The Illinois General Assembly adjourned its 2019 session June 2, 2019 – an “historical” session, according to Gov. JB Pritzker. The Technology & Manufacturing Association’s representative to state lawmakers, Jay Shattuck, reviewed how this session “made history” for manufacturers.
The General Assembly finished its business Sunday evening with the Senate concurring to House actions from the day before. They adjourned until the fall Veto Session scheduled to start October 28th.
On May 31st, the last scheduled day of the legislative session, I was prepared to opine that not since the mid 70’s when organized labor passed massive changes to Illinois’ workers’ compensation and unemployment insurance laws has there been a legislative session so anti-jobs. However, House Republican Leader Jim Durkin (Western Springs) and his 44-member caucus was able to salvage a few key issues for the business community and remove a little of the sting. Unfortunately, I still believe that the keys of the state have been handed over to the leaders of organized labor and labor advocacy groups.
It began early in the session following the inauguration of JB Pritzker as Governor. The Democrat super-majorities in both chambers approved a four-year phase-in of a $15 per hour minimum wage (SB 1). That was followed a few months later with Gov. Pritzker’s signing of SB 1596, a measure that undermines the protections for employers from being sued by an employee under the Occupational Diseases Act. The legislative session ended with numerous business related bills advanced to the Governor this session…more in one session than I can recall in my over 40-year career.
Gov. Pritzker has a Tremendously Successful First Session
Illinois Governor Pritzker’s first term will be heralded as a huge success as nearly all of his campaign promises are being fulfilled in the first legislative session of his governorship:
- Moving Illinois towards a graduated income tax
- Approving a balanced budget
- Enacting recreational marijuana
- Approving a capital budget
- Expansion of gaming
As for an encore in 2020, it will be difficult for the Governor to match this year’s accomplishments.
Budget, Marijuana, Gaming, Capital & Taxes All Connected
It took a few extra days beyond the scheduled adjournment for the General Assembly to finish its business. All the major issues were intertwined and agreements between the four caucuses and the Governor were necessary to pull off one of the more active sessions in decades.
Key Tax Issues for TMA Members
SB 689 TAX ISSUES/M & E EXPANSION/FRANCHISE TAX PHASE OUT
Last Action: Passed Both Houses (June 2, 2019)
Primary Sponsor: Sen. Toi Hutchinson (D)/Rep. Greg Harris (D)
Summary: changes impacting manufacturers:
- Income and franchise taxes amnesty
- Expands the manufacturing machinery and equipment exemption to cover items formerly covered by the Manufacturers’ Purchase Credit (supplies and consumables used in a manufacturing facility including fuels, coolants, solvents, oils, lubricants, and adhesives, hand tools, protective apparel, and fire and safety equipment used or consumed within a manufacturing facility). This provides a full sales tax exemption without the reporting and tracking requirements of the former MPC and applies to purchases on or after July 1, 2019.
- Five-year phase-out of franchise tax
Last Action: Adopted Both Houses (May 27, 2019)
Primary Sponsor: Senator Don Harmon (D)/Representative Robert Martwick (D)
Summary: Proposes to amend the Revenue Article of the Illinois Constitution. Removes a provision that provides that a tax on income shall be measured at a non-graduated rate. Provides that the General Assembly shall provide by law for the rate or rates of any tax on or measured by income imposed by the State. Provides that the highest rate imposed on corporations may not exceed the highest rate imposed on individuals by more than a ratio of 8 to 5. Effective upon being declared adopted.
SB 687 GRADUATED INCOME TAX RATE
Last Action: Passed Both Houses (May 31, 2019)
Primary Sponsor: Senator Toi Hutchinson (D)/Mike Zalewski ((D)
Summary: Sets graduated income tax rates effective January 2021, if the constitutional amendment authorizing graduated rates is approved by the voters.
- Corporations will be taxed at a rate of 7.99% of the taxpayer’s net income.
