This Week in Springfield, – 100-16

In This Issue:

WHERE ARE WE NOW?
MINIMUM WAGE
PAID LEAVE
COMPENSATION HISTORY
WORKERS’ COMPENSATION
TELECOM MODERNIZATION
GEOLOCATION
RIGHT TO KNOW
EMPLOYEE TRANSPORTATION BENEFITS PROGRAM
CATFISH LABELING
FOOD ALLERGEN TRAINING

 

This Week In Springfield, the scheduled adjournment deadline of May 31st passed with the state no closer to the budget and economic reforms necessary to return Illinois to economic preeminence. Illinois has now gone over 700 days without a budget.

WHERE ARE WE NOW?

Based on the failure to yet again adopt a state budget, bond rating agencies awarded Illinois with yet another ignominious headline: lowest bond rating received by a state in US history. That puts Illinois literally one step above ‘junk bond’ status. The result is that Illinois’ borrowing costs will be significantly more expensive putting added pressure on the fiscal crisis. Illinois’ unpaid bill backlog now exceeds $14 billion. Additionally, there is little progress on reforms needed to return stability to Illinois. As IRMA has long noted, there is no stability without restraint. On the state level, that requires not only long term spending restraint but restraint on imposition of other unfunded cost mandates. The combination of tax increases and cost mandates can and will be crippling. Additionally, lawmakers must exercise their constitutional authority to impose restraint on local governments from doing the same. One need look no further than  the City of Chicago and Cook County and what they have done with devastating results particularly outside of the Loop and more affluent pockets.

As noted previously in TWIS, attempts at a bi-partisan ‘grand bargain’ failed to come to fruition in the Senate with each side pointing the figure at the other. The Senate Democrats eventually passed their own $37 billion budget (SB 6) funded by $5.4 billion in new revenue (SB 9). The House Democrats could not agree amongst themselves on the right combination of tax increases prior to June 1st. Among the numerous provisions they were considering was a minimum corporate income tax of $5,000 regardless of profitability as well as capping the Retail Discount. The latter is especially offensive as the retail sector has not special tax breaks/credits as do many other business sectors, the Discount is a reimbursement for services provided to the state and it is a partial reimbursement at best. The House appropriation committees will hold a series of budget-related hearings over the next few weeks starting next Thursday, June 8th. They hope is to get some sort of budget and tax package by the end of the state’s fiscal year on June 30th.

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MINIMUM WAGE

Compared to its border states, Illinois already has the highest minimum wage. Now Illinois is on the verge of having the highest in the nation, along with California and New York, as lawmakers passed a $15 minimum wage in the closing hours of the regular session.  SB 81 narrowly passed the House with a 61-53-2 vote and the Senate with a 30-23-2 vote.  The legislation increases the minimum wage from the current $8.25 to $15 by 2022. It also includes an income tax credit designed to appear to provide relief for employers with fewer than 50 employees. After decades of denial, this is the first time the proponents have admitted a minimum wage increase imposes costs. However, the proposed credit is so complicated as to effectively discourage its use.

It is clear the vote has little to do with realistically raising the minimum wage and more to do with the toxic political atmosphere that is consuming Illinois. The 2018 election cycle is already in full swing. As Democratic State Representative Scott Drury (D- Highwood) noted during debate on the House floor, the Democrats had majorities or super-majorities in the House and Senate as well as the governorship from 2008-2014 and did not pass a $15 minimum wage but did so with a Republican governor in office.

IRMA testified numerous times in opposition as well as organized the coalition in opposition. We will now turn our attention to attempting to secure a veto. What the proponents cannot address is how they expect employers to grow sales to account for the new mandates and taxes being imposed by local governments, and eventually the state, when tens of thousands of consumers are leaving Illinois each year.

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PAID LEAVE

HB 2771 SA #1 and SA #2 (Rep. Christian Mitchell, D-Chicago/Sen. Toi Hutchinson, D-Chicago Heights) seeks to impose paid leave requirements statewide. It narrowly passed the Senate 31-17 and is awaiting concurrence by the House. A significant flaw is that employers will not be able to tie benefits to their fiscal year.  Instead, companies will have to tie benefits and carry those benefits over either on January 1st or the date that the employee started working for the employer.

Changing how companies distribute benefits so that it will be more costly and complicated to administer may not be the goal of the advocates and sponsors, but it will be the result.  No other paid leave policy in the country, other than, of course, Chicago and Cook County, has such a mandate.  Only in Illinois are things made unnecessarily complicated.

IRMA opposes the substance of the bill that adds more costs to the employer without accounting for a corresponding increase in revenue to the business. Again, Illinois’ population continues to decline raising the question of who employers are expected to increase sales to account for these unfunded cost mandates. The House recessed without voting on the motion to concur. While the bill has had its deadline extended until June 30th, a super-majority will be required in the House meaning at least four Republicans will have to vote for it.

