This Week in Springfield – 101-12

April 17, 2019

IN THIS ISSUE:

BUSINESS DAY 2019: BE HEARD
GRADUATED INCOME TAX
DATA PRIVACY
INTERNET CONNECTED DEVICES
PHARMACY BENEFITS MANAGERS
LIQUOR DELIVERY
RESTAURANT FOOD ALLERGEN NOTICE
RETAIL RESTROOM BABY CHANGING PLATFORM PASSES HOUSE
INTERNET LOTTERY
BPA BUSINESS RECORDS
COVERNANTS NOT TO COMPETE
CARPET TAX

Last week in Springfield the 3rd Reading deadline for the House and Senate expired. The members of both chambers are now back in their respective districts for a two-week in-district work break. They will return Tuesday, April 30th – the day before Business Day 2019.

BUSINESS DAY 2019: BE HEARD!

Graduated income tax, retail discount, felony retail theft threshold, paid leave mandates, and many more issues will be decided between now and the end of May. Wednesday, May 1st is a day of action for employers like you. A day to make your collective voices heard and to inquire of policy leaders and experts on issues of interest.

If you have not yet done so, register today and make your voice heard!

The day starts with an address from Governor Pritzker at the opening luncheon, subject panels on privacy, recreational marijuana, and the graduated income tax follow the luncheon with plenty of time after to interact with your elected officials at the Capitol and the Party Under the Tent.

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GRADUATED INCOME TAX

Last Wednesday, the Senate Executive Committee voted along party-lines to advance Governor Pritzker’s proposed graduated income tax constitutional amendment to the floor. Both the Senate and House must approve the proposal amendment by 3/5ths votes. If that happens, the amendment will go to the voters in the November 2020 election. If 60% of the voters voting on the question approve, it will be adopted. In brief, the plan allows for a graduated income tax. The highest tax on corporations cannot exceed the highest tax on personal income tax by more than an 8 to 5 ratio. As an example, if the highest personal rate is 10%, the highest corporate rate cannot exceed 16%. This would not include the additional 2.5% Personal Property Replacement Tax which would move the effective rate to 18.5%.

The Senate is expected to undertake consideration upon its return the first week of May.

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DATA PRIVACY

A proposed Illinois law would allow consumers to see or prohibit the use of their data by “big tech” companies. Behind the drive for a law is rising concern over the compromise of private data held by Facebook, Google and other tech giants that aggregate consumer information for commercial purposes. The industry traditionally has been lightly regulated and has resisted closer oversight.

These companies use analytic products to determine a user’s browsing path around the internet. By linking that information to an IP address and an associated account, a complete profile of a person can be assembled without the knowledge of the consumer. These companies then monetize the information and sell it to third parties outside the scope of the business transaction or business purpose that it was originally collected. As drafted, HB 3358 (Rep. Art Turner, D-Chicago/Sen. Tom Cullerton, D-Villa Park) creates the Data Transparency and Privacy Act and provides that an entity that collects personal information about individual consumers through the Internet must make disclosures to the individual regarding the collection of the information. It also establishes that a consumer has a right to opt out of the sale of the consumer’s information.

The legislation takes into account that retailers are required by state and federal law to collect, share, or process consumer information from sales at retail to submit sales taxes to the state, process a consumer transaction using a debit or credit card, provide Medicaid, WIC, or SNAP benefits, protect pharmacy patient information, develop a manifest to transport, ship or deliver goods, etc.

The bill passed the House by a 72-37-1 vote.

IRMA is neutral to the legislation as it passed the House and would like to thank Deputy Majority Leader Art Turner and the advocates for working to address IRMA’s concerns.

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INTERNET CONNECTED DEVICES

Laws at the federal and state level have long prohibited the unauthorized use of a device to record a person’s communications. Drafter’s of the federal Wiretap Act and Illinois’ existing wiretapping law focused on the activity prohibited rather than the technologies that are used to engage in the activity. The drafters understood that technological advancements would continue to provide convenience for individuals, but individuals’ actions regarding the use of the technology needed to be regulated.

Any product can become dangerous, illegal, or intrusive if used improperly. SB 1719 (Sen. Christina Castro, D-Elgin/Rep. Justin Slaughter, D-Chicago) flips that rational upside down and assumes a product is illegal if the person bought it but did not consent to the intended use of the product for which it was bought. It makes the incorrect assumption that the product can distinguish between the owner and an authorized user and has the capability to derive consent, and be able to produce a schedule and calendar of use, categories it has recorded, and how it will collect and disseminate the information.

SB 1719 passed the Senate by a 39-14 vote and now goes to the House for additional consideration.

IRMA is opposed to the legislation as currently drafted.

