The General Assembly adjourned Sine Die on Saturday, March 10th. As you will see from our wrap-up report (vrf.com) it was a very successful session for the Retail Industry. We defeated all bills that would have a negative impact on our members and had several bills pass that would be beneficial to our members.
However, it is important to note that although the General Assembly did adjourn on Saturday, they adjourned without a budget and therefore will have to be called back by the Governor for a Special Session to pass a budget for the Commonwealth.
The Governor has called the Special Session April 11, 2018. There is a $600 million gap between the Senate and House Budgets, not to mention the major issue of Medicaid Expansion. We do have a few budget items that we would like to see remain in the budget as you will see below. We will continue to have conversations with Budget Conferees about the importance of these items. In addition to the Special Session, the General Assembly will be back for Reconvene (“Veto”) Session on April 18th.
SB 29 Item 40 #1s
Administrative and Support Services
Explanation: This amendment provides the funding necessary to implement the information technology system changes required pursuant to the provisions of House Bill 1713 and Senate Bill 1044 of the 2017 General Assembly for both General District Courts and Circuit Courts. The funding approved during the 2017 General Assembly session only covered the cost of implementation for the General District Courts. This item is not set out in SB 29. It is the intent of this amendment that the Item would be set out during enrolling.
SB 30 Item 272 #1s
Accelerated Sales Tax Workgroup
Explanation: This amendment would direct the Department of Taxation to convene a workgroup to examine the provisions related to the timing of payments and return filings required of registered retail sales dealers, and to consider policy options related to Accelerated Sales Tax requirement.
Below is a brief review of the major issues from the 2018 General Assembly Session.
Felony Threshold for Larceny:
As a part of the bi-partisan negotiation on the Felony Threshold increase, both the House and Senate have passed legislation to increase the felony threshold for larceny to $500. SB 105 and HB 1550 are now before the Governor for signature. A very important part of this negotiation was the legislation to strengthen restitution in the Commonwealth. HB 484 (approved) and SB 994 provide that if restitution is ordered at sentencing, the court will place the defendant on probation until restitution is paid in full. Virginia Retail Federation strongly supported Delegate Bell’s legislation. HB 484 has been approved by the Governor and the rest are before him for signature.
Senator Lewis introduced legislation again this year with regard to our recycling initiative. SB 218 does several things, including adding the definition of recycling for beneficial use to the code as well as direct the Department of Environmental Quality to create a report by November 2019 on how to improve recycling over the next 10 years. Virginia Retail Federation has always been supportive of recycling initiatives, and we continue to be with this legislation. The legislation has passed out of both bodies and is now before the Governor for signature.
There were two bills that reported out of subcommittee with regard to wage theft. Delegate Krizek’s HB 551 that seeks to create a private cause of action for nonpayment of wages. Allowing the employee to recover the amount of wages due plus interest at eight percent annually from the date the wages were due. In addition, the employee will recover attorney fees and other costs if the court finds that the employer knowingly failed to pay wages. The employee can even recover triple the amount due in certain situations.
This bill was defeated in full committee on a vote of 9 to 9. Delegate Habeeb introduced HB 259 which creates new requirements for employers in addition to a new cause of action against employers for failure to pay employees. This bill passed out of Courts but was defeated in House Appropriations Subcommittee on vote of 5 to 3.
Senator Wagner introduced SB 661 which removed certain exemptions from the Virginia Minimum Wage Act. It also required attorney fees incurred by an employee who is awarded judgment for an action in violation of the act. It expanded the information an employer is required to provide to employees when wages are paid. And finally, it authorized the Commissioner of Labor and Industry to institute proceedings against an employer if he has reason to believe the employer has engaged in a patter/practice of violations. This bill was defeated in Senate Commerce and Labor 6 to 7. The Virginia Retail Federation opposed all wage theft bills.
There were several labor bills that were defeated in House Commerce and Labor Subcommittee. Virginia Retail Federation opposed all of these bills due to the negative impact they would have on our members.
- Delegate Rasoul introduced HB 240 which prohibits prospective employers from inquiring about a prospective employee’s wage history either from the prospective employee or from the former employer of the prospective employee. It also established a civil penalty for violations.
- Delegate Jay Jones introduced HB 243 which would require employers to compensate employees for time that said employee is serving on jury duty. The measure also creates a private cause of action for violation.