- Individuals who do not file a joint return and have net income of $750,000 or less:
- 4.75% of the portion of the taxpayer’s net income that does not exceed $10,000;
- (B) 4.9% of the portion of the taxpayer’s net income that exceeds $10,000 but does not exceed $100,000;
- (C) 4.95% of the portion of the taxpayer’s net income that exceeds $100,000 but does not exceed $250,000;
- (D) 7.75% of the portion of the taxpayer’s net income that exceeds $250,000 but does not exceed $350,000; and
- (E) 7.85% of the portion of the taxpayer’s net income that exceeds $350,000 but does not exceed $750,000;
- In the case of taxpayers who do not file a joint return and have income over $750,000, 7.99% of all of the taxpayer’s net income.
- For taxpayers who file a joint return and have net income of $1,000,000 or less:
- (A) 4.75% of the portion of the taxpayer’s net income that does not exceed $10,000;
- (B) 4.9% of the portion of the taxpayer’s net income that exceeds $10,000 but does not exceed $100,000;
- (C) 4.95% of the portion of the taxpayer’s net income that exceeds $100,000 but does not exceed $250,000;
- (D) 7.75% of the portion of the taxpayer’s net income that exceeds $250,000 but does not exceed $500,000; and
- (E) 7.85% of the portion of the taxpayer’s net income that exceeds $500,000 but does not exceed $1,000,000;
- In the case of taxpayers who file a joint return and have a net income of more than $1,000,000, 7.99% of all of the taxpayer’s net income.
SB 1591 R & D TAX CREDIT
Last Action: Passed Both Houses (May 29, 2019)
Primary Sponsor: Senator Ann Gillespie (D)/Representative Mark Walker (D)
Summary: Amends the Illinois Income Tax Act. Provides that the research and development credit applies for taxable years ending prior to January 1, 2027 (currently, January 1, 2022). Creates an income tax credit for qualified education expenses incurred by an employer on behalf of a qualifying apprentice, subject to certain limitations. Effective immediately. TMA SUPPORT
Recreational Marijuana
HB 1438 RECREATIONAL MARIJUANA
Last Action: Passed both Houses, (May 31, 2019)
Primary Sponsor: Representative Kelly Cassidy (D)/Senator Heather Steans (D)
Summary: Legalizes the use of and regulates the production and distribution of recreational marijuana to individuals over 21 years of age. For employers, the legislative sponsors worked and negotiated with TMA’s lobbyist to provide the strongest workplace protections in the country. The goal of protecting employers with zero tolerance, drug free workplace and drug testing policies is being met. Based on the final language and legislative intent, we are confident that employers will be free to continue to provide for safe workplaces through their reasonable, non-discriminatory employment policies. For more information on these provisions contact TMA.
Sexual Harassment/Limits Use of NDAs and Arbitration Clauses
SB 75, sponsored by Sen. Melinda Bush (D-Grayslake) and Rep. Ann Williams (D-Chicago) became the vehicle for the sexual harassment omnibus bill. The enrolled version, in general, provides:
- Limits the use of employment policies or other agreements intended to prevent an employee from reporting sexual harassment, such as non-disclosure agreements, arbitration clauses, and non-disparagement clauses for cases involving harassment, discrimination and retaliation. During the Senate debate the Senate sponsor indicated that the Workplace Transparency Act prohibits unilateral confidentiality and arbitration provisions related to harassment and discrimination, but allows them when mutually agreed upon so long as an employee is made aware of his or her rights in relation to such provisions. The goal is to regulate employer practices to ensure workers are not being forced to accept contract provisions that would make them vulnerable to sexual harassment and discrimination in the workplace;
- Makes harassment against contract employees illegal (currently, these employees do not have legal protection against sexual harassment);
- Clarifies that it is illegal to discriminate against an employee if they are perceived to be part of a protected class (i.e. gender, sexual orientation, ethnicity), even if they are not;
- Expands the Victims Economic Security & Safety Act (VESSA) to allow victims of gender violence to take unpaid leave from work to seek medical help, legal assistance, counseling, safety planning and other assistance;
- Prevents a union representative from representing both a victim of sexual harassment and the alleged harasser in a disciplinary proceeding;
- Requires employers, labor organizations and units of local government to disclose the number of final adverse administrative or judicial decisions of sexual harassment and discrimination against them to the Department of Human Rights;
- Requires employers to annually train their employees on preventing sexual harassment. The Department of Human Rights is required to make a sexual harassment training program available for employers to provide to their employees. Adds additional training requirements for employees of bars and restaurants and requires such employers to have written sexual harassment policies;
- Creates the Hotel and Casino Employee Safety Act which will require hotels and casinos to adopt anti-sexual harassment policies and make safety devices available to certain employees; and
- Makes changes to various public sector ethics laws.