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PHARMACY BENEFIT MANAGERS

Among its many provisions, HB 465 (Rep. Greg Harris, D- Chicago/Sen. John Cullerton, D- Chicago) seeks to provide accountability and transparency into the operations of pharmacy benefit managers (PBM’s). HB 465 licenses PBMs, provides for suspension or revocation of those licenses, requires contracts between health insurers and PBM’s to update MAC pricing information at least every 7 days, provides access to the PBM’s MAC list to each pharmacy or PSAO, provides a process for appeals, etc. Additionally, a drug on the MAC list must be a generically equivalent drug, available for purchase by each pharmacy in the state from national or regional wholesalers, not obsolete; etc.

HB 465 was approved by the House unanimously and now moves to the Senate for additional consideration.

IRMA would like to thank House Majority Leader Harris and Sen. Manar for their leadership.

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LIQUOR DELIVERY

SB 54 (Sen. Don Harmon, D-Chicago/Rep. Michael Zalewski, D-Riverside) expressly allows retailers to deliver liquor to consumers. The retail industry is ever evolving and growing as technology offers more conveniences for consumers. One innovative step has included the use of mobile phone apps, telephone and online orders, and curbside pickup to facilitate the purchase of groceries, including alcohol. Illinois currently

Inconsistency has risen as some local municipalities have been prohibiting it while others have been expressly allowing it through ordinance. The Senate passed the legislation to the House to continue the discussions with the industry. In order to encourage continued innovation and establish a consistent policy, the House will consider an amendment that will:

  1. Allow grocery stores, liquor stores, and convenience stores to continue using any of the aforementioned delivery methods and ordering platforms to deliver alcohol within 30 miles of the retailer;
  2. Clarify that curbside pick-up of alcohol is allowed;
  3. Require consumer safeguards; and
  4. Prohibit municipalities from restricting consumers for accepting the delivery of alcohol.

A plethora of business interests support the potential amendment, which include IRMA, Associated Beer Distributors of Illinois (ABDI), Illinois Licensed Beverage Association (ILBA), Illinois Food Retailers Association (IFRA), the Wine Institute, MillerCoors, Anheuser-Busch, etc.

IRMA would like to thank Sen. Harmon for his continued work on this issue.

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RESTAURANT FOOD ALLERGEN NOTICE

Researchers estimate that 32 million Americans have food allergies, including 5.6 million children under age 18. Eight major food allergens Рmilk, egg, peanut, tree nuts, wheat, soy, fish and crustacean shellfish Рare responsible for most of the serious food allergy reactions in the United States. Illinois is one of the few states that require a restaurant to have a person who has had additional allergen training to be on duty at all times. Massachusetts, Maryland, Rhode Island and Virginia also require notices to consumers to make sure they notify the restaurant that they may have an allergy to a certain food. HB 3018(Rep. Joyce Mason, D-Gurnee/Sen. David Koehler, D-Peoria) provides the same notice to consumers.

The legislation allows those restaurants that already have a notice as required by another state, internal policy, or national standard to continue to use that notice. Additionally, the legislation requires the Illinois Department of Public Health (IDPH) to create a sign for those restaurants that do not currently use a notice. The notice will be provided as a downloadable document and free of charge to restaurants. Finally, the legislation creates a flexible notice while requiring the employee who receives an allergen warning from a consumer to communicate that warning to the person in charge or the certified food protection manager on duty. This legislation provides flexibility for the retailer without creating regulatory hurdles while also providing an extra layer of protection for the consumer who suffers from food allergies.

The legislation passed the House by a vote of 110-0-1.

IRMA would like to thank Representatives Stephanie Kifowit and Joyce Mason for working with IRMA to create the current compromise.

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RETAIL RESTROOM BABY CHANGING PLATFORM PASSES HOUSE

Representative Delia Ramirez introduced HB 3711 in response to complaints prompted by viral videos of a father attempting to change the diaper of a child on the floor of a bathroom. As drafted, HB 3711 would require a retailer or a restaurant that serves on average more than 50 people to have a baby changing platform in both the women and men’s restroom.

After IRMA discussed the practical issue of the requirement as drafted, the sponsor agreed to work with IRMA to make the legislation consistent with other states’ requirements and current Illinois law, conform with the American with Disabilities Act, and the current building codes of each jurisdiction. Subsequently, Rep. Ramirez adopted an amendment that includes the following:

  1. Requires a baby changing station in a bathroom accessible to women, one that is accessible in a bathroom accessible to men, or a publicly accessible baby diaper changing station that is accessible to both men and women;
  2. Restricts the changes to new buildouts or renovations of restaurant and retailers that exceed 50% of the building;
  3. Restricts the changes to a retailer of more than 5,000 square feet and has a restroom that is open to the public;
  4. Restricts the changes to a restaurant with an occupancy of at least 60 people as determined by the fire marshal that has a restroom open to the public;
  5. Exempts a retailer that does not allow minors on the premise; and
  6. Allows a building inspector to determine that the installation of a baby diaper changing station is not feasible or would not comply with applicable building standards governing the right of access for persons with disabilities.

With the adoption of the amendment, HB 3877 passed the House by a vote of 110-0-0 and now moves to the Senate for consideration.

