Democrat Wage Lien Bill Passes Committee
New wage lien legislation passed the House Labor & Commerce Committee on a partisan vote but only after Chairman Jay Hoffman (D-Collinsville) and other lawmakers chastised the bill’s sponsor Rep. Chris Welch (D-Westchester) and elicited a promise to hold the bill pending an amendment. The Illinois Manufacturers’ Association along with a host of employer organizations including retailers, bankers, credit unions, and others opposed the legislation that would severely penalize good employers.
The legislation (HB 4324) allows an employee to file a wage lien against an employer that includes all of their property, both real and personal, before any adjudication occurs. Following the filing of the lien, the employee has up to 180 days to commence an action to enforce the lien and prove that wages are owed. Employees may file claims up to three years prior with liens subject to the first $30,000 of unpaid wages.
If enacted into law, this lien proposal could be devastating for good employers. A disgruntled employee (or former employee) could slap a lien on a business without any proof. Under the scenario, if the employer went to the bank for a line of credit to buy a new piece of manufacturing equipment or to pay for new inventory, the bank would likely refuse to make the loan because of a pending lien. Furthermore, the lien could be placed on all property including inventory making it impossible for the company to sell their products. There is no provision in the current draft to penalize employees who make false claims.
The IMA does not support wage theft – employees should be paid fully for their work. In an effort to address the underlying issue of wage theft and a long wait for claims to be addressed, the business community provided a potential compromise that would require the Department of Labor to adjudicate wage claims within 30 days at which time a lien could be applied. Rep. Welch and the proponents rejected this effort out of hand.
Rep. Welch actually had the audacity during committee to tell lawmakers opposing the measure that they were “protecting thieves” rather than low-wage workers. It’s very clear that he does not have a full understanding or appreciation of how businesses operate and prefers to find them guilty before any adjudication of the claim is made.
Wage Equity Bill Passes House of Representatives
Legislation seeking to ban employers from asking an applicant’s salary history successfully passed the House of Representatives over objections from the business community. The IMA opposes any form of wage discrimination but this legislation contains provisions that allow an applicant to double dip by suing in both state and federal court while prohibiting the business from offering an affirmative defense. Additionally, an employer could be held liable if a job candidate voluntarily offered their salary in an interview.
Sponsored by Rep. Anna Moeller (D-Elgin), HB 4163 passed on a vote of 87-24 and moves to the Senate. Identical legislation passed the General Assembly last year before it was vetoed by Governor Rauner who removed some of the problematic provisions while still banning employers from asking wage questions.
Unfortunately, the sponsors prefer to play politics so that they have an issue to use at the ballot box rather than enact sound public policy.
Bill Seeks to Send Permits to the Court System
The Illinois Manufacturers’ Association was on-hand in the Senate Judiciary Committee this week to testify in opposition to SB 3005 (Raoul, D-Chicago). The bill, as amended, vastly expands the right to judicial review of environmental-related and many other state-issued permits to nearly every citizen in the State of Illinois and even those who live outside of the State. The Farm Bureau, Illinois Environmental Regulatory Group (IERG), and Department of Agriculture joined the IMA in testifying against the measure on behalf of more than fifty opponents.
Under the bill, any individual, regardless of where they live, who feels they are adversely affected or have been legally wronged by the state’s decision on a permit, has the right to judicial review. These individuals can raise an objection to permits issued by the Department of Agriculture, Environmental Protection Agency, Department of Natural Resources, Department of Public Health, or Department of Transportation. By expanding judicial review, the permitting process could take even longer and increase costs for businesses that require permits. More importantly, the bill does not limit court action to a simple review of the Agency’s decision; rather, it creates a new legal avenue, new facts, and a second bite at the apple.
Testifying in opposition, the Illinois Manufacturers’ Association noted that there is currently a process for review of permits within the state agencies that allows for affected parties to weigh in. The courts should not have to weigh in on every environmental permitting decision and the right to judicial review should not be expanded to include nearly anyone regardless of where they live.
SB 3005 and HB 5119 (Andersson, R-Geneva) are supported by environmental activists seeking to delay or block critical infrastructure projects.
EPA Releases VW Settlement Plan
The Illinois Environmental Protection Agency released its proposed mitigation plan funded by proceeds from the $2.9 billion settlement reached by Volkswagen and the federal government following severe violations of emissions laws. Illinois is receiving more than $108 million to help reduce NOx emissions and applications will be accepted beginning in May for funding under the established parameters.
Stakeholders can now comment on the IEPA plan during the 45-day comment period. The plan focuses on reducing NOx emissions in areas where the affected Volkswagen vehicles are registered along with maximizing emission reductions and leveraging funding through cost-effective projects. It is anticipated that much of the funding will be allocated to the Chicago and Metro East areas due to their ozone non-attainment designations and larger number of registered VW vehicles.