The effective date is January 1, 2020, except (i) the Hotel and Casino Employee Safety Act takes effect July 1, 2020; and (ii) the changes to the Illinois Governmental Ethics Act, the State Officials and Employees Ethics Act, and the Lobbyist Registration Act take effect immediately.
Bills Approved by the General Assembly
General Business
Last Action: Passed Both Houses (May 29, 2019)
Primary Sponsor: Representative Anna Moeller (D)/Senator Cristina Castro (D)
Summary: Amends the Equal Pay Act of 2003. Prohibits an employer from: (i) screening job applicants based on their wage or salary history, (ii) requiring that an applicant’s prior wages satisfy minimum or maximum criteria, and (iii) requesting or requiring as a condition of being interviewed or as a condition of continuing to be considered for an offer of employment that an applicant disclose prior wages or salary. Prohibits an employer from seeking the salary, including benefits or other compensation or salary history, of a job applicant from any current or former employer, with some exceptions. Limits defenses. Provides for penalties and injunctive relief. TMA OPPOSED
HB 2472: PRODUCT LIABILITY EXCEPTIONS
Last Action: Passed Both Houses (May 8, 2019)
Primary Sponsor: Representative Kelly Burke (D)/Senator Terry Link (D)
Summary: Amends the Consumer Fraud and Deceptive Business Practices Act. Excludes from provisions of the Act making the Act inapplicable to actions or transactions specifically authorized by laws administered by a regulatory body or officer, the manufacture, distribution, or sale of a product that causes or contributes to cause bodily injury, death, or property damage. Effective immediately.
Last Action: Public Act 101-0001 (February 19, 2019)
Primary Sponsor: Senator Kimberly A. Lightford (D)/Representative Will Guzzardi (D)
Summary: Increases the minimum wage to $9.25 per hour beginning January 1, 2020 and adds annual increases in the minimum wage culminating in a minimum wage of $15 per hour beginning on January 1, 2025. Employers with 50 or fewer full-time equivalent employees may use a tax credit against tax withheld beginning January 1, 2020. Reduces the credit beginning January 1, 2021. Provides employers may claim the credit amount in effect on January 1, 2025 until December 31, 2026 and that employers with no more than 5 employees may claim that credit until December 31, 2027. Authorizes the Department of Labor to perform random audits of employer to ascertain compliance with the Minimum Wage Law. Authorizes a penalty of $100 per employee for failure to maintain required records. Effective immediately. TMA OPPOSED
Last Action: Public Act . . . . . . . . . 101-6 (May 17, 2019)
Primary Sponsor: Senator Elgie R. Sims, Jr. (D)/Representative Jay Hoffman (D)
Summary: Amends the Worker’s Compensation Act and the Workers’ Occupational Diseases Act. Provides that specified Sections limiting recovery do not apply to injuries or death resulting from an occupational disease as to which the recovery of compensation benefits under the Act would be precluded due to the operation of any period of repose or repose provision. Provides that, as to any such injury occupational disease, the employee, the employee’s heirs, and any person having the standing under law to bring a civil action at law has the nonwaivable right to bring such an action against any employer or employers. Effective immediately. TMA OPPOSED
Environmental Issues
HB 2491 UNCONTAMINATED PLASTIC RECYCLING
Last Action: Passed Both Houses (May 16, 2019)
Primary Sponsor: Representative Larry Walsh (D)/Senator Pat McGuire (D)
