Regulatory Alert

    REG ALERT

 

PROPOSED STATE OF ILLINOIS RULES AFFECTING SMALL BUSINESS

The following are proposed rules of possible interest to small businesses published in the Illinois Register.  Individuals have opportunity to express their support or opposition to the rule during the comment period. To get more information on Illinois Rules and Regulations, how to file a complaint about a burdensome or excessive state rule, go to www.ilsmallbiz.biz/regflex
 
To submit comments or to learn more about the proposed rules, contact Katy Khayyat at the Department of Commerce and Economic Opportunity Business Information Center via e-mail at Katy.Khayyat@Illinois.gov  or call 217.558.0190. 

 

The Department of Employment Security adopted an emergency amendment that will impact businesses failing to submit timely February 2020 wage reports to DES will have penalties waved:  

The Department of Employment Security adopted an emergency amendment to Payment of Unemployment Contributions, Interest and Penalties (56 IAC 2765; 44 Ill Reg 6099) effective 4/ 8/20 for a maximum of 150 days. An identical proposed amendment appears in the April 17th Illinois Register at 44 Ill Reg 5971. The emergency and proposed rules provide that business interruptions and closures due to the COVID-19 pandemic constitute good cause for waiving any penalties an employer would otherwise incur for failing to timely submit February 2020 wage reports to DES.

Bottom Line:  Requiring good cause to be found to waive penalties for the failure to timely file the employer's wage report for the month of February 2020, as provided by Section 1402 of the Unemployment Insurance Act, due to the COVID-19 Pandemic, retroactive to April 1, 2020.

For questions/requests for copies/ comments on the proposed rulemaking through 6/1/20: Kevin Lovellette, DES, 33 S. State St., Room 930, Chicago IL 60603, 312/793-1224, fax 312/793-5645.  This rulemaking is open until June 1, 2020. You may submit comments here. 

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The Illinois Gaming Board proposed amendments which will impact small businesses owned by veterans: 

The ILLINOIS GAMING BOARD proposed amendments to Riverboat and Casino Gambling (86 IAC 3000; 44 Ill Reg 5974) implementing a PA that expands contracting goals for casino owner's licenses to include veteran-owned businesses. The target contracting goals by business ownership are now 11% minority, 7% female, 3% veteran, and 2% persons with disabilities. Beginning in 2021, annual licensee reports of utilization of minority, female and disability-owned businesses shall also include veteran owned businesses.

Bottom Line: Currently, the contracting goal provisions of 86 Ill. Adm. Code 3000.286 only apply to firms owned by minorities, women and disabled persons. Section 7.6 was amended by PA 100-1152, effective December 14, 2018, to include veteran owned firms. An amendment to Section 3000.286 is required to implement the amendatory statutory change. The new language in the present rulemaking closely tracks the existing rule language applicable to firms owned by minorities, women and disabled persons. Specifically, the new language provides the following: Contracting goals for veteran owned firms will be set as percentages of the total dollar amount of contracts awarded by a casino owner licensee during each calendar year. Although these are goals rather than quotas, the underlying Act directs that "each owners licensee must make every effort" to meet them. Beginning in 2021, the annual reporting requirement for casinos under the Business Enterprise Program will now include information on their utilization of veteran owned businesses. The rule language cites the definition of "veteran" contained in Section 10 of the Veterans Preference in Private Employment Act [330 ILCS 56/10]. Under this definition, a "veteran" means a person who has either:

  • Served on active duty with the armed forces of the United States for a period of more than 180 days and was discharged or released from active duty under conditions other than dishonorable;
  • Was discharged or released from active duty because of a service-related disability;
  • or Is a member of the Illinois National Guard who has never been deployed but has separated under conditions other than dishonorable.

