This week in Springfield a disturbing anti-employer narrative continued to build as proposals to increase the minimum wage to $15, shift the property tax burden to employers, remove the ability to pay employees based on merit, seniority, or production, and eliminate at-will employment that put employers and employees at risk advanced.
$15 MINIMUM WAGE
HB 198 Amendment #1 (Rep. Will Guzzardi, D-Chicago) seeks to raise the state’s minimum wage from the current $8.25/hour to $15.00/hour over a period of 5 years. The increase would begin on January 1, 2018 and increase every January 1st for all employees aged 18 years or older according to the following schedule:
- 1/1/2018: $9/hour
- 1/1/2019: $10/hour
- 1/1/2020: $11.25/hour
- 1/1/2021: $13/hour
- 1/1/2022: $15/hour
There is a limited income tax credit for employers of 50 or fewer employees. This credit does not extend to franchises or other similar business models that have more than 10 locations combined between the franchisor and all franchisees (or the equivalent) nationwide. The tax credit has the effect of providing an additional year for businesses with 50 or fewer employees to reach $15.00/hour. All current minimum wage exemptions will remain intact. Those exemptions allow an employer to (1) pay an employee $0.50 less per hour for the first 90-days of employment; or (2) pay employees under the age of 18 $0.50 an hour less than the minimum wage. As we did in the previous subject matter hearing, IRMA testified in opposition. The bill passed out of the House Labor & Commerce Committee on a partisan vote of 17-6-0 and has been sent to the House floor for additional consideration.
PROPERTY TAX SHIFT
HB 156 (Rep. Michelle Mussman, D- Schaumburg) seeks to shift several billion in property taxes from residential payers to employers. The shift comes by way of increasing the homestead exemption in Cook County by 14% and 33% in all other counties. This would make the homestead exemption uniform $8,000 statewide. Additionally, there are special tax breaks for senior citizens and veterans. The House debate was interesting in that many noted this was nothing more than political gamesmanship but they wound up voting ‘yes’ for fear of getting attacked for failing to provide property tax relief. While HB 156 received bi-partisan support as a result of these fears, it was the House Democratic response to Governor Bruce Rauner’s call for permanent property tax relief.
IRMA joined a long list of other entities in opposition with the Taxpayers Federation of Illinois (TFI) providing detailed testimony. TFI estimated that the homestead exemption would shift nearly $5.2 billion while the senior exemption would shift another $800 million in equalized assessed valuation (EAV). If applies across the board, TFI estimates this shift will add at least another 2% to the property tax bills of commercial and industrial property tax payers.
HB 156 now proceeds to the Senate for additional consideration.
GENDER PAY HISTORY
An initiative to prohibit employers from requesting the wage, salary, compensation and other benefits history of a prospective employee continues to progress through the General Assembly. IRMA has made it very clear that it can support an initiative that prohibits an employer from asking about prior wages and salary but cannot support an initiative that does not allow a company to base an employee’s salary or raise on seniority, merit, quality or quantity of production. These are the current defenses to an unequal pay claim in Illinois and almost every other state. HB 2462 (Rep. Anna Moeller, D-Elgin) would prohibit a company from using these common sense and practical measures as defenses if an employee can find any “alternative practice” used by any company in the United States for a similar job position. As such, an employee who has no experience but has the same educational and technical background as a person with 25 years of experience arguably must be paid the same. An employee who has a sales metric of $100,000 arguably must be paid the same as a person who has a sales metric of $1 million. This is contrary to how businesses operate in the real world. Additionally, courts have repeatedly upheld these processes as legitimate business measures that protect and promote employees. In fact, in a state of over 13 million people, only 266 claims have been filed in the last four years. Only 13 claims were found to have any merit. Only ½ of 1% of all businesses in Illinois are responsible for any paid out unequal pay claims. Companies spent more money defending frivolous claims than unequal pay claims were awarded by the courts. Frivolous claims will only be exacerbated by the fact the proposed legislation also provides for additional penalties that include but are not limited to compensatory damages, punitive damages, and special damages.
IRMA was told by the advocates of HB 2462 that we should support the bill because the Massachusetts’ Retail Association supported a law that the Illinois’ bill was modeled upon. IRMA does support the Massachusetts’ approach. Unfortunately HB 2462 bears no resemblance to the Massachusetts’ law. To date, that compromise has been rejected.
Legislation that would eliminate the ‘agreed bill process’ passed out of the Senate Labor Committee on the assurance of the sponsor he would work with opponents including IRMA. SB 1760 (Sen. Pat McGuire, D-Crest Hill) is a union initiative that would require an employer to furnish to a discharged employee a statement of reasons for the discharge. A discharge would be wrongful if the discharge was a constructive discharge, if it was not for good cause, or if the discharge was in violation of the employer’s personnel policy. Illinois would be the only state to have such a law.
