Michigan Developments
Eric Rule,
Director of Governmental Affairs

Governor signs water regulation bills

After months of workgroups and negotiations, a package of bills designed to provide Michigan with a regulatory environment for certification of large water withdrawals passed both the House and Senate and was signed into law by Governor Jennifer Granholm. They went into effect immediately.

The laws don’t have a large impact on normal business operations outside of manufacturing and industries that rely heavily on water usage. Businesses such as golf courses could have been severely impacted by this package, but lobbying efforts successfully limited permit fees to new users over a certain capacity.

Golf courses already report their water usage and, therefore, should not be greatly affected unless they are within a quarter-mile of a designated trout stream.

The concept of “capacity” nearly caused problems for numerous businesses that use a well, but that hurdle was avoided by basing regulation on actual usage rather than capacity. The bills originally said that anyone with the capacity to use over 100,000 gallons a day would have to place a monitoring device on their pumps and report that usage to the state, even if the business’s actual usage never approached that capacity.

Youth employment bill vetoed

Gov. Granholm vetoed a bill that sought to clarify how many hours per week a student under 18 can work. Senate Bill 179, sponsored by Sen. Tony Stamas (R-Midland), would have simplified the way student work hours are calculated.

Current state law, which limits the total number of hours of work and classes to 48, presents numerous challenges for employers when attempting to determine who may work how many hours, especially when students from multiple school districts with different hours of instruction are involved. Stamas’ legislation would have limited the number of hours a student can work to 20 per week, regardless of class hours.

Granholm has long opposed the idea—she vetoed a similar 2004 bill that set the total hours at 22. In her statement on the current bill, she wrote: “While I support efforts to reduce administrative burdens for employers, I am concerned that increased hours in the workplace for students will lead to decreased performance in the classroom and on standardized tests.”

Stamas countered that the bill still allowed a student or parent to order a business to scale back the teen’s hours if necessary. He also argued that young people benefit from the opportunity to work part-time so they can “gain invaluable experience while getting their education.”

Attorney General wants drug pricing data

Attorney General Mike Cox held a press conference calling for measures that would make it easier for consumers to comparison shop for prescription drugs—the result of an investigation launched by his office.

Cox would like information available via a website run by the Michigan Department of Community Health informing customers about the prices of the 150 most commonly prescribed drugs by zip code.

Cox is also investigating 17 pharmacies for price gouging. MRA has requested a meeting with him to show how the investigation was flawed and the pharmacies were not negligent in their behavior.

Retailers oppose health care mandates

A Senate bill that would force large businesses to spend an arbitrary amount of their payroll on health care appears to target giant retailer Wal-Mart. Sponsored by Sen. Ray Basham (D-Taylor), the bill is similar to laws already passed in other states, notably Maryland.
MRA opposes the bill, which offers no real solution to the problem of health care access and affordability. It would discourage businesses from offering higher quality coverage at a lower cost and would do nothing to make health care more affordable and accessible.

Ten state legislatures already have dealt significant setbacks to employer mandate bills because of their negative effects on businesses and jobs.

The Retail Industry Leaders Association (RILA), which represents large retailers, has filed lawsuits challenging similar laws in Maryland and Suffolk County, New York. RILA argues that the two laws illegally mandate specific health care expenditures and threaten to take away flexibility businesses need to deal with their employees.

The simplest way to become involved in helping MRA with its legislative agenda is with a donation to the MRA PAC. Contact MRA’s Kathy Wilson at 800.366.3699 or kwilson@retailers.com to contribute.

Update from Washington
James Goldberg,
MRA Washington Counsel

Déjà vu all over again

U.S. Treasury Department officials have said the department will study standards used to distinguish the classification of individuals as employees or independent contractors, saying that the topic deserves more attention than it has received.

This issue crops up every few years, only to wither away for lack of follow-through, so Washington observers may be forgiven if they don’t get excited until there is actual progress on a study.

Two years ago, the National Taxpayer Advocate floated an idea for mandatory tax withholding for all payments to independent contractors. Throughout the late 1990s, MRA’s Washington Office representatives participated in a lobbying coalition seeking congressional action on a bill that would provide a “bright line” test for when an individual was to be properly treated as an independent contractor.

The issue is important for employers, who must pay their share of Social Security and Medicare payroll taxes on employees but not on independent contractors, and who can face IRS penalties in an audit if they improperly classify someone.

In order to determine the proper status of a worker, the IRS has been using a 20-question test to help it determine how much control the employer exercises over the worker’s job performance. The greater the level of control, the more likely it is that the individual is an employee, regardless of what the business considers him or her to be.

Final deadline for settlement claims

The deadline for most retailers to file claims to receive their share of the $3.1 billion settlement of a class-action lawsuit against Visa and MasterCard has passed (December 28, 2005), but some merchants may still have a little time left.

More than 8 million claim forms were sent to eligible retailers last summer, and those companies that received more than one claim form (usually because they have more than one store location) can still submit requests to consolidate their claims until March 31.

The first checks from the settlement fund are expected to be in the mail later this year.

Congress approves digital TV deadline

Tucked away in a $39-billion spending bill signed by President Bush in January is a measure requiring TV broadcasters to convert to all digital signals by February 2009.

The conversion has been pending for a few years, but reluctance to make a total switchover arose because such a move would make virtually obsolete all existing analog TV sets.

So, as part of the digital TV requirement, Congress included a provision requiring the government to implement a program under which all U.S. households may obtain, on request, up to two coupons (worth $40 each) that can be applied toward the purchase of set-top converter boxes that will translate digital signals into analog format.

Coupons would be distributed starting January 1, 2008, in post offices and other government buildings, as well as electronically.

The move to digital is expected to create a major selling opportunity for electronics retailers, who could heavily promote the sales of digital-ready TV sets as well as multi-purpose converter boxes.

New lawsuit challenges federal tax

In the last issue, we reported on the growing number of lawsuits that have challenged the federal government’s right to collect a 3-percent tax on flat-rate long-distance telephone calls.

Now, RadioShack Corporation has filed what it hopes to be a class-action suit seeking to end the levy permanently. If the litigation is successful, the federal government might have to refund as much as $9 billion in back taxes that were erroneously collected.

The tax dates back to the 1960s and defines “taxable service” as the rate computed based on the distance and time of each call.

However, most telecommunications carriers have not used that system for years, preferring instead a flat, per-minute rate for each call or a bundled price to cover all long-distance calls in a month.

If the litigation is certified as a class action, MRA members might be eligible for refunds, even if they amount to only a few dollars. MRA’s Washington Office will closely monitor the judicial proceedings.

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