A "veteran owned business" is defined as a business that is at least 51% owned by one or more veterans (or in the case of a corporation, at least 51% of the stock of which is owned by one or more veterans), and the management and daily operations of which are controlled by one or more of the veterans who own it. This parallels the definitions already contained in Section 3000.286 for firms owned by minorities, women, and persons with disabilities. To ensure that veteran owned firms have the best possible information about contracting opportunities with Illinois casinos, the rulemaking requires casinos to publish information to potential bidders on their websites as to how to obtain more detailed information about future available contracting opportunities. The casinos must also share this information with the Director of the Department of Commerce and Economic Opportunity and the Director of the Department of Veterans' Affairs. Additionally, the rulemaking establishes benchmark numerical contracting goals for all of the types of firms covered by Section 3000.286. These benchmark goals are the following: 11% for minority owned businesses; 7% for female owned businesses; 2% for businesses owned by persons with disabilities; and 3% for veteran owned businesses. The final contracting goals for each owner's licensee shall approach, at a minimum, the benchmark contracting goals of paragraph (1) of subsection (b) of this section as closely as the Board deems practicable.

For questions or comments, contact Agostino Lorenzini, IGB, 160 N. LaSalle St., Chicago IL 60601, IGB.RuleComments@igb.illinois.govThese rules will remain open for public comment until 6/1/20. You may submit comments here. 

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The Department of Human Services proposed amendments which will impact funeral service providers: 

DHS also adopted an emergency amendment to Related Program Provisions (89 IAC 117; 44 Ill Reg 6114) effective 4/6/20 for a maximum of 150 days, with an identical proposed amendment at 44 Ill Reg 5993. This amendment increases the maximum reimbursement amount for the funeral expenses of an eligible decedent to $1,370 and the maximum reimbursement amount for burial or cremation to $686. (Reimbursement limits in current rule are based on inflationary increases from benchmark amounts established in 2002.) Funeral service providers may be affected. Questions/requests for copies/ comments on the 2 proposed DHS rulemakings through 6/1/20: Tracie Drew, DHS, 100 S. Grand Ave. East, 3rd Fl., Springfield IL 62762, 217/785-9772.

Bottom Line:  Due to an increase in the Consumer Price Index and the COVID-19 crisis, this rulemaking increases the maximum reimbursement amount for funeral expenses of an eligible descendant to $1370.00 effective April 6, 2020. It also increases the maximum reimbursement amount for burial (including cremation) expenses to $686.00 effective April 6, 2020.

Interested persons may present their comments concerning this amendment within 45 days after the date of this issue of the Illinois Register. All requests and comments should be submitted in writing to: Tracie Drew, Chief Bureau of Administrative Rules and Procedures Department of Human Services 100 South Grand Avenue East, Harris Building, 3rd Floor Springfield IL 62762 217/785-9772.  This rule will remain open for public comment until 6/1/20. You may submit comments here. 

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The Department of Insurance adopted a new part that will impact small businesses and other employers that provide health insurance coverage to their employees:    

The DEPARTMENT OF INSURANCE adopted a new Part by emergency rulemaking titled Temporary Health Coverage Requirements During an Epidemic or Public Health Emergency (50 IAC 2040; 44 Ill Reg 7766) effective 4/20/20 for a maximum of 150 days. An identical proposed amendment appears in the May 1, 2020 Illinois Register at 44 Ill Reg 6693. The new Part prevents issuers of group health insurance policies and standalone dental plans from canceling coverage for non-payment of premiums during epidemics or public health emergencies when the Governor has issued a stay-at-home order or generally closed non-essential businesses. (These rules do not apply to short-term, limited duration or excepted benefit policies.) When such an emergency is in effect, issuers must allow employers to continue covering employees that would normally lose coverage due to layoffs or reduction in their working hours. For employers with 20 or more workers, the insurance issuer cannot prevent eligible employees from electing continuation coverage under COBRA or the State's HMO Act as along as at least one worker remains actively employed. For health insurance coverage that is not issued through the Exchange established under the federal Affordable Care Act, special enrollment procedures shall be waived for persons who have lost workplace insurance coverage so that the enrollee's new policy becomes effective the day after the prior coverage terminated. Issuers must also allow insured persons, upon request, to defer premium payments without interest for at least 60 calendar days from each original premium due date. For insured persons who missed premium payments prior to 4/20/20 but whose coverage has not yet been terminated, the issuer shall not cancel or refuse to renew coverage for nonpayment for at least 60 days after this Part takes effect. Deadlines for binder payments must be extended at least 30 days beyond the normal applicable deadline. Communications from an issuer to an insured person must clearly state that the insured still has an obligation to pay back deferred premiums or potentially be subject to billing for unpaid claims. Policies that cover prescription drugs must cover off-formulary drugs if no formulary drug is available to the insured, without prior authorization, step-therapy requirements, higher cost sharing or other additional conditions. Insured persons must also be allowed to obtain at least 90-day supplies of maintenance medications upon refill of a prescription, except for categories of drugs prone to abuse such as opioids and stimulants.