Despite this transparent and public process, environmental activists are already opposing the unreleased mitigation plan and plan an end-run around the EPA process. Senator Heather Steans (D-Chicago) and Sen. Christina Castro (D-Elgin) introduced legislation (SB 3055 and SB 3101) seeking to determine how the settlement money should be spent. The first bill specifically dedicated 15 percent for the purchase of light duty electric vehicle supply equipment with the remainder allocated for the replacement of fossil fuel powered vehicles. The second bill creates a task force controlled by environmental advocates that will make recommendations on how to spend the funds. They include no representatives from the business community.
The IMA supports the process initiated by the Illinois EPA and plans to weigh in during the stakeholder process so that these funds are used effectively. At the same time, the IMA will oppose legislation sought by environmental activists who believe they should be able to unilaterally control how and where it is spent.
Budget & Revenue Discussions Begin
The House Revenue Committee started the budget-making process this week with a subject matter-only hearing to debate the FY19 revenue estimate that will serve as a base for the budget. The Commission on Government Forecasting and Accountability (COGFA) appeared before the committee to offer economic assumptions and projected revenue for the coming year.
COGFA is predicting GDP growth of 2.9 percent in 2018 followed by a 2.4 percent increase in 2019. During the same time period, COGFA believes that Illinois employment will increase slowly while the state’s unemployment rate will drop from 5 percent to 4.4 percent in 2019. Population is expected to remain relatively stagnant with a slight decrease.
In terms of revenue, the state’s income tax hike increased revenue in the last fiscal year and that growth is expected to continue in the coming fiscal year starting in July. Total income tax receipts ($20 billion) are projected to grow by $545 million while sales taxes will increase by $179 million. However, all state revenues are estimated to drop by $239 million because of reductions on federal resources associated with the state’s bonding and paying down old Medicaid bills. Bonding in the current year allowed Illinois to get matching federal dollars that will not be available in the coming year.
While COGFA is the legislature’s economic arm, the Governor’s office uses the Office of Management and Budget (GOMB). Their revenue numbers are fairly similar with GOMB projecting an additional $175 million in incomes and sales taxes. Both agencies predict a drop in public utility taxes.
Department of Revenue: Impact of Federal Tax Cuts and Jobs Act
The Illinois Department of Revenue released information this week regarding the impact of the federal Tax Cuts and Jobs Act (Public Law 115-97). While the Department has not yet provided the dollar impact on state revenue, this document estimates the provisions that will lead to increased or decreased state revenue along with limited guidance.
According to IDOR, federal tax law changes that will increase revenue include limitations on business deductions, accounting method changes, and reductions in dividends. On the other hand, Illinois could see decreased base revenue as a result of business asset expensing and foreign dividend deductions. IDOR’s projection is that the pass-through business deduction, standard deduction, personal exemptions, SALT limitation, and other itemized deductions will have no impact to state revenue.
Chicago Seeks Ban on Manganese-Handling Operations
Chicago Mayor Rahm Emanuel filed an ordinance recently seeking to ban manganese-handling operations in the city, along with future expansions of current facilities. Manganese is the fifth most abundant element in the earth’s crust and often used as an additive in steel production or as a cathode for batteries.
Under the ordinance, the definition of “manganese-bearing materials” is broadly defined to include ferrous manganese, manganese silicate, manganese alloy, manganese ore, or any other material from which manganese is extracted.” Operations include storing, loading, unloading, stockpiling, handling, blending, mixing, crushing, screening, breaking, wet or dry cleaning, thermal drying, and chemically treating the material for purposes of distribution or transportation.
This ordinance seeks to demonize manganese by noting that the storage and handling of “manganese-bearing materials” harms communities because of dust, noise from truck, rail, and material operations, and can cause a potential threat to human health. It falsely claims that these material operations will impact the quality of life and economic development.
E-Waste Bill Moves Forward
This week, the Illinois Manufacturers’ Association joined Senator Pam Althoff (R-McHenry) in presenting Senate Amendment #1 to HB 3248 in the Senate Judiciary Committee. The bill provides the formula for which the E-waste Manufacturer’s Clearinghouse will operate in 2019 as well as provides antitrust language that was sought by interested parties.
The IMA has championed a rewrite of the E-waste law for many years because the previous program based on weight was not working. Manufacturers, retailers, local governments, and environmental advocates supported the legislation that passed the Judiciary Committee. The bill will need to pass the full Senate and receive concurrence in the House before being sent to the Governor for his signature.
Call Center Worker Act Advances
Politically-motivated legislation seeking to penalize employers that move all or a part of their call center outside of Illinois passed the House Economic Opportunity Committee on a partisan 8-5 vote. Initiated by labor unions representing call center workers, the legislation would require companies to repay all tax incentives while becoming ineligible for future grants, loans, or other incentives. Additionally, companies that fail to notify the State Treasurer at least 120 days in advance face penalties of up to $10,000 per day.
HB 4081 (Halpin, D-Moline) fails to recognize how businesses operate. Call centers may relocate because of changes in customer location or the result of a merger or acquisition. Illinois law should not penalize employers for making business decisions and passage of this law will likely result in fewer call centers being located in Illinois.