This Week in Springfield 100-09

RETAIL THEFT
$15 MINIMUM WAGE
PAID SICK LEAVE
RETAIL DISCOUNT
DATA PRIVACY – RIGHT TO KNOW
DATA PRIVACY – GEOLOCATION INFORMATION
ORDER OF PROTECTION REASONABLE ACCOMMODATION MANDATE
FOOD ALLERGEN TRAINING
REMOTE SELLERS
SNAP PHOTO ID
TOBACCO MERCHANDISING
VAPOR PRODUCTS RETAIL LICENSE
CRIMINAL LIABILITY FOR BUILDING OWNERS AND MANAGERS
GUN DEALER LICENSING
BUSINESS DAY APRIL 26TH

 

This week in Springfield, both the Senate and the House were in session with the House focused on committee action leading up to their Friday committee deadline.  Below is a summary of action on bills of importance to retail.

RETAIL THEFT

 

The debate over whether or not to increase the threshold for felony retail theft continued this week with the advancement of HB 3337 (Rep. Elgie Sims, D- Chicago) out of the House Judiciary-Criminal Committee. The advancement occurred based on the sponsor’s commitment to return to the committee with an amendment. IRMA has been working with Rep. Sims in an effort to develop an alternative to raising the threshold.

The debate is occurring within a larger discussion of criminal justice reform with an eye toward reducing the state’s prison population by diverting more non-violent offenders from prison. However, the studies upon which the proponents based their recommendations to increase the threshold for felony retail theft make false comparisons and have been completely undermined. Those claims included that people are sitting in prison solely for retail theft or because they cannot afford bail for retail theft, or retail thieves steal largely for need, or that retail theft has not increased in states that increased their retail theft threshold. All of the aforementioned claims have now been thoroughly refuted. As an example, let us focus on the claim that retail theft has not increased in states that have increased their threshold for felony retail theft.

According to the FBI, over the last five years as other states have increased their felony thresholds, retail theft has increased nearly 18%. Over the same period, the value of the merchandise stolen has increased 30% strongly indicating retail thieves know the limits and steal to them. So why the difference between the FBI statistics and those being cited by the proponents of increasing the felony retail theft threshold? The proponents are using larceny numbers and not retail theft specific numbers. Larceny is a catch-all category of many crimes. As a category, larceny has been decreasing. However, as noted above, the specific crime of retail theft has been increasing.

Proposals in Illinois seek to increase the felony retail theft threshold to as high as $2,500. Yet California, which “only” increased its threshold to $950, experienced a substantial increase in theft. For example, the Los Angeles Police Department recorded a 25% increase in the incidence of retail theft. Again, it goes back to comparing larceny to retail theft.

The Illinois Municipal League, the Illinois Sheriff’s Association, and numerous business groups and local chambers have joined with IRMA in opposition to increasing the threshold. Largely because increasing the threshold shifts the burden to local governments while at the same time eroding their sales tax base.

IRMA has long worked with legislators on efforts such as sealing, expungement, and lowering barriers to employment for those with criminal records. Likewise, IRMA continues to work with Rep. Sims on a possible alternative to increasing the felony threshold for retail theft. But there are limits and increasing the threshold for felony retail theft is one such limit.

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$15 MINIMUM WAGE

 

On the heels of last weeks subject matter-only hearing in the House Labor & Commerce Committee at which IRMA testified, this week, Rep. Will Guzzardi (D- Chicago) filed House Amendment #1 to HB 198 proposing to increase the Illinois minimum wage from $8.25 per hour to $15 per hour by January 1, 2022. The proposal seeks to increase the minimum wage on the following schedule:

 

  • January 1, 2018 = $9.00
  • January 1, 2019 = $10.00
  • January 1, 2020 = $11.25
  • January 1, 2021 = $13.00
  • January 1, 2018 = $15.00

 

Such a schedule would increase Illinois’ starting wage by an average of 16.36% each year or a total increase over the five years of over 81%. This added cost would come on top of the billions in new taxes that are certain to be imposed when Springfield ultimately deals with its deteriorating fiscal situation. This would be a double-whammy for employers in the City of Chicago and Cook County who enacted ordinances imposing a $13 minimum wage on top of billions in new taxes. Additionally, it comes as record-numbers of citizens leave the state making it impossible for retailers to grow sales.

