This week in Springfield, attempts at a ‘grand bargain’ on a variety of issues in the Senate came to an end with the Senate Democrats adopting a go-it-alone approach while both chambers prepare to put politically sensitive wedge issues on the floor for votes during the waning days of session.
SENATE DEMOCRATIC BUDGET
After discussions between the Senate Democrat and Senate Republican negotiators broke down, the Senate Democrats passed a ‘go it alone’ approach that would provide $5.4 billion in new revenues (SB 9 Sen. Toi Hutchinson, D- Chicago Heights) intended to fund state spending of approximately $37.3 billion in a proposed budget (SB 6, Sen. Heather Steans, D- Chicago).
SB 9 provided that if revenues are expected to generate more than 2.4% of what was realized in the previous fiscal year, then the Governor must include in his budget monies to reduce the unpaid bills by the lesser of: (1) 50% of the revenues that exceed 2.4%, or (2) the revenues needed to reduce the unpaid bill backlog to $1 billion. Additionally the individual income tax would be increased from 3.75% to 4.95%. The income tax on corporations would be permanently increased from 5.25% to 7.0%. SB 9 also imposes a “means test” on the property tax credit, education expense tax credit, and the standard exemption. It creates a new $250 tax credit for instructional materials and supplies and increases the Earned Income Tax Credit (EITC) from 10% to 15%. The Research & Development (R&D) tax credit is permanently extended and modernized while the Manufacturers Purchase Credit and Graphic Arts exemption are merged into the Manufacturers Machinery & Equipment exemption and made permanent. Additionally, the Outer continental shelf exclusion, Non-combination rule, and Decouples from the Qualified Production Deduction were repealed.
The 6.25% sales tax on tangible personal property sold at retail would be expanded to include some services to consumers. The services included are: storage, landscaping, personal care (this does not include massage therapy, such services provided as part of medical care, or the styling, cutting, or coloring of hair), pest control, dry cleaning/laundry, and services provided by private alarm, private detective, or private security services. Business-to-business transactions are exempt as are legal, medical care, and accounting. Home rule cities and Cook County, that impose their own local sales tax, are allowed to tax services at the same rate they tax sales. As an example, if a municipality has a 2% sales tax, in addition to the state’s 6.25%, that municipality can apply their sales tax to the same services the state taxes. Satellite television would be taxed at 5% and video streaming services (e.g. Netflix, Amazon, Hulu, etc.) would be taxed at 1%.
SB 9 would reduce filing fees from $500 to $39 for filing organization (foreign), articles of incorporation (domestic) and from $750 to $59 for the same for limited liability companies. A loophole is closed that would allow local units of government to tax items by weight or volume. Additionally, the False Claims Act is amended to exclude from its provisions all taxes administered by the Illinois Department of Revenue.
The Senate Democrats did include some cuts in their proposed budget including a 10 percent cut for higher education, a 5% cut for state agencies, and a 15% reduction in the budgets of the offices of Governor and Lt. Governor. The budgets of the offices of Attorney General, Secretary of State, State Comptroller, and State Treasurer, all held by Democrats, were not reduced. Elementary and secondary education would receive an increase of $330 million.
Senate Bills 6 and 9 passed the Senate on partisan roll-calls and now advance to the House. SB 9 was picked up by Republican State Representative Jeannie Ives (R- Wheaton) so it is not expected to move as Rep. Ives is strictly anti-tax. SB 6 was picked up by State Representative Greg Harris (D- Chicago). However, it is expected that the House will make substantial changes to SB 6. What, if any, revenue bill the House produces remains to be seen.
$15 MINIMUM WAGE
A $15 dollar minimum wage amendment was filed Friday and a vote is expected Monday. House Amendment #1 proposes increasing the Illinois minimum wage on the following schedule:
- January 1, 2018 – $9.00 per hour
- January 1, 2019 – $10.00 per hour
- January 1, 2020 – $11.25 per hour
- January 1, 2021 – $13.00 per hour
- January 1, 2022- $15.00 per hour
The aforementioned scheduled increases will apply to:
- Employees 18 years of age or older; or
- Employees under 18 years of age who work more than 650 hours for the employer during any calendar year.
Employees under 18 years of age who work less than 650 hours in any calendar year are to be paid as follows:
- January 1, 2018 – $8.00 per hour
- January 1, 2019 – $8.50 per hour
- January 1, 2020 – $9.25 per hour
- January 1, 2021 – $10.50 per hour
- January 1, 2022 – $12.00 per hour
An income tax credit is proposed for any employer who employs fewer than 50 employees. The credit is equal to the maximum credit multiplied by the number of hours the employee worked during the year. The credit can be taken for reporting periods that begin on or after January 1, 2018 and end on or before (1) December 31, 2025 for employers that employ more than 5 employees during the applicable period; and (2) December 31, 2027 for employers that employ no more than 5 employees during the period. The credit cannot be claimed for an employee who works less than 90 consecutive days immediately preceding the reporting period. However, the credits can be accrued during that period and be claimed for future reporting periods after the employee has worked 90 consecutive days. However, the employer is not eligible for the credit for a reporting period unless the average wage paid by the employer per employee for all employees making less than $55,000 during the reporting period is greater than the average wage paid by the employer per employee for all employees making less than $55,000 during the same reporting period of the prior year. In other words, if an employer is forced to reduce hours or employees in order to afford the wage increases, the employer cannot claim the credit.
