Michigan Developments
Eric Rule,
Director of Governmental Affairs

Attorney General fines Home Depot record amount
Michigan Attorney General Jennifer Granholm announced the largest settlement to date under the state’s item pricing law: a potential fine of $500,000 against Home Depot.

According to Granholm’s office, the settlement requires the Atlanta, Georgia-based home improvement retailer to pay fines of $250,000 within 30 days. The company can avoid another $250,000 in fines if it is found by state inspectors to be in full compliance with details of the settlement agreement.

The agreement calls for Home Depot to implement proactive programs to improve pricing practices at all 45 Michigan stores. The company has pledged to provide enough staff, equipment and signage to ensure full compliance with the pricing law, which requires price stickers on virtually every product in a store. The company must also conduct weekly audits in each store to make sure prices are marked clearly on items as required by the 1976 law.

In cases of some building products such as drywall and lumber, the company may provide customers with a sheet that clearly lists products and specific prices.

Security guard bills exempt store personnel
A package of Senate bills increasing the training requirements and licensing fees for private security guards in Michigan has passed the House.

As passed, the bills do not extend their requirements to proprietary security personnel. MRA worked very hard to make sure store employees were exempt, arguing that most retailers have already implemented extensive training regimens that would meet or exceed any standards mandated by the state.

Although the Senate bills that passed are no longer problematic, a similar package of House bills is still lurking in a House committee, possibly to see action in the fall. Legislators involved in that package indicate there may be some support for including proprietary personnel in some training requirements.

The private security industry is arguing that retail employees are the majority of the problem. MRA is working to deflect that criticism and educate legislators on the extensive training requirements employed by retailers in loss prevention.

Governor Engler vetoes hospital group's bill
Governor John Engler vetoed the Hospital Quality Assurance Assessment bill, legislation that would have enabled the state to receive $83 million in federal funds to cover the state’s rising Medicaid costs.

Spencer Johnson, president of the Michigan Health and Hospital Association that pushed the legislation, accused the governor of vetoing the bill in retaliation for the hospitals’ current petition drive. The hospitals are backing a constitutional amendment to require the lion’s share of the state’s annual tobacco settlement funds to go to specific anti-smoking and other health programs, including those run by the hospitals.

In vetoing the measure, the governor said it would be fiscally irresponsible for him to sign a bill while special interests advocated a constitutional amendment that would jeopardize the state’s finances.

Johnson called the veto a “mean-spirited salvo directed at hospitals who cared to cross the governor by asking for fair and adequate funding.”

The organization was urging lawmakers to override the governor’s veto of House Bill 5103, but Senate Majority Leader Dan DeGrow (R-Port Huron) called that possibility “non-existent.” According to Lansing-based Michigan Information & Research Service, lawmakers haven’t overridden a governor’s veto in more than 20 years.

Detroit mayor punts on governor's race
Detroit Mayor Kwame Kilpatrick was expected to announce that he is not endorsing a candidate in the August 6 Democratic primary for governor, despite earlier stories that he would back Attorney General Jennifer Granholm.

Vote-rich Detroit is a major battleground for Granholm, former Governor James J. Blanchard and Congressman David Bonior.

Bonior’s camp claimed the mayor’s decision to stay neutral was the result of organized labor pressuring Kilpatrick on Bonior’s behalf. However, polls have shown Blanchard making a strong showing among Detroit voters and he has also received endorsements from city religious leaders.

A Granholm spokesman said her campaign had been waiting for a formal announcement from the mayor before trumpeting the rumored endorsement.

FTC receives new data on do-not-call
The National Retail Federation has given the Federal Trade Commission new data that documents customers’ acceptance of telemarketing calls from retailers, particularly calls from companies they have done business with before.

The data was submitted in response to the FTC’s proposal to establish a national “do-not-call” list for telemarketers. Retailers are attempting to demonstrate to the FTC the importance of providing an exemption for established business relationships.

The filing included data from four major retailers who had conducted telemarketing campaigns, presenting each as a case study. The companies were not identified, but all were household names.

In the first case, a company that called only existing customers found that an average 10.5 percent of those called made purchases. Only 0.8 percent asked to be removed from the company’s calling list. In the second case, another retailer called both existing customers and new individuals (cold calls). A slightly higher percentage - 15 percent - made purchases, but a far higher number - 5.7 percent - asked not to be called in the future.

In the third and fourth cases, the number of purchases was 16 percent and approximately 27 percent, respectively, while do-not-call requests were 1.2 percent and less than 0.1 percent.

NRF believes the numbers clearly support the case for an established business relationship exemption to the proposed Do-Not-Call list. The data shows that consumers do purchase from retailers who call them by phone and that they are aware of their right to ask not be called again and already exercise that right.

It also shows that while both cold calls and calls to existing customers can be successful, the number of requests not to be called again is much higher with cold calls. This suggests that even when well-known companies are involved, consumers are less inclined to discourage future calls from companies with which they have an existing relationship.

Bankruptcy negotiators reach tentative agreement
House-Senate negotiators working on a final version of the bankruptcy bill say they have reached an agreement in principle on the controversial issue of whether individuals involved in attacks against abortion clinics should be allowed to erase their debts by filing bankruptcy.

The tentative agreement was reached June 18 at a meeting between Senator Charles E. Schumer, D-N.Y., Representative Henry Hyde, R-Ill., and other members of the bankruptcy conference committee. Congressional staff have been working on the precise wording since then, but that process could take some time.

Lawmakers say the agreement would place limits on the ability of violent and obstructive abortion clinic protestors to discharge court-ordered fines in bankruptcy, while still preserving their ability to engage in peaceful protest.

Schumer inserted the abortion language into the Senate bankruptcy bill last year, saying he didn’t want abortion protestors to be able to use bankruptcy to get out of paying fines that result from protests. But Hyde has argued that existing case law already prevents that, making Schumer’s language unnecessary.

NRF believes the abortion issue is essentially extraneous and has led a campaign to urge negotiators to resolve the matter. NRF has sought reform for years because bankruptcy claims cause direct losses for retailers who offer their own credit programs and drive up fees charged by credit card issuers.

IRS backs down on payroll taxation of stock options
Retailers won a victory when the Internal Revenue Service backed down on a proposal to begin applying payroll taxes to employee stock options.

The IRS said it would extend its 30-year tradition of not applying payroll taxes to stock options “indefinitely.” Officials said the proposal could be brought back up, but that employers would not be required to implement any changes until at least two years after the issuance of a final regulation. That works out to at least January 1, 2005, instead of the January 1, 2003, date proposed earlier.

NRF will continue to seek permanent withdrawal of the taxation proposal and, if necessary, legislation to block its implementation. But the IRS announcement is nonetheless good news for the retail industry, which uses stock options to attract and retain employees ranging from rank-and-file workers to the executive level.

Return to July/August Michigan Retailer Page one