT:

Ryan McLaughlin, 312-969-0255 | ryan@macstrategiesgroup.com

Rachel Peabody, 217-753-1761 | rachel@macstrategiesgroup.com

BUSINESS GROUPS LABEL 2017 SESSION “ONE OF THE WORST FOR EMPLOYERS”

Litany of anti-employer, job-killing measures rock employers

 

SPRINGFIELD – The state’s premier business groups have labeled the spring legislative session as “one of the worst for employers”, citing lawmaker’s apparent “race to the bottom” and litany of anti-employer, anti-job growth measures considered this year.

At a press conference on the final day of session, the Illinois Manufacturers’ Association, Illinois Retail Merchants Association, Chicagoland Chamber of Commerce, Illinois Chamber of Commerce and NFIB joined together lamenting the continuous effort to tax, over-regulate, mandate and constrict employers at every turn by lawmakers in both chambers which has created one of the most crushing business climates in the nation. While this is not a new phenomenon in Springfield, the massive uptick in these anti-employer measures coupled with the accompanying rhetoric has exasperated an already hostile business climate.

Ironically, many of these measures – in theory – are aimed at increasing pay, hiring more employees or giving workers more certainty, yet they achieve quite the opposite. While the intention of our business community is to provide jobs with competitive pay and generate revenue to fix the state’s problems, the anti-employer narrative is having a chilling effect.

“My Democrat friends like to say we are in a race to the bottom. Unfortunately, I’m here to tell you we are winning but that means Illinois businesses and families are losing. The high cost of workers’ compensation is one of the biggest issues facing manufacturers but lawmakers fail to act because they continually side with wealthy trial lawyers. Their failure to act and create an attractive economic climate means that Illinois will continue to bleed jobs and remain a laughingstock of the nation,” said Greg Baise, president and CEO, Illinois Manufacturers’ Association.

“Every day seems to bring another report of another round of retail store closings. Instead of talking restraint and recovery for the retail community, the narrative out of Springfield, like the actual actions in Chicago and Cook County, is higher taxes, labor and regulatory burdens, and, in the case of Cook County, incentivizing theft. This ‘campaign against Main Street retailers’ will only hasten the continued job loss and store closings that have become all too familiar. Retailers have limited responses; reduce employee hours, lay people off, increase automation, or close. Passing legislation to mandate artificially higher wages when the jobs don’t exist doesn’t help anyone,” said Rob Karr, president and CEO, Illinois Retail Merchants Association.

“The ping pong of anti-employer policies coming from both Chicago and Springfield is unsustainable. At every corner, Chicagoland businesses are being asked to pay higher property taxes, soda taxes, and sales taxes while also being forced to implement countless mandates that do not grow the economy. Chicago has so much to offer but this economic death by 1,000 paper cuts does not create the jobs, quality of life and revenue Springfield should be seeking,” said Michael Reever, Vice President of Government Affairs, Chicagoland Chamber of Commerce.

“Time and again lawmakers have suggested policies that shift greater financial burdens to employers statewide. Whether it is during the budget impasse or after it is resolved, standing up against job-crushing legislation is crucial for our economy. Increasing minimum wage, passing “fake” workers’ compensation reform and proposing a significant arbitrary tax increase is far from the progress Illinois deserves. We need pro-growth economic policies to prevent the steady decline of Illinois’ economic competitiveness. And we need them now, that is, if we want to continue to attract the best and the brightest individuals to Illinois,” said Todd Maisch, President and CEO, Illinois Chamber of Commerce

“Our members aren’t surprised by the legislature’s anti-business antics this session, but they are disappointed and fed up. Illinois is broke and we haven’t had a budget in two years. We need leaders who are less focused on scoring easy political points and more on enacting good policies that benefit all Illinoisans. We need legislators who will act like adults, set aside their political differences, and make the difficult decisions that would make things better for working families and allow businesses to grow and create jobs,” said Mark Grant, Illinois State Director, NFIB