House Amendment #1 to HB 198 does not contain language preempting local governments from regulating labor so they are free to continue this ever-upward spiral effectively killing what little opportunity exists. Additionally, the amendment contains a tax credit for employers with fewer than 50 employees. This tax credit has the effect of delaying full implementation for such employers for one year. It is also the first time the proponents have publicly admitted there is a cost to such increases. Historically, they have steadfastly denied such an impact.

IRMA anticipates House Amendment #1 to HB 198 will be considered by the full House within the next few weeks.

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PAID SICK LEAVE

 

HB 2771 Amendment #1 (Rep. Christian Mitchell, D-Chicago) and SB 1296 (Sen. Toi Hutchinson, D-Chicago Heights) were both advanced out of their respective committees this week.  Both bills will be amended to reflect much of the same language of the existing Chicago and Cook County ordinances that will take effect on July 1st.  While the bills are not direct copies of the ordinance language, they reflect most of the ordinances key components.  As we did in both Chicago and Cook County, IRMA testified in opposition.

Layering another costly mandate on top of significant tax increases that are certain to come, will present employers with a significant challenge.  Employers large and small never get the benefit of experiencing costs in a vacuum.  They will see this mandate in combination with other government-imposed costs without any corresponding increase or accounting for revenue.  Many businesses are already in a precarious financial position and this bill ensures that the challenges will keep coming.  As Illinois bleeds consumers at an alarming rate, there is no opportunity to grow sales. Nevertheless, the House Economic Opportunity Committee passed the bill out on a party line vote of 7-5-0 and the Senate Labor Committee did the same with a vote of 11-3-0.  Both bills may be further amended before being called on the floor.

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RETAIL DISCOUNT

 

This week, Sen. John Mulroe (D- Chicago) introduced a proposal (Senate Amendment #1 to SB 472) that included eliminating the Retail Discount. This is the 1.75% Illinois retailers are allowed to retain as a partial reimbursement for serving as the administrator and collector of sales taxes imposed by the state and units of local government. The inclusion of the Retail Discount in the proposal adds insult to injury as retailers are underwriting the collection of sales tax and are not even reimbursed for their true costs.

We fully expect others to look make similar proposals in an effort to avoid having to make the truly difficult decisions to correct decades of fiscal mismanagement. IRMA is ready to defend the Discount and urges members to contact their State Senator to express opposition.

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DATA PRIVACY – RIGHT TO KNOW

 

HB 2774 Amendment #2 and Amendment #3 (Rep. Art Turner, D-Chicago) was heard in the Cybersecurity, Data Analytics and IT Committee this week.  IRMA testified in opposition. This bill requires that companies which share or sell data to third parties must tell consumers, upon request, what personal information has been shared or sold and with whom the information has been shared or sold.  It seems like an easy enough request, but presents a major challenge for companies that have various ends of their business that collect and share data.  For instance, companies that have their own credit cards, loyalty programs, apps, and/or website may collect and share different kinds of data at different times.  Data is also shared in order to conduct surveys with third party manufacturers of products sold in stores.  All of the data is not kept in one neat box to pull from upon customer inquiry.  Businesses will have to build out a mechanism to search and find data that has been shared.  There is a cost and time component to that effort that would be better used doing things that would actually protect consumers, such as reinforcing software programs used to catch predators seeking to breach collected information.

This bill is based on the state of California’s “Shine the Light” law which is much more narrowly focused in scope.  That law requires disclosure to persons that have an established business relationship if information is shared for direct marketing purposesHB 2774 has no such qualifiers.  It is much more expansive.  In addition, the bill defines personal information very broadly.  It can be something as simple as a person’s address which can be found through a simple Google search, or even information that people put out on the internet themselves like educational information that a person may post to LinkedIn.