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COMPENSATION HISTORY

Illinois will soon prohibit an employer from viewing, asking about, or requesting the previous salary, wage, benefits or other compensation of any applicant for employment if, as expected, HB 2462 (Rep. Anna Moeller, D-Elgin/Sen. Daniel Biss, D-Skokie) is signed into law

While IRMA opposes discrimination in any form, there are legal questions surrounding prohibiting an employer from asking a prospective employee about previous wage and salary.  The City of Philadelphia passed an ordinance with similar language that prohibits an employer from asking a prospective employee about their previous wage and salary. Subsequent to passage, a lawsuit was filed in federal court on the grounds that the ordinance violates the First Amendment and the Commerce Clause of the United States Constitution.  If adopted, the Illinois statue would face the same deficiencies.  The statute prohibits a business from asking a simple question which in of itself does not discriminate or harm an individual so would not rise to the time, place, manner analysis which is required of a free speech prohibition. Additionally, the statute impacts commerce that takes place outside of Illinois boundaries. For instance, if a Missouri resident is interviewed in Missouri for a job in Illinois, does the statue apply? Or vice-versa, if an Illinois resident is interviewed in Illinois for a job in Missouri does the statute apply? If the answer is yes, then the statute arguably attempts to control activity outside of Illinois’ border and is subject to a federal Commerce Clause analysis. Additionally, the 9th U.S. Circuit Court of Appeals in California cited a 1982 ruling by the court that said employers could use previous salary information as long as they applied it reasonably and had a business policy that justified it.

Finally, the initiative assumes it will deter the bad actors from discriminating against a woman. Let us assume, for sake of argument that Company A is going to intentionally pay a woman less than a man for the same position. If the goal is to prevent Company A from paying the woman less, how does not knowing the previous salary of the prospective employee achieve that goal? Or consider the example of a woman who has a relatively high salary and shares her salary expectations with a prospective employer. Consider the other female candidate does not. Will the employer assume that the candidate who did not share her current salary information is paid less and make a corresponding offer? The bottom line is HB 2462 does not prevent someone from offering a lower wage to a woman for the same position then they would offer a man. If anything, it makes it easier therefore furthering what inequity exists rather than solving it.

Despite the aforementioned basic questions and concerns, HB 2462 (Rep. Anna Moeller, D-Elgin/Sen. Daniel Biss, D-Skokie) passed the House with a 91-24 vote and the Senate with a 35-18-1 vote and has been sent to the Governor for his signature.

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WORKERS’ COMPENSATION

Democratic lawmakers passed workers’ compensation reform that is expected to be vetoed by the Governor. 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 and House vote of 64-51.

Additionally, lawmakers passed HB 2622 (Rep. Laura Fine, D-Glenview/Sen. Daniel Biss, D-Skokie) that would take $10 million in employer money 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 changed its workers’ compensation system in 2011 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’ and self-insured companies paid an estimated $2.75 billion in workers’ compensation benefits in 2014, according to the National Academy of Social Insurance. By contrast, employers in Indiana paid an estimated $589.2 million. Additionally, Illinois’ employers pay $2.23 for every $100 in payroll, while those in Indiana pay $1.05—the national median is $1.84. Today, Illinois is tied for having the eighth-most expensive premiums in the nation. Supporters of HB 2622 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.

HB 2622 passed the House with a partisan vote of 67-51 and the Senate with a vote of 32-20-1. Both initiatives are expected to be vetoed by the Governor.

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TELECOM MODERNIZATION

The telecommunication modernization bill passed both chambers In the waning hours of May 31st. SB 1839 (Sen. Bill Cunningham, D-Chicago/Rep. Brandon Phelps, D-Harrisburg) allows telecommunications carriers to stop spending resources on old copper wire infrastructure and instead focus all their resources on fully developing  a modern flexible telecommunications infrastructure that provides for today’s ever evolving mobile technologies.   It also includes an amendment that would stabilize Illinois’ 911 infrastructure.

The statute that currently implements the funding for 911 systems was set to expire on June 30th. If the statute expired, 911 call centers would be left without money for basic operations which would potentially have left Illinois residents without a 911 system. Rather than only extending the sunset, lawmakers also requested additional fees and taxes which included an increase in Chicago from $3.90 to $5 per phone line, assuming the City Council approves such an increase, and a downstate increase from 87 cents to $1.50 per phone.  The measure passed both chambers with overwhelming bipartisan support. Specifically, SB 1839 passed the House with a vote of 81-27-2 and the Senate with a vote of 53-3-1.

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GEOLOCATION

HB 3449 SA #4 and SA #5 (Rep. Ann Williams, D-Chicago/Sen. Thomas Cullerton, D-Villa Park) sought to 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.  But this requirement would not apply to everyone.  In fact, the list of entities exempt from the bill is almost as long as the bill itselfThose exempted include political parties, political campaigns, candidates for public office, financial institutions, and private detective/alarm companies.  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,
  • 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.