Springfield’s Dirty Dozen

  1. SB 81: Legislation that raises the minimum wage to $15
  2. HB 2771: A costly government mandate forcing employers regardless of size to provide paid leave to every employee regardless of hours worked.
  3. HB 160: A $5,000 fee on every employer for the “privilege” of doing business in Illinois
  4. HB 156: Massive property tax shift onto commercial and industrial taxpayers
  5. SB 1502: Trial lawyer supported legislation that burdens every e-commerce business, and every company with a credit card, loyalty program app or website, without providing any consumer protections
  6. HB 3449: Trial lawyer supported legislation that unfairly targets companies that share or store location data and requires ecommerce businesses to ask for permission before collecting location data from your device
  7. HB 3538: Penalizes business that move even one job out of state while discouraging future investment
  8. HB 2802: Government mandate forcing businesses to pay the transportation costs of their workers
  9. HB 2525: This bill codifies “a cause” workers’ compensation standard that mandates insurance rate review without providing any meaningful reform
  10. HB 2622: Legislation that would disrupt the private workers’ compensation insurance market without having a strong reason to exist
  11. HB 3337: A bill that allows someone to steal $2,000 of merchandise from a retailer
  12. SB 9: Imposes $5.4 billion in new taxes on Illinois businesses and families – *revenue without reforms

Ignored Reforms of the 2017 Legislative Session

  • Pension reform
  • Workers’ compensation reform
  • Tax reform
  • Restraint of local government
  • Property tax relief
  • Education and workforce development

 

About the Illinois Manufacturers’ Association (IMA)

The Illinois Manufacturers’ Association is the only statewide association dedicated exclusively to advocating, promoting and strengthening the manufacturing sector in Illinois.  The IMA is the oldest and largest state manufacturing trade association in the United States, representing nearly 4,000 companies and facilities.

About The Illinois Retail Merchants Association (IRMA)

One of the largest state retail organizations in the United States, IRMA serves as the voice of retailing and the business community in state government. Founded in 1957, IRMA represents more than 23,000 stores of all sizes and merchandise lines. From the nation’s largest retailers to independent businesses in every corner of the State, merchants count on IRMA to fight for the best possible environment in which to do business in Illinois.

About the Chicagoland Chamber of Commerce

The Chicagoland Chamber of Commerce represents over 1,000 member companies, their 400,000 employees, and over $24 billion in revenue. We combine the power of our membership with our legacy of leadership and business advocacy to drive a dynamic economy. We focus on delivering value for our members, making Chicagoland a world-class place to live and work. Visit ChicagolandChamber.org

About the Illinois Chamber of Commerce

The Illinois Chamber of Commerce has been the unifying voice for Illinois business since 1919. The Chamber advocates prosperity and a pro-business climate in Illinois. www.ILChamber.org

About the National Federation of Independent Business (NFIB) Illinois

The National Federation of Independent Business (NFIB) Illinois is a chapter of America’s leading small business association, promoting and protecting the right of our members to own, operate and grow their businesses. NFIB represents 325,000 small businesses in all 50 states and Washington, D.C., and is dedicated to leveling the playing field with Big Business, Big Government, and Big Labor in every key area – taxes, healthcare, regulations, and more.

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IRMA Responds to House Passage of the Minimum Wage Bill

May 30, 2017

  CONTACT

Rachel Peabody, 217-753-1761 | rachel@macstrategiesgroup.com

Ryan McLaughlin, 312-969-0255 | ryan@macstrategiesgroup.com

IRMA Responds to House Passage of the Minimum Wage Bill  

SPRINGFIELD – The Illinois Retail Merchants Association (IRMA) issued the following statement regarding the passing of the minimum wage bill out of the Illinois House that seeks to increase the minimum wage in Illinois to $15.00 per hour by 2022.
“The political campaign to raise the minimum wage to $15 per hour has already resulted in reduced hours and eliminated positions in major cities where this has been enacted, including the City of Chicago. In fact, we have seen automation and self-service alternatives replace jobs due to continued efforts to artificially increase wages through government actions instead of working with employers. Quite simply, the state cannot bear another proposal that eliminates what little opportunity exists in Illinois. We urge lawmakers to show more restraint when making decisions that significantly impacts a businesses’ bottom line.”