Bottom Line:  This Part is intended to help protect insured individuals' access during an epidemic or public health emergency to timely, affordable health care services by requiring temporary accommodations or exceptions to the terms of the health benefits arrangement that insures them or their employers. The COVID-19 epidemic is causing significant economic impact, including loss of income, wages, and working hours, for Illinois residents and employers. These losses will temporarily reduce either their ability to pay for coverage or to qualify for their employment-based coverage under the terms of their health benefits arrangement. A widespread loss of coverage combined with a loss in income is likely to undermine public health officials' efforts to contain the illness or health condition causing the public health emergency because affected individuals may delay seeking testing or treatment. Additionally, it is likely to place a financial strain on health care providers if increasing numbers of uninsured individuals use health care services, whether related or not to the illness or health condition causing the public health emergency. The outbreak is also likely to place a strain on the ability of health care providers to deliver services quickly and efficiently to the increased number of patients who need them, particularly if those services are subject to utilization review. Such an epidemic or emergency could also cause shortages or disruptions to prescription drug supplies. This Part is intended to prevent or mitigate the impact of the above problems.

First, the rules will require health insurance issuers to extend premium payment deadlines by 60 days and will prohibit cancellations based on nonpayment of premium for 60 days after the rules take effect. For binder payments to secure new coverage, payment deadlines will be extended by 30 days. The rules will also prohibit health insurance issuers from interfering with employers that want to keep their employees on their existing health coverage despite a reduction in hours or temporary lay-off. The rules will also ensure that, as long as at least one employee remains actively employed, a health insurance issuer shall not prevent an employee whose coverage was terminated from electing COBRA or state continuation coverage. The rules will also provide an accommodation for employees whose employment-based coverage has been terminated since the disaster proclamations took effect so that, in any special enrollment period for which they otherwise qualify, their new coverage can retroactively take effect immediately after their prior coverage terminated. The rules will also require health insurance issuers to cover off-formulary drug alternatives if there is a shortage in a formulary drug, and such coverage shall not impose additional prior authorization or step-therapy requirements, nor impose cost-sharing greater than would have applied to the formulary drug. Issuers will also be required to cover at least a 90-day supply refill for maintenance medications other than those susceptible to misuse. The rules will exempt short-term, limited duration health insurance coverage, as well as excepted benefit policies, except where specified for dental benefits. The rules will not apply to group health insurance coverage unless it is provided by a health maintenance organization, except where specified in Section 2040.80.

Questions/requests for copies/ comments on the proposed rulemaking through 6/15/20: Robert Planthold, DOI, 122 S. Michigan Ave., 19th Fl., Chicago IL 60603, 312/814-5445, or Susan Anders, DOI, 320 W. Washington St., Springfield IL 62767, 217/558-0957.  This rulemaking is open until June 15, 2020.  You may submit comments here. 

