Illinois lawmakers threw a curve ball at the plumbing industry when a bill unanimously sailed through the House that would limit the traditional service repair role of the contractor, effectively knocking off small businesses. The Service Contract Act, which is awaiting Senate approval, would only allow companies with $100 million in net worth to offer service contracts and extended warranties.
“We’re not too pleased with this piece of legislation,” said Bev Potts, education and regulatory affairs coordinator for the Illinois PHCC. “It is a piece of legislation that is very much in concert with what the utilities and large retailer merchants have been trying to do for the last several years.”
Also known as HB 3464, the Service Contract Act sets a very strict criteria and registration process for contractors doing residential service work. In addition to $100 million in net worth, the bill requires extensive record keeping, registration and contract disclosure requirements.
The bill, sponsored by Frank Matino (D) and Bill Brady (R), quickly moved through the House undetected by trade organizations and many lawmakers. HB 3464 originally amended the insurance code to add a caption in a section pertaining to unearned premiums upon the death of the insured. The bill had nothing to do with residential service work until the latest amendment.
“The original bill wouldn’t red flag anything in the PHC industry,” Potts said. “We weren’t aware it happened until after it did.”
Only utilities and large retailers, like Sears or Home Depot, would be able to offer service contracts and extended warranties on items like water heaters and boilers, according to Potts. The bill said service contracts cover the repair, replacement or maintenance of “the heating, cooling, plumbing, electrical, ventilation or any other similar system of a home.”
“It would limit consumer choice as to who could work on their plumbing, heating, cooling and electrical systems just because of the small amount of people left who could work on the system, and who can do that type of work,” said Potts. “It’s consistent with the utilities’ attempt to run small businesses out in order to control the service market.”
The bill is currently waiting to be studied by the state’s Insurance and Pensions Committee before heading to the Senate for a vote. Potts said a hearing date has not yet been set. The bill is supported by the Illinois Retail Merchants Association. This appears to be the retail merchant’s way of thanking the utility for the early rate cut for supporting the utility deregulation position.
“We are contacting committee members to let them know of our opposition and fears if this bill is passed,” said Potts. “We would like to see the bill not even be called for a vote in the Senate.”