Democratic lawmakers in the Senate passed two bills related to workers compensation that move Illinois farther from needed reform. HB 2525 (Rep. Jay Hoffman, D-Belleville/Sen. Kwame Raoul, D-Chicago) codifies current case law of “in the course of employment” & “arising out of the employment” maintaining the “any” cause standard established by the Sisbro Inc. v. Illinois Industrial Commission that has helped increase the cost of workers’ compensation. It also codifies Venture-Newberg Prini Stone & Webster v. Illinois Workers’ Compensation Commission by establishing factors for determining traveling employee status and expands liability by also establishing a traveling employee through a reasonable and foreseeable standard. It resolves the Will County Forest Preserve District v. Illinois Workers’ Compensation Commission that separated the shoulder from the arm when determining awards after one hundred years of precedence. Additionally, the legislation mandates insurance rate regulation increases fraud penalties, and adds new electronic billing penalty and new penalties for delay of authorization of medical care. The legislation passed on a partisan Senate vote of 35-19. It failed to address the medical fee schedule, AMA standards, permanent partial disability, or temporary total disability.
The second bill, HB 2622 (Rep. Laura Fine, D- Glenview/Sen. Daniel Biss, D- Chicago) creates a new state-run workers’ compensation insurance program designed to compete with private insurance companies despite the fact Illinois has one of the most competitive insurance sectors in the nation. The Fund would be created using $10 million in employers monies, the same employers paying the 8th highest workers compensation costs in the nation.
HB 2525 passed 35-19-1 and returns to the House for additional consideration. HB 2622 passed 32-20-1 and moves to the Governor’s Desk for his consideration. Both bills passed with only Democratic votes.
PAID SICK LEAVE
HB 2771 SA #1 and SA #2 (Rep. Christian Mitchell, D-Chicago/Sen. Toi Hutchinson, D-Chicago Heights) will require each employer to provide employees with up to 40 hours of paid sick leave in a 12-month period. While the advocates claim that employers with more generous paid leave policies will not need to change those policies in order to conform to the requirements in the bill, that will only be true if the employer follows the minimum requirements laid out in the bill. One of those requirements mandates that benefits start and roll over either on the start date of the employee or at the beginning of the calendar year. There are many employers who tie benefits to their fiscal year or some other date set by the company. If that is the case, then those employers will have to change their policies so that benefits are tied to the dates outlined in the bill. From the very beginning, IRMA has asked for this section to be changed so as not to completely disrupt the way benefits are given by companies that are already giving employees more than 40 hours of paid sick leave. In fact, no other paid leave policy has such a mandate.
It has never been explained why there is hesitancy to make this very simple change that would save employers time and money and would be seamless to employees without diminishing their benefits. If there is going to be a mandate on employers at this difficult time in our economy, more steps should be taken to ensure that employers are not unnecessarily saddled with arbitrary and unnecessary additional costs and operational burdens.
The Senate Labor Committee voted 12-4-0 to pass an amendment that exempts rail companies and clarifies the definition of healthcare providers, but that does not address our substantive issue. The bill will now be considered on the Senate floor.
HB 3449 SA #4 and SA #5 (Rep. Ann Williams, D-Chicago/Sen. Thomas Cullerton, D-Villa Park) would require companies that use geolocation services to provide a way for persons to affirmatively consent to the use of those services if the company is collecting, disclosing or otherwise using the precise location of the customer for any purpose even though the power to opt-out is already at each person’s finger-tips. But this mandate doesn’t apply to everyone. In fact, the list of persons exempt from the bill is almost as long as the bill itself. Yet, no viable reason was given as to why such exemptions should exist. Among those excluded from the mandate include, banks and candidates for public office, political parties and campaigns. Altogether, the bill DOES NOT apply to the following entities:
- covered entities subject to HIPAA,
- financial institutions and affiliates subject to Gramm-Leach-Bliley,
- internet, wireless and telecommunications service providers,
- cable and video service providers,
- certain governmental entities,
- persons licensed under the Private Detective, Private Alarm, Private Security, Fingerprint Vendor, and Locksmith Act of 2004,
- persons licensed under the Land Surveyor Act
- persons licensed under the Professional Engineering Services Act,
- public utilities
- candidate political committees,
- political party committees,
- political action committees,
- ballot initiative committees; and
- independent expenditure committees
All of the above entities can collect, use and disclose a person’s geolocation information without first obtaining their consent.
It is widely understood that the power to control geolocation services is already literally in the user’s hand. Such services can be turned off on a person’s device both through the app and through the phone or tablet. This bill is an unnecessary burden to businesses that have already given the user the choice to use geolocation services. It will require that the user give his/her consent upon first time use of the app, and also give consent whenever there is a material change to the specific purposes for which the information is collected, used or disclosed.