The state of Illinois has already protected consumers through updating the Personal Information Protection Act (PIPA).  PIPA requires companies to notify consumers when personal identifying information has been breached that could cause consumers financial harm or put them at risk of identity theft.  Consumers can then do things to protect themselves such as seek new credit cards and put fraud notifications on credit reports.  HB 2774 doesn’t provide the consumer with any actual protection, just knowledge that information has been shared.  In fact, notice about information sharing practices can be found in a company’s privacy policy today.  This bill doesn’t give consumers any further protections than what they have already.  It would instead require businesses to divert precious resources that could be better used to focus on protecting the data that companies collect.

We should also note that political organizations organized under 501(c)(4) are exempt from the bill.  This means that Super PACs and data collection arms of political organizations could collect, share and sell without providing any notice to voters.

In order to give the sponsor more time to work on amendments and to give the committee more time to ask questions of advocates and industry, the bill was passed out of committee 6-0 based on the sponsor’s promise the bill will be brought back to committee for further discussion.

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DATA PRIVACY – GEOLOCATION INFORMATION

 

HB 3449 (Rep. Ann Williams, D-Chicago) is a bill that would require companies that use geolocation services through an app to provide a way for users to affirmatively consent to that use.  The consent must be through a hyperlink or other action that will require the consumer to show that they have consented to the specific use.  Therefore, mentioning that such activity will be used in a privacy policy is not enough.

To date, there has been no evidence presented that there is something different about geolocation information and any other data that is collected that would warrant an affirmative notice outside of a company’s privacy policy.  It is widely understood that geolocation services can be turned off by a person on their device either through the app or through the phone or tablet.  With such a simple remedy already available to consumers, retailers are concerned that the bill will mostly be used by trial attorneys seeking to create class actions and file lawsuits based on technicalities.  This is a trend that Illinois should refrain from setting.  The bill is being pushed by a law firm that has filed class action lawsuits against companies like Facebook and Google in California, and it is possible that similar lawsuits could be filed against Illinois based companies if this law was passed.  The power to control whether geolocation services are used is already in the consumer’s hand.  This bill provides no further protection.  IRMA testified in opposition.

Considering the impending committee deadline, the bill was passed out by a vote of 6-4-0 with the understanding that amendments would be brought back to committee for further discussion before moving to the House floor.

 
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ORDER OF PROTECTION REASONABLE

ACCOMMODATION MANDATE

 

HB 647 (Rep. Stephanie Kifowit, D-Aurora) would require a retailer to provide ‘reasonable accommodation’ for any employee that has an order of protection against an individual. This ‘reasonable accommodation’ includes changing the employee’s email address, telephone number, screening their telephone calls, restructuring their job functions, changing their work location, installing locks and other security devices, and allowing the employee to work flexible hours.

Retailers do not have locked gates, security checkpoints or any other measure that deters customers from entering their stores.  Retailers must encourage consumer interaction. Additionally, some retailers are open 24-7 to accommodate the public.  Very few, if any, retail associates have their own work emails or work phone numbers.  Moreover, depending upon the skill set, training, or knowledge of the individual employee, retailers cannot ask a greeter to become a cashier, or the barista to work in the sports section, or the cosmetic clerk to work in the technology center, or the hostess to become a cook, or the cashier to work in the pharmacy. Even if this were possible in limited circumstances, this “restructuring” would move the employee no more than a few hundred feet from their original job function in a space that is open to the public. Consequently, a retailer would not be able to provide the reasonable accommodations required under this legislation.

The Victims’ Economic Security and Safety Act (VESSA) already applies to the circumstances of HB 647 and provides a balance between the needs of the employer and the employee. For instance, the current law already recognizes the unique position a retailer holds with the public and provides consideration for this public accommodation.  While opponents were not allowed to testify in committee, the legislation passed out of the Judiciary – Civil Committee on a vote of 6-4 because the sponsor agreed to bring an amendment back to committee for additional consideration.

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FOOD ALLERGEN TRAINING

 

A bill that would require redundant allergen training and additional fees passed out of committee with a promise to bring an agreed amendment back to committee. HB 2510 (Rep. Sarah Feigenholtz, D-Chicago) requires additional allergen training for those holding a Food Service Sanitation Manager Certification (FSSMC). This is an initiative of the Illinois Restaurant Association (IRA) and the National Restaurant Association. This is similar to legislation enacted in Virginia, Massachusetts, Michigan and Maine. The current FSSMC training already contains a 90 minute segment that includes discussion of allergens.  As such, an FSSMC holder will now be required to pay another fee for another training program. Additionally, the IRA believes that the additional training is necessary to remain ‘progressive’ in the restaurant industry. To that point, any restaurant can voluntarily choose to require their employees to receive additional training without passing a law that mandates additional redundant requirements and expenses on every restaurant in Illinois.