IRMA is neutral on the legislation and would like to thank Rep. Ramirez for working with IRMA on this important issue.

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INTERNET LOTTERY

Currently, subscribers can play the three big jackpot lottery games (i.e. MegaMillions, Powerball, and Lotto) via the Internet. There has been a desire for some time to expand the Internet offerings and allow “play as-desired” as opposed to via subscription. As introduced, HB 3661 (Rep. Chris Welch, D-Chicago/Sen. Kimberly Lightford, D-Westchester) would have allowed the Illinois Lottery to offer not just the draw (i.e. jackpot) games but all games the Lottery offers via the Internet. This would have applies to scratch-off as well. After discussions with Representative Welch, IRMA, the private lottery manager, and others, HB 3661 was amended on the House floor to allow only draw games to be offered via the Internet.

After the adoption of the amendment, the legislation passed the House by a 101-13-0 vote. HB 3661 now moves to the Senate for consideration.

IRMA would like to thank Rep. Welch for addressing our concerns.

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BPA BUSINESS RECORDS

Environmentalist contend that bisphenol-A (BPA) found in receipts causes adverse reactions to those individuals who handle the receipts. HB 2076 (Rep. Karina Villa, D-Batavia/Sen. Ann Gillespie, D-Arlington Heights) would prohibit the use of business documents, including receipts that contain BPA.

The majority of Illinois retailers stopped using receipts that contained BPA many years ago. This decision was not based on any scientific study, only public opinion and capitalism. Retail sales of “BPA free” products increased, therefore retailers offered and used more “BPA” free products, including paper products. Testimony from a union representative that employees of specific retailers are currently handling receipts that contain BPA is factually incorrect as those listed retailers do not currently use receipts that contain BPA.

Even though retailers do not use BPA receipts, the legislation has issues as drafted. The legislation prohibits the use of any document that contains any level of BPA. Therefore, without a de minimis standard, this would preclude the ability to use recycled paper because it contains traces of BPA due to the mixing of paper during the recycling process. Additionally, the Illinois Environmental Protection Agency (IEPA) only employs one toxicologist and does not currently have the equipment to test for BPA. Even though retailers moved away from the use of BPA, the ability of the IEPA to adequately monitor or enforce the prohibition would be impractical. Finally, the legislation does not contain an adequate “use through provision” to allow businesses to deplete current stock and phase in for the orderly transition to BPA free paper.

The sponsor agreed to address the opponents’ concerns in an amendment in the Senate and bring an agreed amendment back to the House Environment Committee for consideration.

In order for IRMA to agree to the amendment it has to include the following language:

  1. It has to contain a standard or level of measurement to determine if the level of BPA in the paper exceeds current US EPA safe handling guidelines;
  2. It has to include a “use through” provision;
  3. It has to include an “archived records” exemption; and
  4. It has to include an exemption for recycled paper that contains BPA.

With the pledge to bring an agreed upon amendment back to the House committee, HB 3018 passed the House by a 76-37-1 vote.

IRMA would like to thank Rep. Karina Villa for working with IRMA to address our concerns.

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COVENANTS NOT TO COMPETE

Legislation that would prohibit legal covenants not to compete in the state of Illinois failed to pass the House. Last year, lawmakers passed an agreed bill that prohibited covenants not to compete between an employer and an employee who is making minimum wage. The rational was to remove a potential barrier for low-wage workers from moving from job-to-job.

HB 2565 (Rep. Anne Stava-Murray, D-Downers Grove) would expand the prohibition to ALL employers and employees in Illinois. The sponsor testified in committee that a covenant not to compete restricted the ability of a family member to transfer from a job where they were being illegally mistreated by a supervisor. The legislation was voted out of committee after the sponsor agreed to consider to restrict the legislation to covenants not to compete be voided upon the illegal conduct of a supervisor.

Subsequently, the sponsor did not limit the scope of the bill. As a result, HB 2565 failed to pass the House by a 37-62-3 vote.

IRMA was opposed to the legislation.

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CARPET TAX

SB 557 (Sen. Melinda Bush, D-Grayslake/Rep. Michael Zalewski, D-Riverside) seeks to require producers to impose a 4-cent fee on every yard of carpet (nylon, polypropylene, and wool) and a 6-cent fee on every yard of PET, PTT, and blended carpet sold in the state of Illinois to pay for the collection and recycling of carpet. A producer is anyone who has legal ownership of the brand, brand-name, or co-brand of the carpet or the importer if the producer has no physical presence in Illinois. The legislation seeks to create a clearinghouse to operate the program. The clearinghouse not only administers the entire program but also sets goals. Additionally, the clearinghouse would discuss and could provide recommendations on a number of fronts including carpet design. Retail participation as a take-back location is voluntary but if the retailer is an importer or has private-label brand, that retailer would be a producer and subject to the requirements of the act.

With promises from the sponsor to continue discussion in the House, SB 557 passed the Senate by a unanimous vote of 56-0-0.

IRMA is opposed to the legislation as currently drafted.