SB 1760 would create a “good cause” for termination standard for all Illinois workers. It allows any employee, except those covered by a collective bargaining agreement (CBA), to challenge any termination or resignation as not being for “good cause” pursuant to the specific definitions in this bill. As defined, a discharge would be wrongful if; (1) it was a constructive discharge, (2) it was in retaliation for the employee’s refusal to violate public policy or for reporting a violation of public policy, (3) it was not for good cause and the employee had completed the employer’s probationary period for employment, or (4) the employer violated the provisions of their written personnel policy. Additionally, employers would be banned from providing truthful references. Any time an employee is terminated for what the company considers to be for good cause and in compliance with the law would be subject to the employee’s challenge. The legislation would also be in conflict with employer’s drug and alcohol policy and limit the employer’s ability to enforce that policy in a necessary and safe manner for the entire workplace. Finally, the legislation threatens the agreed bill process. Passage of SB 1760 would reverse the terms agreed to by labor during the agreed bill process.
FOOD HANDLER FEE REDUCTION
HB 3684 (Rep. Kelly Burke, D-Oak Lawn) removes an obsolete fee paid by restaurant and grocery retail workers. It passed the House unanimously by a vote of 114-0-0. Illinois is one of only a few states that require a separate food handling certificate and fee in addition to the national food handling certificate. Currently under Illinois law, an individual must complete an Illinois Department of Public Health (IPDH) approved training program and then pass an exam provided by an accredited exam provider. Once the individual pays for and passes the exam and receives the national certificate, he/she is required to electronically send the national certificate to the state and pay an additional $35 for a redundant Illinois specific certificate. When the Food Handling Regulation Enforcement Act was initially implemented, Illinois drafted, maintained, amended, mailed and graded their own examination. As such, an administrative justification existed for an additional fee. This Illinois specific exam no longer exists, therefore the administrative expenses no longer exist.
The legislation now moves to the Senate for consideration.
IRMA would like to thank Rep. Kelly Burke for her sponsorship and efforts in achieving passage in the House. IRMA would also like to thank Sen. David Koehler for sponsoring the bill in the Senate.
ATM FEE LIMITS
HB 1274 Amendment #1 (Rep. Arthur Turner, D-Chicago) would prohibit ATM withdrawal fees from being higher than $1.00, and would prohibit other costs and fees from financial institutions related to withdrawing cash from the ATM. This bill attempts to address the fact that fees have increased over the years and state government currently doesn’t have any control over how much a person can be charged when withdrawing money from an ATM. There are specific costs to the business for financial transactions, and businesses use these fees to help cover the costs of these transactions. As there is much competition in the ATM marketplace, the customer has the right to comparison shop and do business with financial institutions, or utilize ATM’s that give them the best value. The bill passed out of the Consumer Protection Committee on a partisan roll call of 3-2-0 and we expect that there will be more debate on the House floor.
Lawmakers passed an $817 million “lifeline budget” out of the House that would provide temporary funding relief to higher education and social service and health programs. This included $258 million for programs, including senior meals and crime prevention, and indigent burials. It also included $559 million for state universities, community colleges, and educational grants for low-income students.
Before the debate had even taken place, Governor Bruce Rauner had pledged to veto any stopgap measure absent property tax relief. As such, no Republican voted for the initiative and argued that the measure was just delaying a real fix to the problem.
IRMA joined an array of entities testifying in support of HB 2691 (Rep. Brandon Phelps, D-Harrisburg) that seeks to modernize Illinois’ telecommunications laws. Historically, retail is the most dynamic of the business sectors as we are in a constant state of change adjusting to changes in products, technologies, and consumer tastes and desires. As technology has evolved, the pace of change has accelerated and created tremendous opportunities and challenges. Illinois retailers need a modern and flexible telecommunications system in order to compete and meet the customized experiences consumers now expect.
JOIN US FOR BUSINESS DAY
The constant attacks to your business are real. State government stands poised to pile on instead of exercising caution. They are considering proposals to raise the minimum wage to $15, require paid sick leave, increase the threshold for felony retail theft to $2,000 or more, eliminate the retail discount, and the list goes on.
So what can you do about it? You can show up when it counts. Attend IRMA’s annual lobby day on Wednesday, April 26th. Bring a fellow business owner and have a frank discussion with legislators about the impact that all of these proposals will have on your business. Join the largest gathering of employers in Illinois each year. Additional information, including registration and sponsorships can be found here. We hope to see you there.