Facts about the minimum wage:

  • Illinois’ minimum wage is already the highest in the Midwest. Illinois is poised to add another anti-competitive burden to retailers’ ability to compete with retailers in border states.
  • Raising the minimum wage will continue to keep people, especially teens, out of jobs. According to a January 2016 report from the University of Illinois at Chicago’s Great Cities Institute, only 12.4 percent of African Americans, 15 percent of Hispanic or Latinos and 24.4 percent of Whites (non-Hispanic or Latinos), ages 16 to 19 years old, are employed in Chicago. This destroys what little opportunity exists.
  • Minimum wage salaries are a floor, not a ceiling. Workers are not locked into minimum wage jobs, they have the ability to garner the necessary skills to advance and earn higher wages. Retail ranks are filled with those who started in minimum wage jobs.
  • Penalizes brick-and-mortar retailers over internet retailers. The minimum wage hike will not impact internet retailers, but penalize those retailers that invest in a physical property, workforce, pay property and sales taxes, etc.

 

About The Illinois Retail Merchants Association (IRMA)
One of the largest state retail organizations in the United States, IRMA serves as the voice of retailing and the business community in state government. Founded in 1957, IRMA represents more than 23,000 stores of all sizes and merchandise lines. From the nation’s largest retailers to independent businesses in every corner of the State, merchants count on IRMA to fight for the best possible environment in which to do business in Illinois.

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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!

This Week in Springfield – 100-29

In This Issue:

PLASTIC BAGS
PROMPT PAYMENT
ENERGY
BUSINESS DAY

PLASTIC BAGS

In 2012, under the sponsorship of Sen. Terry Link, D- Gurnee and former Rep. Mike Tryon, R- Crystal Lake, the General Assembly approved legislation that would have imposed a uniform statewide recycling program for plastic bags and plastic wrap. Plastic wrap makes up 85% of plastic in the waste stream. The fees collected would have been used to fund household hazardous waste operations statewide and the definition of household hazardous waste was expanded to allow for the collection of many more items, including polystyrene. The legislation passed both chambers. However, at the last moment, environmental groups switched their position, convinced then-Governor Pat Quinn to switch his, and he ultimately vetoed the bill. Illinois missed a golden opportunity to divert hundreds of tons of plastic each year from landfills.

 

Two weeks ago, Sen. Link filed Senate Amendment #3 to SB 1597. Under the proposal, a $0.05 fee would be collected by the retailer for every plastic or paper bag used by the consumer. The fee would not apply to reusable bags which are bags with handles, specifically designed for reuse with a minimum lifetime capability of 125 or more uses, carrying 22 or more pounds over a distance of at least 175 feet, and capable of being washed so as to be cleaned and disinfected at least 100 times. Two-cents of the fee would be retained by the retailer as a partial reimbursement for their carrying and administrative costs. One-cent would flow into the state’s General Revenue Fund. The remaining $0.02 would go into a new fund called the Carryout Bag Fee Fund to the county where the original $0.05 was paid. That county could use their funds to implement a county or municipal join action agency solid waste management plan. SB 1597 was reported out of the Senate Environment and Conservation Committee.

 

This week, the sponsor held a meeting to try and bring the sides together. The environmental groups are once again the obstacle as they want to impose a statewide fee but want to allow local governments to continue to impose additional fees on myriad items. Additional discussions are expected in the coming weeks.

 
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PROMPT PAYMENT

 

This week, Senate Amendment #1 to SB 44  (Sen. Laura Murphy, D-Des Plaines) was filed and originally scheduled to be heard in the Senate State Government Committee. As filed, Senate Amendment #1 would allow the state to lower the interest rate the state owes vendors for the state’s failure to pay its vendors on a timely basis. Under the proposal, the Comptroller would have been given the authority to determine the interest rate on late payments from July 1st using the following formula: the greater of (a) 0.25% per month/3% annually; or (b) an annual rate of 2 times the percentage increase, if any, in the Consumer Price Index during the 12-months immediately preceding July 1st. This would remove the incentive for the state to pay its vendors on time while turning vendors into unwilling banks thereby encouraging the state to continue fiscal mismanagement. Currently, vendors who are owed money don’t start earning interest until at least 90-days.

 

In short, should something like this be adopted, the state will have fiscally abused its vendors and escaped responsibility for the mismanagement. The floor amendment was not heard in the Senate’s State Government Committee but we expect further consideration at some point.

 
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ENERGY

Project Next Grid is a study launched by the Illinois Commerce Commission. Its purpose is to proactively address issue Illinois’ electric utilities will confront in the future. The focus will be on technological advancements, contributions to economic development, and environmental impacts. The stated goal is not to provide specific recommendations but layout concepts that could be used by policy makers in future decisions. IRMA is involved with Project Next Grid.
Eight working groups have been formed to help facilitate effective discussion.