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The Department of Revenue proposed an amendment which will impact small businesses and other customers of marketplace facilitators: 

The DEPARTMENT OF REVENUE proposed an amendment to Use Tax (86 IAC 150; 44 Ill Reg 7855) implementing provisions of Public Acts 101-9 and 101-604 concerning the collection of the 6.25% Illinois use tax by marketplace facilitators. A companion emergency rule was effective 12/23/19 for 150 days. Effective 1/1/20, marketplace facilitators must collect and remit use tax on their sales to Illinois customers if, within any 12-month period, they conduct at least 200 transactions with Illinois customers or collect at least $100,000 in gross receipts from Illinois customers. Marketplace facilitators are defined as persons or entities that list or advertise tangible personal property items for sale, collect payment from the customer, and transmit payment to the seller (e.g., Amazon, eBay). Use tax does not apply to entities that provide only advertising and leave financial arrangements to the buyer and seller (e.g., Craigslist); those that merely handle financial transactions (e.g., PayPal); or offer only non-tangible items such as discount coupons (e.g., Groupon). It also does not apply to transactions that are subject to State or local sales taxes (e.g., online food-ordering and delivery services) or to certain specialized online marketplaces. Marketplace facilitators that are or may be subject to use tax must determine on a quarterly basis whether they have met either the gross sales or 200-transaction threshold in the preceding 12 months. Those that do meet this test must begin filing regular use tax returns; those that do not must continue to monitor their Illinois sales quarterly.

Bottom Line:  This regulation implements the provisions of PA 101-9, which added provisions governing collection of the 6.25% Use Tax by a marketplace facilitator for sales made through its marketplace on behalf of marketplace sellers. Beginning January 1, 2020, a marketplace facilitator that meets specific selling thresholds (i.e., the Wayfair thresholds of either 200 transactions or $100,000 of gross receipts) is considered to be the retailer for all sales made through its marketplace on behalf of marketplace sellers, provided that the resulting liability for the marketplace seller would be a Use Tax collection liability. For all such sales, the marketplace facilitator must collect Use Tax and remit it to the Department. The regulations provide key definitions; clarify the scope and nature of the new tax remittance obligation; provide examples of the types of activities that make a person a marketplace facilitator; clarify the responsibilities of marketplace facilitators, as well as of marketplace sellers selling through a marketplace; and reference the new act's hold harmless provisions. Marketplace facilitators sometimes make sales on behalf of marketplace sellers that are subject to Retailers' Occupation Tax (ROT), rather than Use Tax (typically, when a marketplace seller fulfills an order from Illinois inventory). The new law does not consider the marketplace facilitator to be the retailer for such sales, nor does it authorize it to remit ROT for these sales. The marketplace seller, instead, is considered the retailer for these sales and must register and remit ROT to the Department. The rules offer one method that could be used to handle these transactions between a marketplace seller and marketplace facilitator. This new regulation also implements provisions of PA 101-604, that, beginning January 1, 2020, amends the definition of a marketplace facilitator.

Those affected by this rulemaking include small businesses and other customers of marketplace facilitators. Questions/requests for copies/ comments through 6/22/20: Jerilynn Troxell Gorden, DOR, 101 W. Jefferson St., Springfield IL 62794, 217/782-2844.  These rules will remain open for public comment until 6/22/20You may submit comments here. 

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The Department of Public Health proposed amendments which will impact staffing agencies to initiate fingerprint-based criminal history background checks for their clients seeking employment in health care jobs:      

The DEPARTMENT OF PUBLIC HEALTH proposed amendments to Health Care Worker Background Check Code (77 IAC 955; 44 Ill Reg 8151) implementing Public Act 101-176, which allows staffing agencies, workforce intermediaries (organizations that provide job training and employment services) and organizations that provide pro bono legal services to initiate fingerprint-based criminal history background checks for their clients seeking employment in health care jobs. These organizations may also initiate requests for waivers allowing an individual who would otherwise be disqualified from health care employment due to a past criminal conviction to be cleared for employment.

Bottom Line:  This rulemaking implements PA 101-176, which amended the Health Care Worker Background Check Act to allow workforce intermediaries and organizations providing pro bono legal services to initiate a fingerprint-based criminal history records checks for individuals who have disqualifying conditions and who are receiving services from the workforce intermediary or organization. The economic effect of this proposed rulemaking is unknown. Therefore, the Department requests any information that would assist in calculating this effect.