- Delegate Carter introduced HB 463 which requires employers to provide employees with unpaid break times for meals and creates a civil penalty for violation of this requirement. This legislation would create rigid requirements for meal breaks that would not work for all employers.
- Delegate Ayala introduced HB 626 which prohibits an employer from requiring employees to refrain from discussing or disclosing information about wages with fellow employees and creates a civil penalty for violation of this.
- Delegate Murphy introduced HB 653 which mandates sexual harassment training for employers in the Commonwealth and would create a civil penalty for each violation.
- Delegate Tran introduced HB 1109 which requires an employer to compensate its employees who are entitled to overtime compensation under the federal Fair Labor Standards Act at a rate (i) not less than one and one-half times the employee’s regular rate of pay for any hours worked in excess of 40 hours in any one workweek and (ii) not less than twice the employee’s regular rate of pay for (a) any hours worked in excess of 12 hours in one workday and (b) any hours worked on the seventh day of work in any workweek to the extent that the hours worked on such day exceed 40 hours worked in such week. The sanctions for an employer’s failure to pay such overtime wages, including civil and criminal penalties, are the same as currently provided for failing to pay wages generally. This legislation was duplicative of Federal law.
- Delegate Krizek introduced HB 1259 which was directed at the tipped wage exclusions from the Minimum Wage Act. One of the provisions of this legislation would require employers to pay tipped employees the current minimum wage rate and said employee would receive tips on top of minimum wage. Currently, tipped employees can receive $2.13 an hour and use tips to reach minimum wage.
- Delegate Murphy introduced HB 1543 which provides that the two-year statute of limitations for filing workers’ compensation claims is tolled during the period the employer pays compensation or wages or furnishes medical service to the employee. Meaning that the statute of limitations is not running during this time, extending the time in which an employee can file a workers compensation if said employee is receiving compensation, wages, or medical services from the employer.
- Delegate Lopez introduced HB 1562 which provides that an employing unit that willfully fails or refuses to furnish a report required by the Unemployment Compensation Act or to produce or permit the inspection or copying of records is liable to a penalty of $1,000 for each offense. The measure also authorizes the Commissioner of the Virginia Employment Commission to order an employer that continues to violate such provisions after three days’ notice to cease and desist all business transactions and operations until it is found to be in compliance.
- Delegate Carroll Foy HB 1569 introduced legislation that would require predictive scheduling for employers. This legislation requires employers to give certain employees, prior to the first day of work, a good faith estimate of the employee’s expected minimum shifts per month and the days and hours of those shifts. The measure also requires employers to provide each employee on a biweekly basis with at least two weeks’ prior notice of the employee’s expected work schedule over the ensuing two-week period. Violations of this would be subject to civil penalties.
- Delegate Yancey introduced HB 1080 which requires employers to provide a reasonable place for employees to express breast milk. This bill passed out of Commerce and Labor, but was defeated in House Appropriations Subcommittee on a vote of 8 to 0.
Delegate Habeeb introduced HB 1336 which would have allowed a judge to give a jury an inference instruction with regard to destroyed or altered evidence. This bill did not require bad faith to be present, it could be simple negligence and the instruction could still be given to the jury. This legislation sought to overturn a unanimous Virginia Supreme Court decision that came down in December 2017. The bill made it out of the House, but was defeated on the floor of the Senate. The Virginia Retail Federation, along with a very large business community collation, opposed this bill because of the potential negative impact it would have on our members.
There were several bills introduced that either sought to ban plastic bags or to tax plastic bags. Senator Petersen’s SB 139 would have implemented a $.05 tax on plastic bags within the Chesapeake Bay Watershed. This would have required our members within this geographical area to collect this tax from its customers. Senator Locke introduced SB 193 which would allow localities to choose whether or not they would like to ban plastic shopping bags. Delegate Rodman introduced HB 981 which would allow localities to choose to tax distribution of disposable paper and plastic bags. Virginia Retail Federation maintained its position of opposition, and highlighted our encouragement of recycling efforts. All of these bills were defeated in committee.