Summary: Provides that, to the extent allowed by federal law, uncontaminated plastics that have been processed prior to receipt at the facility into a feedstock meeting feedstock specifications for a plastics gasification facility or plastics pyrolysis facility, and that are further processed by such a facility and returned to the economic mainstream in the form of raw materials or products, are considered recycled and are not subject to regulation as waste. Provides that the Environmental Protection Agency may propose to the Pollution Control Board for adoption, and the Board may adopt, rules establishing standards for materials accepted as feedstocks by plastics gasification facilities and plastics pyrolysis facilities, rules establishing standards for the management of feedstocks at plastics gasification facilities and plastics pyrolysis facilities, and any other rules, as may be necessary to implement and administer the amendatory Act’s provisions. If permitting and construction has commenced prior to July 1, 2025, a pilot project allowing for a pyrolysis or gasification facility is permitted for a locally zoned and approved site in either Will County or Grundy County. Provides that if permitting and construction for the pilot project has not commenced by July 1, 2025, the amendatory Act’s provisions are repealed. Provides that the amendatory Act’s effective date is July 1, 2020.
Apprenticeships and Training
Last Action: Passed Both Houses (May 23, 2019)
Primary Sponsor: Senator Ann Gillespie (D)/Representative Mark Walker (D)
Summary: Requires the Illinois Community College shall establish and administer a 21st Century Employment grant program. To qualify for a grant, a community college district and a public high school located in that district must jointly establish a collaborative regional partnership with workforce development organizations, regional economic development organizations, and economic development officials in the district, along with manufacturers, healthcare service providers, and innovative technology businesses that have a presence in the district, to provide a manufacturing training program. Requires a grant recipient to provide the Board with a plan that meets certain requirements. Requires the Board to establish an advisory board for the program; sets forth the membership and duties of the advisory board. Provides that in awarding grants under the program, the Board must give priority to plans that demonstrate a formal articulation agreement between a public high school and a community college district. Provides that the plan must support a seamless transition into higher education and career opportunities and must outline the college credit and on-the-job training hours that will transfer from the high school to a community college. Adds to the membership of the advisory board. Makes other changes. Makes the 21st Century Employment grant program subject to appropriation.
SB 1525: DCFS APPRENTICESHIP STIPENDS
Last Action: Passed Both Houses (May 31, 2019
Primary Sponsor: Senator Robert Peters (D)/Representative Yehiel Kalish (D)
Summary: Provides that the Department of Children and Family Services shall provide eligible youth an apprenticeship stipend to cover those costs associated with entering and sustaining through completion an apprenticeship, including, but not limited to fees, tuition for classes, work clothes, rain gear, boots, and occupation-specific tools. Provides that certain youth may be eligible for the apprenticeship stipend. Provides that, to receive a stipend, an applicant must be enrolled in an apprenticeship training program approved or recognized by the Illinois Department of Employment Security or an apprenticeship program approved by the United States Department of Labor.
Last Action: Passed Both Houses (May 23, 2019)
Primary Sponsor: Senator Ann Gillespie (D)/Representative Will Guzzardi (D)
Summary: Requires the Department of Commerce and Economic Opportunity to conduct a study on the potential expansion of apprenticeship programs in this State and produce a report on its findings and to submit its report with findings and recommendations to the Governor and the General Assembly on or before June 1, 2020.
