Michigan Developments
Eric Rule,
Director of Governmental Affairs

Credit card skimming bill introduced
MRA-supported legislation was introduced to fight illegal “skimming” of customer credit card information, a growing fraud concern.

Skimming occurs when employees or others swipe a credit card through a mobile device that stores the data, which can be downloaded later to a computer for unauthorized use. The devices can be as small as a pager and hold up to 96 different credit card data sets.

House Bills 6192 and 6193, sponsored by Rep. Mike Bishop (R-Rochester), would make it illegal to possess devices capable of carrying out this fraudulent activity. There is no other known function for these devices.

Action is not expected on the package until fall.

MRA backs fire safety tax exemption
MRA’s Eric Rule participated in a May 10 press conference with Lt. Gov. Dick Posthumus announcing a package of bills intended to reduce fire fatalities in Michigan. The “Burkart Package” is sponsored by a group of legislators led by Sen. Shirley Johnson (R-Royal Oak).

The bills would require fire alarm systems and fire suppression equipment in all apartment buildings. They also exempt fire extinguishers, fire alarm systems and fire suppression equipment from Michigan sales and use tax and provide a refundable income tax credit of up to $100 for individuals purchasing fire safety equipment.

MRA encourages retailers who sell fire safety equipment to promote awareness of fire safety in their stores as part of the retail community’s participation in this effort.

Meyer testifies on sale of explicit materials

MRA Chairman and CEO Larry Meyer voiced his concerns with House Bill 4979 to members of a House Commerce subcommittee.

The bill places restrictions on how “sexually explicit material” can be displayed by businesses. The bill would require businesses to establish separate areas for such material and ensure that minors’ access to that area is restricted.

Meyer asserted that the bill is far too broad in its wording and could have a severe impact on retailers who do not consider themselves to be selling pornographic materials. The bill is not clear on whether magazines such as Cosmopolitan or even romance novels would be included in the requirements.

The bill covers both written and visual material and sets a low threshold for designating these materials as sexually explicit.

Bill sponsor Rep. Triette Lipsey Reeves (D-Detroit) has agreed to hold off on further action until MRA and other interested groups can discuss the impact on retailers.

Legislators face difficult budget choices
Michigan’s budget situation for fiscal years 2002 and 2003 is presenting legislators with difficult choices in their quest to produce a balanced budget and adjourn for a summer of campaigning. The main options are increasing taxes on cigarettes by 30 cents a pack, halting the rollbacks of the Single Business Tax and income tax, or making painful cuts in spending.

Senators voted down an increase in the tobacco tax proposed by Sen. Joel Gougeon (R-Bay City). Legislators also seem unwilling to freeze tax cuts in an election year.

Even more unpopular, however, may be the deep spending cuts necessary if additional revenue is not secured. In the end, a tobacco tax increase may prove to be the least politically unpopular option.

Update from Washington
James Goldberg,
MRA Washington Counsel

House passes permanent repeal of estate tax
By a 256-171 vote, the House has voted to make permanent the repeal of the federal estate tax. The estate tax is scheduled to be phased out by 2010 but will be reinstated on January 1, 2011, due to a quirk in the way Congress must enact such measures.

The vote is largely symbolic, since observers give the measure virtually no chance of clearing the Democrat-controlled Senate.

Most Democrats would like to retain some form of the estate tax. They are looking at creating a permanent $3 million exemption and perhaps freezing the previously adopted rate reductions.

Overtime exemptions slated for update
The white-collar exemptions from federal overtime pay requirements haven’t been changed in more than 25 years, but the Department of Labor may well get around to revising them next year.

Department officials have been meeting with representatives of various industry groups, including MRA’s Washington Office, to determine where the problems are in the current regulations and how business would like to solve them.

Under current law, employees categorized as professional, executive or administrative don’t have to be paid overtime, provided their job duties meet certain criteria. Many retailers encounter difficulties classifying store assistant managers, who usually do a substantial amount of selling (not exempt from overtime) in addition to managerial responsibilities.

The Labor Department is considering requests to adopt a so-called “super upset” test, under which employees who receive more than a certain annual salary would be exempt from overtime, regardless of their duties. The problem lies in setting the salary level. Most manufacturers pay substantially higher salaries than retailers, setting up the possibility of a two-tier system, which is certain to meet with strong union objections.

Also possible is a fix of the so-called “pay docking” issue, under which an otherwise overtime-exempt employee becomes entitled to overtime if he or she is docked less than a full day’s pay for an absence from work.

Minimum wage hike may be on tap
Talk continues on Capitol Hill, especially in the Senate, about an increase in the federal minimum wage later this year. It’s always a good election-year issue, especially for Democrats, and the effort, if launched, is likely to pick up support from moderate Republicans as well.
MRA’s Washington Office has been working with a coalition of business interests to craft a package of amendments that would benefit retailers if a wage hike is approved.

Debit card suit could bring retail windfall
A largely overlooked lawsuit working its way through the federal court system could result in a huge financial windfall for the nation’s retailers.

Wal-Mart, Sears and Safeway are named plaintiffs in a class-action suit against Visa and MasterCard, arguing that retailers should not be forced to accept their branded debit cards, which carry processing fees that are substantially higher than those of conventional, bank-issued debit cards.

To ensure that their debit cards caught on, Visa and MasterCard imposed an “honor all cards” rule on retailers, forcing them to accept the new debit cards if they wanted to continue accepting credit cards.

The retailers sued and have won a series of pretrial rulings. The major issue pending is whether the case should proceed as a class action on behalf of all retailers who accept these cards rather than just those named in the litigation.

The two credit card companies have estimated their exposure at more than $39 billion.

New fees considered for electronics disposal
MRA’s Washington Office is closely watching the activities of the National Electronic Product Stewardship Initiative, which has been quietly looking into the environmental costs of disposing of certain allegedly hazardous consumer electronics products such as computer screens and television sets.

The group is considering whether to require retailers to collect a fee at the time these products are sold to pay for the cost of disposal. No fee could be imposed unless the Environmental Protection Agency issued a regulation (after public comment) or Congress passed legislation authorizing it.

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