 

The first study update will be held on Jun 14th from 1:00 – 3:30 p.m. at the ICC’s offices in Chicago (160 N. LaSalle, Room C-800) or via teleconference at the ICC’s Springfield offices (527 East Capitol). The agenda for the update can be found here. A public comment session will be included. Interested participants need to register in advance. Those wishing to testify must also register in advance. IRMA members can also provide feedback to IRMA who will be happy to submit it.
 
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BUSINESS DAY SOLD OUT

We look forward to seeing everyone next Wednesday, May 9th, for another sold out Business Day 2018 hosted by IRMA and the Illinois Manufacturers’ Association. Business Day 2018 is the largest annual gathering of Illinois employers and gives you the opportunity to network with fellow business leaders, meet directly with your legislators, and directly share the impact policies they are considering have had or will have on your investment, employees, and customers. The day will start with the opening luncheon keynoted by Jim VandeHei, the founder and CEO of Axios and the founder of POLITICO.

 
We would like to thank our sponsors for their support!
 
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This Week in Springfield – 100-30

BUSINESS DAY 2018

Over 350 employers converged on Springfield Wednesday for Business Day 2018 co-hosted by IRMA and the Illinois Manufacturers’ Association. These employers from throughout Illinois were eager to share their concerns over the direction of the state and the future of employment in Illinois directly with policymakers on both sides of the aisle.

 

This year, the opening luncheon featured Jim VandeHei, the founder and CEO of Axios and the founder of POLITICO. Mr. VandeHei argued that with the exception of the bluster and seemingly perpetual crisis that pervades the White House, the accomplishments of the Trump Administration to-date are not small and not outside what would be expected from a more traditional Republican nominee. VandeHei particularly focused on the way President Trump uses social media to end-run main-line media and actually control their narrative. He also noted that voters on both sides of the political divide are getting the politics they desire as everyone consistently isolates themselves and seek only opinions that affirm their opinions. He noted that of the 20 top stores shared on Facebook last year, 19 were fake and 60% forwarded stories without even reading them. The way Facebook is designed, it reinforces how we use it meaning Facebook users wound up with even more content that simply reinforced opinions.

 

Mr. VandeHei does not believe President Trump acts without thinking. In fact Mr. VandeHei explains that Trump is quite adept at manipulating the media. He explained that Trump uses a very specific formula for manipulating the media and hijacking the Twitter/cable/conventional media industrial complex. Trump sets this formulaic trap increasingly often and news organizations keep falling for it. In the end, they are talking about him and keeping his base active as reflected consistently in polling.

 

After the luncheon, attendees made their way to an afternoon at the Statehouse to share insights on specific issues with legislators. Members of IRMA’s Board met with three of the legislative leaders and Governor Bruce Rauner. Each shared their insight into the ongoing budget and reform impasse in addition to hearing concerns of attendees. IRMA would like to thank Governor Bruce Rauner, Senate President John Cullerton, Senate Republican Leader Bill Brady and House Republican Leader Jim Durkin for their time and insights.

 

The day ended with the themed Party Under the Tent where policy makers, staff, and employers mixed in a casual atmosphere enjoying the many food and drink offerings provided by IRMA members and the outstanding live band covering an array of 80’s and 90’s hit songs.
IRMA would like to thank the co-hosts, sponsors, and reception caterers who made Business Day 2018 possible and an outstanding success.

 
 

 
 

 RESTRICTIVE SCHEDULING

A second subject matter hearing on the restrictive scheduling mandate was held this week in a joint House and Senate Labor and Commerce Committee. A subject matter hearing was already held in the House in April. As introduced, HB 5046 (Rep. Chris Welch, D-Westchester) and SB 202 Floor Amendment #1 (Sen. Cristina Castro, D-Elgin) would, among other provisions, 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. Over 40 different employer sectors which include but are not limited to, retail, agriculture, accounting, manufacturing, energy, security, education, automotive, distribution, construction, hospitality, law enforcement, et., all oppose a restrictive scheduling mandate that negatively impacts employers and employees.