Questions/requests for copies/ comments on the proposed rulemaking through 6/29/20:  Erin Conley Rules Coordinator Division of Legal Services Illinois Department of Public Health Division of Legal Services 535 W. Jefferson St., 5th Floor Springfield IL 62761 217/782-2043 dph.rules@illinois.govThis rulemaking is open until June 29, 2020.  You may submit comments here. 

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The Department of Commerce and Economic Opportunity Public Health proposed a new party by emergency rulemaking which will impact Small businesses and non-profits engaged in public works projects:

The DEPARTMENT OF COMMERCE AND ECONOMIC OPPORTUNITY adopted a new Part by emergency rulemaking titled Illinois Works Jobs Program Act (14 IAC 680; 44 Ill Reg 8502) effective 5/8/20 for a maximum of 150 days. An identical proposed amendment appears in the May 22 issue of the Illinois Register at 44 Ill Reg 8470. The emergency and proposed rules implement the Illinois Works Apprenticeship Initiative that is scheduled to begin on 7/1/20. Under this initiative, contractors, subcontractors and grantees undertaking State-funded public works projects with a total cost of $500,000 or more must have apprentices perform at least 10% of the actual or estimated labor hours in each prevailing wage classification. Affected contractors may apply for a waiver from DCEO if this goal cannot be met and DCEO may hold public hearings on these requests.

Bottom Line:  The Illinois Works Apprenticeship Initiative applies to public works projects with an estimated total project costs of $500,000 or more. The program will impact grantees, contractors and subcontractor who receive money from appropriated capital funds for public works projects. For those projects, the goal of the Illinois Apprenticeship Initiative is that apprentices will perform either 10% of the total labor hours actually worked in each prevailing wage classification or 10% of the estimated labor hours in each prevailing wage classification, whichever is less.

Questions/requests for copies/ comments on the proposed rulemaking through 7/6/20:  Jolene Clarke Rules Administrator, Department of Commerce and Economic Opportunity, 500 E. Monroe, Springfield IL 62701, 217/557-1820 or fax: 217/524-3701.  You may email jolene.clarke@illinos.govThis rulemaking is open until July 6, 2020.  You may submit comments here. 

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The Illinois Department of Labor proposed an amendment which will impact small businesses and non-profit entities with joint employment relationships:

The DEPARTMENT OF LABOR proposed an amendment to the Part titled Minimum Wage Law (56 IAC 210; 44 Ill Reg 8472) addressing situations in which one individual is jointly employed by two or more closely associated employers. The rulemaking lists factors to be considered in determining whether a joint employment relationship exists between or among other entities that are associated with a person's main employer. If this is the case, the employee's work in a given period for all the related entities counts as one employment subject to the Minimum Wage Law and all joint employers become liable for any violations of that law. (If the entities are found to be completely independent of one another, the employee is considered to be working separate jobs and each employer may disregard work performed for the other employers.) Factors to be considered include: whether the employee's work benefits the alleged joint employer or is an integral part of the alleged joint employer's business; whether the alleged joint employer has direct or indirect control or influence over the employee's terms or conditions of employment (e.g., work schedule, work quality); whether the alleged joint employer owns or leases the premises where the work is performed or provides tools, equipment or materials used by the employee; and whether the alleged joint employer controls the main employer's operations via contractual obligations, ownership interest, joint management, or economic dependence.

Bottom Line:  Recent action taken by the United States Department of Labor (U.S. DOL) could expose workers to a higher risk of wage theft and give unscrupulous employers a competitive advantage over law abiding employers. The U.S. DOL adopted a new rule on March 16, 2020. This new federal rule abandons over 60 years of precedent by adopting a restrictive four factor test to determine the existence of a joint employer relationship. Illinois has not needed its own rule interpreting joint employment, until now, because the former Fair Labor Standards Act regulation provided reasonable guidance on the issue.

Questions/requests for copies/ comments on the proposed rulemaking through 7/6/20:  Jason Keller Illinois Department of Labor, 900 South Spring St. Springfield, IL 62704 217-782-1706.  You may also email Jason.keller@illinois.govThis rulemaking is open until July 6, 2020.  You may submit comments here.