For everyone else, the consent must be obtained through a hyperlink or other action that will require the consumer to actively agree to the specific use.  Therefore, mentioning in the company’s privacy policy that geolocation services are used is not enough to satisfy the requirement in the bill.

This is yet another example of Illinois regulating where regulation wasn’t needed. 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 each individual  app, through the phone or tablet itself, or both.  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.  After debate on adopting the concurrent amendments made in the Senate, the vote failed in the Cybersecurity, Data Analytics and IT Committee with a vote of 5-2-3.  IRMA would like to thank those who voted against this unnecessary regulation.

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  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 although it confuses ‘personally identifiable’ and ‘personal information’.  While it has not yet passed, it establishes a troubling standard. This bill will require any company with an online presence that collects data from consumers to identify the categories of information collected.  Therefore, this bill will apply to most companies that have a website although it will not apply to companies with no physical presence in Illinois.  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.

The proposal seeks to expand what constitutes ‘personal information’ to the breaking point. Under the proposal, personal information could be 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.  As an example, if a manufacturer of washing machines asks each of the retailers that sell its products what the age of the purchaser is, this would viewed as ‘personally identifiable information’ even though it is not tied to any individual. There is no way that sharing personally unidentifiable information can be construed as personal that would require some heightened level of privacy or care.

After many rounds of negotiations, the bill now allows the company to choose to either respond directly to customer requests or generally list all categories of personal information that the company shares or sells about any customer and list all of the third parties that receive such information unless they qualify under an exemption.  This way, a company will not have to respond to each individual request and can make the choice to provide all of the information up front either in its privacy policy or elsewhere in its agreement with the customer.

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.

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 because it was basically unenforceable.  Lastly, it inserts a cure period of 15 days and adds yet another exemption, this time for 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 was called for a vote on the House floor and failed to receive enough votes to pass.  The sponsor moved for postponed consideration and now the deadline will be extended to June 30th.

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EMPLOYEE TRANSPORTATION BENEFITS PROGRAM

HB 2802 SA #2 (Rep. Theresa Mah, D-Chicago/Sen. Martin Sandoval, D-Cicero) seeks to require employers located in specific areas of the Regional Transportation Authority (RTA) with at least 25 or more full-time employees in those designated areas to set up a program that would allow all employees to take a pre-tax benefit in order to purchase their transit passes or to pay for parking at or near their place of business.  If the employee chooses not to take the benefit pre-tax, there will be no obligation by the employer to pay for the benefit outright.  The benefit would kick in for the first check issued after the employee has been on the job for 120 days.

This bill is based off of similar legislation that exists in New York City, Washington, DC and San Francisco.  Illinois would be the first state to pass such a mandate.  Companies are allowed to voluntarily participate in these programs today in Illinois, and the RTA and CTA have their own program set up for employers.

There has been significant push back from the employer community as this bill largely affects employers in Cook County.  Those same employers are currently working to implement a series of complicated and costly mandates recently leveled onto them by the city of Chicago and the Cook County Board.  Having to consider implementing another mandate is more than they can handle right now.  Especially, since more work could be done simply in marketing the RTA and CTA programs to employers.  The House sponsor has agreed to hold this issue while we continue to have talks during the summer about what more could be done to market the existing programs and understand the current challenges facing the employer community in Cook County and surrounding affected areas.  The latest amendment was unanimously adopted onto the bill in the Senate Transportation Committee with the understanding that we would continue to work on the issue over the summer.

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CATFISH LABELING

SB 312 (Sen. Emil Jones, III, D-Chicago/Rep. Melissa Conyears-Ervin, 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 expressed 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 cannot 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 the House with a vote of 82-23-0 and, now that it has passed both houses, it will be sent to the Governor for approval.

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FOOD ALLERGEN TRAINING

Illinois joins Virginia, Massachusetts, Michigan and Maine as the only states that require additional food allergen training for restaurant workers. The current food safety sanitation manager certificate (FSSMC) training already contains a 90-minute segment that includes, but is not exclusively focused on, training on allergens.  HB 2510 (Rep. Sarah Feigenholtz, D-Chicago/ Sen. Antonio Munoz, D-Chicago) would require an individual receiving a FSSMC to receive and pay for a separate allergen training course.  The requirement only applies to local Illinois restaurants. Multi-state restaurants and franchisees are exempt if they have an internal food handling program on file with the Department of Public Health by August 1, 2017; if they have an internal food allergen training program that meets the requirements of the statute; or if they have a food allergen training program approved in another state.  The legislation passed the House with a 77-32 vote and the Senate with 34-16 vote and now goes to the Governor for his consideration.
 
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