 

Restrictive scheduling assumes that every employer can schedule or operate in the exact same manner and that every employee wants the same schedule. Different employers have unique business, employee, and regulatory variables to consider when providing schedules that promote and support their employees while still allowing the business providing the jobs to operate effectively and efficiently. These proposals undermine the ability of each employer to properly manage their business and support the various flexibility preferences of employees.
The issue will certainly re-emerge in November or next year.

 

This Week in Springfield – 100-28


IN THIS ISSUE:

SALES TAX INFORMATION
PHARMACY BENEFIT MANAGERS
WAGE LIEN
PLASTIC BAGS
TOBACCO 21
LIQUOR
WORKERS’ COMPENSATION

This Week In Springfield (TWIS), both chambers of the Illinois General Assembly reached their first Third Reading Deadline. Unless a bill has its final consideration deadline specifically extended, the legislation will be considered ‘held’. However, any idea could emerge later in the session as an amendment to another bill.
 

SALES TAX INFORMATION

The latest chapter in a multi-year debate over whether or not to grant a private company access to the confidential financial information of businesses was closed this week when the House decisively defeated HB 2717 (Rep. Chris Welch, D- Westchester). The vote was 42-61-3.

When the debate began just over two years ago, a private company, Azavar, was advocating for the bill. Within the last six months, the company faded into the background and was replaced by a new organization called the Illinois Coalition of Local Governments. The primary rationale behind HB 2717 was that the Illinois Department of Revenue is making mistakes in the locating of businesses within the proper municipality. As a result, the municipality in which the business is actually located goes without the sales tax collected and remitted by that business. However, those problems are solved by simply providing the municipalities with the business name and address. They can share that information with anyone. Access to financial information is simply not needed. Three compromises offered by the opponents, led by IRMA, to help local governments address this problem were rejected by the proponents.

Last Monday, a coalition of groups, including IRMA, revealed the results of a request for documents under the Freedom of Information Act (FOIA) from a limited number of municipalities. This request uncovered incidents of municipalities breaking current law by providing the financial information of businesses to third parties as well as Azavar directing municipalities on how to break the law and evade detection.

 

This is the third time this issue has been addressed and subsequently defeated by the Assembly. The Senate twice rejected a similar proposal last year. IRMA would like to thank the members of the House who took the time to thoroughly understand a very complicated issue and voted “no” or “present”. IRMA would also like to thank our members, and those of the very broad coalition of opponents, who took the time to contact their elected officials and express their opposition.

While this was a substantial accomplishment, we remain vigilant for its return.

 
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PHARMACY BENEFIT MANAGERS

A confluence of developments has ignited a debate over the treatment of retail pharmacies by PBM’s and the fair reimbursement of pharmacies independently as well as within the confines of Illinois’s recent move to Managed Care Organizations (MCO) for Medicaid. HB 3479 (Rep. Sara Feigenholtz, D- Chicago) would require MCOs to have fair and reasonable reimbursement rates for prescriptions as well as patient care services. The reimbursement rates could not be below the acquisition cost of the pharmacy and the current reimbursement rate utilized for fee-for-services under Medicaid. HB 3479 was approved by the House 87-16-1 and now moves to the Senate for additional consideration.

 

On a directly related front, a Medicaid Working Group has been formed comprised of legislators from both chambers. This group has indicated PBMs, reimbursement, and MCOs will be considered. IRMA has already begun discussions with the members of this group.

WAGE LIEN

An agreement was reached to address wage theft. As introduced, HB 4324 (Rep. Chris Welch, (D-Westchester) would have allowed 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 wage lien would also take priority over any other financial obligation, debt, or mortgage. It is meant to address the situation where unscrupulous companies, usually temporary businesses, dissolve and reorganize before a wage claim is brought or adjudicated.

 

A business and banking coalition led by IRMA worked with Rep. Chris Welch and Rep. Jay Hoffman, (D-Belleville) to reach an agreement adopted in Floor Amendment #2 that addresses the issues presented by the advocates. Currently, the Illinois 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 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. IRMA would like to thank Representative Chris Welch and Representative Jay Hoffman for their efforts in reaching this agreement.