Bills Not Approved by the General Assembly
HB 357, PROCURE DOMESTIC PRODUCTS-ILLINOIS PREFERENCE
Last Action: Placed on Senate Calendar Third Reading (May 16, 2019)
Primary Sponsor: Representative Lance Yednock (D)/Senator Scot Bennett (D)
Summary: Amends the Procurement of Domestic Products Act to provide that purchasing agencies shall promote the purchase of and give preference to manufactured articles, materials, and supplies that have been manufactured in Illinois (currently, the United States). If the purchasing agency determines that certain conditions apply to a procured product, then, with respect to that procurement, the purchasing agency shall give preference to manufactured articles, materials, and supplies that have been manufactured in the United States. Effective immediately. Defines “commercially available off-the-shelf item” for the purposes of the Act.
SB 1407 PREVAILING WAGE REQUIRED ON CERTAIN MANUFACTURER CONSTRUCTION PROJECTS
Last Action: House Third Reading (May 27, 2019)
Primary Sponsor: Senator Michael Hastings (D-Tinley Park)/Representative Larry Walsh (D)
Summary: Requires refineries, certain petrochemical companies and ethanol plants to pay prevailing wage rates for any construction or maintenance performed at their facilities. TMA OPPOSED
Last Action: Assigned to House Labor & Commerce Committee (May 14, 2019)
Primary Sponsor: Senator Toi Hutchinson (D)/Representative Jehan Gordon-Booth (D)
Summary: Creates the Healthy Workplace Act requiring employers to provide specified paid time off to employees. Sets forth the purposes for and manner in which the paid time off may be used. Contains provisions regarding employer responsibilities, unlawful employer practices, and other matters. Provides that an employee who works in the State who is absent from work for specified reasons is entitled to earn and use a minimum of 40 hours of paid time off during a 12-month period or a pro rata number of hours of paid sick time. It is unlawful for an employer to interfere with, restrain, deny, change work days or hours scheduled to avoid paying time off, or discipline an employee for the exercise of, or the attempt to exercise, any right provided under or in connection with the Act, including considering the use of paid time off as a negative factor in an employment action that involves hiring, terminating, evaluating, promoting, disciplining, or counting the paid time off under a no-fault attendance policy. We expect negotiations on this issue this summer. TMA OPPOSED
Last Action: Re-referred to Rules Committee (May 10, 2019)
Primary Sponsor: Senator Toi W. Hutchinson (D)/Representative Will Davis (D)
Summary: Cook County Assessor Fritz Kaegi’s proposal that, in counties with 3,000,000 or more inhabitants, taxpayers of income producing property shall submit income and expense data related to the property annually to the chief county assessment officer. In counties with fewer than 3,000,000 inhabitants, the county board may provide by resolution that taxpayers of income producing property shall submit income and expense data annually to the chief county assessment officer. Provides that, when determining the value of property for assessment purposes, the assessor may consider all relevant information pertaining to the fair cash value of the property, including, but not limited to, income and expense data, sales data, property characteristics data, construction cost data, appraisals, and other valuation information. Provides that the term “income producing property” means property that is not exclusively owner-occupied; defines “property”; provides that failure to submit income and expense data shall result in a penalty of 0.05% of the prior year’s assessed value; provides that the taxpayer shall not be required to pay more than $100,000 in penalties per property; and provides that the chief county assessment officer is not prohibited from disclosing compiled and anonymized income and expense data. Provides that the term “income and expense data” include specific federal income tax returns (in Senate Amendment 1, federal income tax returns generally). Defines “owner-occupied” and “taxpayer”. Provides that the chief county assessment officer shall notify taxpayers of their obligation to submit income and expense data. Makes changes concerning the submission of federal tax forms. Adds provisions concerning administrative hearings. Makes other changes. Effective immediately. TMA NEUTRAL
SB 2140: REPEALS ILLINOIS KYOTO PROTOCAL ACT
Last Action: Held on House Second Reading (May 22, 2019)
Primary Sponsor: Senator Laura Ellman (D)/Representative Robyn Gabel (D)
Summary: repeals the Illinois Kyoto Protocol which will enable state agencies to regulate greenhouse gases without any input from the legislature. The Illinois enacted the law in 1998 to prevent the state from going alone in attempting to regulate greenhouse gases. TMA OPPOSED