IRMA was a part of a coalition of groups opposed to the bill that offered language to narrow the bill to geolocation services that were employed outside of the ordinary course of business, but the language was rejected. The bill passed out of the Senate Judiciary Committee with a vote of 8-3-0 was moved to the Senate floor and passed with a vote of 33-22-0. It has now moved to the House for a concurrence vote.
RIGHT TO KNOW
SB 1502 HA #1 (Sen. Michael Hastings, D-Frankfort/Rep. Art Turner, D-Chicago) is now known as the Illinois Right to Know Data Transparency and Privacy Protection Act. This bill will require any company with an online presence that collects data from consumers to identify the categories of information collected. Companies will also have to provide a description of the customer’s rights if such information is shared or sold to 3rd parties. In addition, the bill requires that companies who share or sell information to 3rd parties, unless it fits into an exemption, disclose what information was shared and with whom. The bill sets out 26 categories of personal information that must, if shared, be highlighted.
It is important to note that “personal information” doesn’t mean that the information is “personally identifiable”. These are really two different concepts. Personal information could be a person’s name, or a person’s age or a person’s educational background, etc. There is no requirement that any of the information be tied to an actual person that could be identified. For example, if a retailer shares the ages of purchasers of a certain washing machine with its manufacturer, but it doesn’t share the customer’s names or any other information that could identify that person, that information is still considered “personal information” in the bill and would need to be disclosed. It doesn’t matter that the third party has no idea who the actual customers were that purchased the washing machine. SB 1502 requires that unnecessary time, money and resources be spent on providing information that does nothing to protect a person’s privacy.
SB 1502 is loosely based on the state of California’s “Shine the Light” law which is more narrowly focused in scope. That law requires disclosure to persons that have an established business relationship if information is shared for direct marketing purposes. SB 1502 has no such qualifiers. In fact, instead of using the definition of personal information as defined by the Personal Information Protection Act (PIPA) which requires that personal information actually be personally identifiable, this bill creates a completely new definition by making any piece of information, whether tied to a person or offered in the aggregate, “personal.” We would also note that information must be disclosed, even if a person shares the information themselves. For instance, if a person has a LinkedIn account and they post their picture, name, educational background, etc. for the entire LinkedIn universe to see, a company must disclose if they have also shared the same information that can be found by a simple Google search.
The latest amendment also addresses an issue raised repeatedly by IRMA which would have required companies to enforce prohibitions on 3rd parties sharing information. It deletes this requirement. Lastly, it inserts a cure period of 15 days and exempts hospitals.
Information should be able to be tied to an actual person if it is to be protected and considered personal. IRMA maintains that this bill is an overreach that could and should be narrowed in scope. The bill passed out of the House Consumer Protection Committee by a vote of 3-2-0 and will now be sent to the floor for further consideration.
SB 312 (Sen. Emil Jones, III, D-Chicago/Rep. Art Turner, D-Chicago) will give the state Department of Public Health and local departments of public health the authority to check restaurant invoices to ensure that if catfish is featured on the restaurant’s menu, the restaurant can prove that it received catfish from a federally regulated processor or manufacturer. The sponsor has concerns that catfish served in some fried fish restaurants and soul food restaurants around the state are selling Vietnamese catfish, which must be labeled “Swai” according to federal law, but are labeling it “Catfish” on the restaurant menu. If a consumer complaint is filed with the Department of Public Health, the inspector will check the invoices of the restaurant to see if it can prove that it indeed purchased catfish. If proof can’t be produced, then the restaurant will be given time to correct the menu. If the restaurant fails a second inspection, then a fine will be issued. Further violations could result in suspension of the restaurant’s license. The bill passed unanimously out of the House Consumer Protection Committee and will now be considered on the House floor.
HB 2957 (Rep. Laura Fine, D-Glenview/Sen. John Mulroe, D-Chicago) creates prescription synchronization for patients who have multiple prescriptions. This adherence is extremely important for patients on multiple maintenance prescriptions for chronic conditions (e.g. diabetes, blood pressure, cholesterol, etc.). Having different refill dates can make adherence challenging. SB 1546 allows for the coordination of refill dates (a.k.a. med sync) to increase adherence. SB 1546 requires insurers to allow patients who are on 2 or more maintenance prescriptions for a chronic condition to allow synchronization at least once per year. Med sync is not available for controlled substances. This is initiative passed the Senate unanimously with a 57-0-0 vote and will be sent to the Governor for his consideration. IRMA would like to thank both Rep. Laura Fine and Sen. John Mulroe for their work in providing safety and adherence protocols to individuals with chronic conditions.
HB 3684 (Rep. Kelly Burke, D-Oak Lawn/Sen. David Koehler, D-Peoria) removes an obsolete fee paid by restaurant and grocery retail workers. Illinois is one of only a few states that require a separate food handling certificate and fee in addition to a 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. HB 3684 passed both Houses unanimously and will be sent to the Governor for his consideration. IRMA would like to thank both Rep. Kelly Burke and Sen. David Koehler for streamlining the food handling statute while providing common sense relief to retail workers.