On the agreement that the sponsor would bring an agreed bill back to committee, the legislation passed out of the Consumer Protection Committee on a vote of 5-0. IRMA will be neutral if and only if the following occurs: (1) the training would only be required for restaurants under the Category I food establishments pursuant to the Food Enforcement Act; (2) Category II and III food establishments (i.e. convenience stores, gas stations, grocery stores, etc.), would be exempt; and, (3) any restaurant that has an internal food training program on file with the Department of Health as of a certain date would be exempt from the extra training.  IRMA does appreciate the efforts of Rep. Feigenholtz to reach a workable compromise.

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REMOTE SELLERS

 

Legislation to level the playing field between brick-and-mortar stores and online retailers when it comes to the collection of the Illinois sales tax, advanced to the House floor this week. The idea is to require remote sellers who do not collect the Illinois sales tax to submit notices to online purchasers about their tax liability. Illinois has already passed legislation requiring remote sellers to collect and remit the Illinois sales tax.

HB 3057 (Rep. Bob Pritchard, R-Sycamore) provides that retailers that have more than $100,000 in gross sales to Illinois purchasers in the previous year and do not collect the tax under the Illinois Use Tax Act must:

  1. provide a notice to each Illinois purchaser that the tax under the Act is due on purchases that are not tax exempt and that the State requires the Illinois purchaser to file a return under the Act;
  2. provide a notice to each Illinois purchaser who purchases more than $500 worth of goods in a year containing specific information about purchases that may result in Illinois use tax liability; and
  3. file an annual report with the Department of Revenue showing the total amount paid for purchases by those Illinois purchasers during the preceding calendar year.

 

The legislation exempts any retailer that currently collects a sales tax under the Use Tax Act. Therefore, the intent of the legislation is to target companies with online sales only.  The legislation is modeled after a Colorado law that was implemented in 2012. A legal challenge by the Data & Marketing Association (DMA) failed. To this point, the Colorado Department of Revenue has struggled to administer and enforce the requirements on a business that has no physical presence in the state.

The legislation passed out of the Revenue & Finance Committee by an 11-0 vote. IRMA supports the legislation as drafted.

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SNAP PHOTO ID

 

SB 1709 (Sen. Chapin Rose, R-Champaign) would have required the Department of Human Services to seek a waiver from the federal government so that it could include photos on each LINK card issued under the Supplemental Nutrition Assistance Program (SNAP).  The bill is modeled after a similar program in Massachusetts where the federal government granted that state to include photos on benefits cards in order to help reduce fraud.  The program has been found to be very costly in the states that have attempted to implement it and the return on fraud has not been worth the effort.  Estimates for Massachusetts just in the upfront costs of adding the photos have been around $2.5 million.  When Pennsylvania did the math, it determined that the cost of their cards would have jumped from $.23 per card to $7.77.  New York dropped the issue due to the rising costs of implementing the program and Missouri overturned its law due to the cost.  Meanwhile the federal government has worked hard to improve the program and tackle fraud head on.  They introduced cards with PIN numbers, states now have the ability to check the Social Security Death file, states can check the prison system as well for disqualified applicants.  While imperfect, the SNAP program is a vital program for needy families and the LINK card is used by everyone in the household.  Therefore a photo ID could limit legitimate use of the card.  Moreover, due to equal treatment provisions enforced by the federal government, coupled with rules developed by VISA, retailers are actually not able to check the photo ID for verification.  So the state would expend resources for photos that are ultimately not used for what they were designed to do.  Both sides presented testimony in the Senate subcommittee on Special Issues and the bill failed to pass.