 
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PLASTIC BAGS

 

In 2012, under the sponsorship of Sen. Terry Link (D- Gurnee) and former Rep. Mike Tryon, (R- Crystal Lake), the General Assembly approved legislation that would have imposed a uniform statewide recycling program for plastic bags and plastic wrap. Plastic wrap makes up 85% of plastic in the waste stream. The fees collected would have been used to fund household hazardous waste operations statewide and the definition of household hazardous waste was expanded to allow for the collection of many more items including polystyrene. The legislation passed both chambers. However, at the last moment, environmental groups switched their position, convinced then-Governor Pat Quinn to switch his, and he ultimately vetoed the bill. Illinois missed a golden opportunity to divert hundreds of tons of plastic each year from landfills.

 

This week, Sen. Link filed Senate Amendment #3 to SB 1597. Under the proposal, a $0.05 fee would be collected by the retailer for every plastic or paper bag used by the consumer. The fee would not apply to reusable bags which are bags with handles, specifically designed for reuse with a minimum lifetime capability of 125 or more uses, carrying 22 or more pounds over a distance of at least 175 feet, and capable of being washed so as to be cleaned and disinfected at least 100 times. Two-cents of the fee would be retained by the retailer as a partial reimbursement for their carrying and administrative costs. One-cent would flow into the state’s General Revenue Fund. The remaining $0.02 would go into a new fund called the Carryout Bag Fee Fund to the county where the original $0.05 was paid. That county could use their funds to implement a county or municipal join action agency solid waste management plan. SB 1597 was reported out of the Senate Environment and Conservation Committee.

 

The sponsor told IRMA he intends to hold additional discussions in the coming weeks.

 
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TOBACCO 21

SB 2332 (Sen. Julie Morrison, D-Deerfield) 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 moves to the House for further consideration.
As currently drafted SB 2332 makes it legal, subject to no penalties, 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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LIQUOR

Senate Amendment #1 to SB 3022 (Sen. Tony Munoz, D- Chicago) 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 some semblance of balance which is appropriate as the ILCC is supposed to be a neutral arbiter and regulator.

 

Senate Amendment #1 to SB 3022 was adopted and passed 43-2-3 by the full Senate and now heads to the House for additional consideration.

 
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WORKERS’ COMPENSATION

Lawmakers passed HB 4595 (Rep. Laura Fine, D-Glenview) out of the House Chamber by a vote of 62-43 that would take $10 million 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 has the most competitive workers’ compensation insurance market in the nation.

 

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’ companies paid an estimated $2.75 billion in workers’ compensation benefits in 2014, according to the National Academy of Social Insurance. Additionally, Illinois is tied for having the eighth-most expensive premiums in the nation. The experience of the commercial companies was mirrored by the reports from the self-insured companies indicating the insurance companies experience is real.
 
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.

 

An identical bill passed last year that was vetoed by the Governor. HB 4595 now goes to the Senate for consideration.

 
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121 Report – April 2018

CHICAGO FOOD CODE RULES EFFECTIVE JULY 1st

Per previous CRMA communications, beginning July 1st, Chicago specific food safety rules take effect. Generally, they follow the federal model food code but there are some slight differences. The final rules can be found here and, for your convenience, a marked-up version noting the changes can be found here.

This is simply a reminder that they take effect July 1st. Please let us know if you have any questions.

 

INTRODUCTIONS AND ORDINANCES 

 

The following proposals of interest to retail have been introduced before the Chicago City Council.
  •        Expansive Date Regulation
  •        Cell-Phone and Mobile Device Merchants
  •        Office of Labor Standards
  •        Water Cost Shift
EXPANSIVE DATA REGULATION
An ordinance introduced by Aldermen Ed Burke, Brian Hopkins, and Brendan Reilly seeks to regulate websites, data breaches, data brokers, cell phone and mobile device sellers, and geolocation information.

 

It seeks to prohibit anyone who owns a website from using, disclosing, selling or permitting access to customer personal information and includes additional requirements for data breaches and data brokers and mobile phone privacy. “Customer personal information” includes:
  •        name and billing information;
  •        government-issued identifiers;
  •        information that would permit the physical or online contacting of an individual such as physical address, email, phone, or IP address;
  •        demographic information such as date of birth, age, gender, race, ethnicity, nationality, religion, or sexual orientation;
  •        financial information;
  •        health information;
  •        information pertaining to minors;
  •        geolocation information;
  •        information from use of the service including web browsing history, application usage history, content of communications, and origin and destination IP addresses of all traffic;
  •        device identifiers, such as media access control (MAC) address or Internet mobile equipment identifier (IMEI);
  •       information concerning a customer or user of the customer’s subscription or account that is collected or made available and is maintained in personal identifiable form.