There were two product ban pieces of legislation which impact our members. The first was Delegate Lopez’s HB 951 which would prohibit both the manufacture and sale of upholstered furniture intended for residential use, or any product intended to come into contact a person younger than 12, if said products contain certain flame-retardant chemicals. This ban was very broad and would impact many of our members. We have seen this legislation in past years and continued our position of opposition this year. This bill was defeated in sub-committee by a vote of 4 to 3. In addition to this, Delegate LaRock introduced HB 1592 which would prohibit the distribution or sale of any product that can access the Internet, unless such product contained a content blocking system which rendered obscene content inaccessible. This bill would have a huge impact on our members if it were to pass. It would open up our members to potential liability for selling a product that does not contain the content blocking system. VRF opposed this legislation because of the negative impact it would have on retailers. The bill failed to pass out of House Courts Subcommittee #2 due to lack of a motion by the committee members.
Senator Locke’s SB 115 would increase the maximum meals tax that any county is authorized to impose and remove the requirement of a referendum to do so. This would mean that a county could implement an increase in the meals tax without holding a referendum and hearing from the voters within the county. VRF has a long-standing position of opposing these efforts. The bill was defeated in Senate Finance on a vote of 9 to 4.
Several mandated paid leave bills were heard in committee in both the House and the Senate. Senator Favola had two paid leave bills: SB 41 and SB 736. The first piece of legislation covered Sick Leave that could be used for care of immediate family members. The second piece of legislation mandated the establishment of a paid family leave for businesses with 50 or more employees.
Senator Wexton introduced SB 421 which mandated a paid medical leave program for private employers with 50 or more employees. In addition to these three Senate bills, Delegate Guzman introduced HB 973 which establishes a mandated paid medical and family leave and even includes civil penalties. HB 40 introduced by Delegate Levine, would establish a Family Medical Leave Insurance Program. Virginia Retail Federation maintained its position of opposition to all of these bills.
We emphasized that our members value the flexibility they have with the current law, and oppose a mandate being place on them. Our members feel that they should be able to make a business decision as to whether or not they can afford to offer paid leave. All four of these bills were defeated in committee.
Delegate Head has introduced a bill for the last three years seeking to codify the relationship between Franchisee and Franchisor with regard to the status of the employees of the Franchisee. The legislation has been vetoed by the Governor every year. This year Delegate Head introduced HB 110 which is identical to the legislation vetoed last year. VRF has supported this bill on behalf of its members over the last three years, and did so again this year. The bill has been Vetoed by the Governor.
Delegate Robinson introduced HB 1379 which seeks to allow retail licensees up to three days, at the discretion of the ABC board, to produce all ABC records. This bill is now before the Governor for signature.
We had several bills on the topic of Accelerated Sales Tax. Senator Sturtevant introduced SB 746 and Delegate Head introduced HB 1339 which are identical bills that seek to phase out Accelerated Sales Tax and create notice requirements if the threshold changes between now and 2020. Both of these bills were carried over until 2019, giving the interested parties time to determine if it is financially possible for the state to eliminate AST completely.
Delegate Wilt introduced HB 512 which would completely eliminate AST by 2020, the subcommittee recommended referring this legislation to Appropriations due to the fiscal impact to the state budget and was left in committee. Virginia Retail Federation is very appreciative to Senator Sturtevant, Delegate Head, and Delegate Wilt for their willingness to carry this legislation. We emphasized to the committees how important this issue is to our members.
Delegate Davis introduced HB 966 which would eliminate the BPOL tax, eliminate the grocery tax, and eliminate the bottom two income tax brackets by imposing a tax on services. There are several exemptions to the tax on services including business to business exemptions. Some of our you may remember this concept from the Thomas Jefferson Institute study that was done several years ago.
VRF supported the concept of this legislation because of its efforts to eliminate the BPOL tax. The legislation was carried over to 2019, which will allow all interested parties time to work on this concept outside of General Assembly Session.
Another tax issue that we worked on was Delegate Watts HB 1051 which applied the communications sales and use tax to streaming services and prepaid calling service. Among many things, this would possibly institute a double taxation on prepaid cell phones. VRF opposed this legislation due to the negative impact it would have on our members. The bill was passed indefinitely by House Finance Committee by a vote of 22 to 0.
This is just an overview of some of the legislation introduced that had an impact on the retail industry. To view a list of the over 200 bills that we followed please visit virginiaretailfederation.com.