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TOBACCO MERCHANDISING

 

HB 3809 Amendment #1 (Rep. Sonya Harper, D-Chicago) attempted to regulate the sale of tobacco by requiring that it be placed no less than 5 ft. away from candy.  The sponsor had concerns that children might be enticed by brightly colored candy being placed in close proximity to colored packages of tobacco.  While there was no concern that children were buying tobacco products from convenience stores and gas stations, there was concern that the image might entice them to buy when they became legally eligible to do so.  IRMA provided testimony in opposition to the bill reminding the committee that there has been no uptick in the sales of tobacco to minors and that the latest data from the City of Chicago states that tobacco use among teens is the lowest that it has ever been.  Teen smoking in Chicago is actually lower than the national average.  Convinced by the evidence and hesitant to get involved in retail merchandising, the Consumer Protection Committee voted against the bill and it will remain in committee with a vote of 2-3-0.

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VAPOR PRODUCTS RETAIL LICENSE

 

Federal regulations and the City of Chicago treat vapor products like tobacco products and therefore regulate them in the same manner. In an attempt to avoid being regulated like a tobacco product, the vapor industry introduced HB 3877 CA#1 (Rep. Kathleen Willis, D-Northlake) to create a separate statute that will govern vapor products and vapor product retailers.

The Vapor Products Regulatory Act (“Act”) requires a retailer selling vapor products to pay a fee of $75, requires recordkeeping, provides for training, regulates the display of products, and provides for fines and fees.  In an ironic twist, all of these provisions are identical to the provisions in the Cigarette Tax Act, the Tobacco Products Tax Act of 1995, the Prevention of Tobacco Use By Minors and Sale and Distribution of Tobacco Products Act, and the Display of Tobacco Products Act. HB 3877would only apply to a retailer that sells vapor products and exempts any retailer that is subject to the aforementioned tobacco acts. Therefore, if a retailer sells both vapor products and tobacco products, the retailer would be exempt from the vapor product regulations.

The legislation passed out of the Business & Occupational Licenses Committee with an 8-1 vote.  Due to the aforementioned exemptions, IRMA is neutral.

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CRIMINAL LIABILITY FOR BUILDING  OWNERS AND MANAGERS

 

Amendment #3 to HB 531 (Rep. Kathleen Willis, D-Northlake) is an agreed amendment that was the result of several rounds of negotiations between the sponsor and owners and managers of commercial buildings.  The amendment would create an offense for injury to first responders when they are hurt due to dangers that exist in buildings that the owner or manager knew about and actively concealed.  The resulting injury must have been the primary cause of the injury or death in order to be charged under the Act.  The amendment clarifies that the new cause of action does not result from unknown dangers.  The earnest negotiations produced a bill that is narrowly tailored to address the issue and allowed the opposition, which included IRMA, to change its position to neutral.  The bill passed out of the House Fire & Emergency Services Committee unanimously.

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GUN DEALER LICENSING

 

SB 1657 (Sen. Don Harmon, D-Oak Park) would require all sellers of guns and ammunition to apply for a state license to sell.  Gun dealers are already licensed and inspected by the federal government.  This license would allow the state to separately inspect locations and possibly take licenses away for violations of the Act.  IRMA was a part of the negotiations last legislative session to discuss the licensing effort and it was decided at that time that retailers that do less than 20% of their sales in guns and ammunition were not the target of this bill and such retailers would be exempt from licensing requirements.  The exemption would certainly be revisited if it is later found that such retailers have not been acting as good stewards of the privilege of selling firearms in Illinois.  IRMA was assured that an amendment will be added soon containing this exemption.  The Senate Judiciary Committee passed the bill with a vote of 7-5-0.

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BUSINESS DAY APRIL 26th

 

See lots of issues that negatively impact your business? Register now to attend Business Day 2017 on Wednesday, April 26th. Business Day is the largest gathering of employers like you in the state. It is the perfect opportunity to network with your peers and voice your collective concerns directly to policymakers. The day will begin with a luncheon keynoted by Matthew Dowd. Mr. Dowd will share insights on federal developments as well as cultural and economic trends. A renowned political strategist who has served notable candidates on both sides of the political aisle, Mr Dowd lends his expertise and insights as a special correspondent for ABC News. Business Day attendees will visit policymakers at the Capitol and mingle with them in an informal setting at the legendary ‘party under the tent’. Make plans now to attend!

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