 

However, if the customer gives the operator prior opt-in consent. The customer can revoke this option at any time and the operator must provide a clearly available option to do so at all times. The request for consent must disclose the following:

 

  •         the types of customer personal information for which the operator is seeking customer approval to use, disclose, sell, or permit access;
  •         the purposes for which the customer personal information will be used;
  •        the categories of entities to which the operator intends to disclose, sell, or permit access to the customer personal information.
Interestingly, the operator cannot refuse to serve a customer, or in any way limit services to a customer, who does not provide consent or charge a customer a penalty, or penalize a customer in any way, or offer a customer a discount or another benefit based on the customer’s decision to provide or not provide consent.
An operator can use, disclose, or permit access to customer personal information without customer consent, but only to the extent necessary to achieve the stated purpose, in the following circumstances:
  •        to provide the operator service from which information is derived, or services necessary to the provision of that service;
  •        to comply with legal process or other laws, court orders, or administrative orders;
  •        to initiate, render, bill for, and collect for the operator’s service;
  •        to protect the rights or property of the operator, or to protect customers of those services and other operators from fraudulent, abusive, or unlawful use of, or subscription to, those services;
  •       to provide location information concerning the customer in emergency situations.
Data breaches must be reported, without delay, to the Chicago Department of Business Affairs and Consumer Protection and affected Chicago residents.

 

Data brokers that maintain personal information shall register with the Chicago Department of Business Affairs and Consumer Protection.

 

In terms of cell phones and mobile devices, the proposed ordinance, requires retailers who sell cell phones or mobile devices to provide notices to customers with a notice that customers can disable such services. The notice must also be prominently displayed at any point of sale where phones or mobile devices are sold or leased. The content of the notice is proscribed in the proposed ordinance.

 

Finally, the proposed ordinance seeks to regulate the collection, use, storage, or disclosure of geolocation information without affirmative express consent. It does provide some exemptions from affirmative express consent.

 

In all the above instances, there are various penalties and courses of action available and regulatory authority is granted to the Chicago Department of Business Affairs and Consumer Protection. The ordinance will take effect 180-days after passage.

 

Please share with us your thoughts on these various proposals as soon as possible.

 

CELL-PHONE AND MOBILE DEVICE MERCHANTS

 

Several years ago, the City of Chicago enacted an ordinance regulating food trucks including how far they had to be from an existing restaurant. Mayor Rahm Emanuel has proposed an ordinance to regulate mobile merchants. A few years ago, temporary regulations were put in place. To date, only six licenses for such truck have been issued. This proposal would formalize that licensure and regulation. Regulations include truck size restrictions, when and who can operate, and where they can park and for how long (2 hours). The major difference is unlike the regulations for food trucks there are no provisions restricting how far such trucks have to be from a retailer selling similar merchandise.

 

OFFICE OF LABOR STANDARDS

 

Currently, there is no one agency responsible for the enforcement of labor laws within the City of Chicago. Alderman Ameya Pawar has introduced a proposal to combine such enforcement under an Office of Labor Standards. The new office would be empowered to:
1.     Promote Chicago’s labor standards through outreach, education, technical assistance and training for employees and employers;
2.     Collect and analyze federal, state, and local data on workforce and workplaces and coordinate enforcement;
3.     Engage in worker education, safety, and protection;
4.     Recommend efforts to achieve workplace equity for women, communities of color, immigrants, refugees, and other vulnerable workers;
5.     Otherwise enforce labor laws.
The Office will generate reports regarding complaints, cases, results of cases and enforcement actions, and anything else the Director deems appropriate. To the extent allowed by law, civil penalties and fines shall be allocated to the Office.

 

WATER COST SHIFT

 

Alderman Carlos Ramirez-Rosa has introduced a proposal to provide discounted or free water for residents of Chicago called “Water-For All”. The credit will vary by resident and will depend on a formula based on the resident’s income. Like property taxes, these costs will be universalized over the other rate-payers.

 

Rob KarrRob Karr
President & CEO
217-544-1003
rkarr@irma.org