Expansive Mandatory Paid Leave Bill Being Rushed Through the House

The House Ways and Means Committee is poised to pass out H.66, imposing mandatory paid family leave and expanding unpaid leave mandates to all employers, after the Legislature returns from the upcoming Town Meeting Week break.  The Committee leadership appears determined to move the bill after they return on March 14 without fully examining and considering how much more expansive and expensive the paid family and medical leave mandate would be compared even to those states that have such policies – and most states do not have mandatory paid family and medical leave policies or impose unpaid leave mandates on all very small employers like H.66 would.

The bill is expected to go to the House Appropriations Committee after Ways and Means completes its work and votes on the bill. However, these costs and resulting tax burdens are issues that should be addressed in the Ways and Means Committee.  Employers are strongly encouraged to contact the House leadership and members of the Ways and Means Committee and urge them to examine the cost differences between H.66 and the laws in other states with mandatory paid leave and understand the implications of how much more expensive H.66 would be owing to higher wage replacement, higher benefit caps, massively more expansive definition of “family members”, and other factors.

Contact information for the Ways and Means Committee can be found by clicking here.  Contact information for the House Speaker can be found clicking here.

Below are highlights of AIV’s testimony in Committee this week.  If you are interested in more information, future updates, and opportunities to engage on this issue, please contact us at info@aivt.org.  For more details on H.66, see the related post here.

Overall Concerns and Recommendations

AIV provided these comments to the Ways and Means Committee on H.66, which would create mandatory paid medical, family, and safe leave as well as greatly expand unpaid leave.  AIV does not support H.66 in its current form, owing primarily to cost, uncertainty, need, and competitive pressures on employing Vermonters.

AIV strongly recommended that the Committee continue to further examine H.66 in clear comparison to other states with active or pending paid leave statutes, particularly with regard to scope, duration, and especially wage replacement levels for both benefit calculations and maximum benefit caps.

AIV also recommended that the Committee consider H.66 in the context of the several other proposals before this Legislature that would increase the cost of employment, as well as existing labor costs and competitive pressures so as to consider the impact on both tax capacity and competitive challenges for companies employing Vermonters.

Finally, AIV recommended that the Committee consider alternative provisions that could encourage and support employers to provide paid leave through individual or voluntary group programs.

Broader Vermont Labor Cost Context

As the Committee considers H.66, AIV encouraged recognition of key drivers in the greater context of labor costs in Vermont.

Vermont has long faced competitive challenges across many cost categories, including labor.  With the recent increase in the challenges to filling open positions, like other sectors manufacturers have had to increase wages, and have had the additional cost of having to increase in-house training.  This has placed additional pressures on not only payroll sustainability but diverted funds from other critical needs.

Finally, it should not be ignored that there are several proposals before this current Legislature that could significantly increase both labor costs and other costs and challenges for businesses employing Vermonters.  The potential impacts of H.66 should not be considered in isolation from these proposals.

Considering H.66 in Context of Other Paid Leave States

Not only do most states not have mandatory paid family and medical leave, but compared to the states that have active programs or have programs pending, H.66 tends to be significantly more expansive in both scope of eligibility, level of benefits, and in some cases duration of benefits.  This not only raises questions about reasonableness and necessity, but especially raises concerns about costs and taxes to pay for those costs.  AIV believes that it is critical that the Committee review and consider the definitions of parties and circumstances that qualify for benefits, the wage replacement formulas and caps, and other key metrics in clear, apples to apples terms.

Costs and Uncertainty

On its face, the expansiveness of H.66 leads to serious concerns about costs, both relative to states without such programs but also relative to those that do have them.  Compounding these concerns, however, is uncertainty.  One particular concern with regard to uncertainty is participation.

As discussed in Committee previously, Rhode Island has been used as a reference for participation.  However, Rhode Island’s laws are significantly different from H.66H.66 has a broader definition of family coverage (e.g. siblings, “family equivalent” relationships, etc.), arguably a broader definition for individual coverage (Rhode Island links to ability to perform work duties), and safe leave, and although Rhode Island allows longer individual disability duration, it only recently went from four weeks for family leave to five weeks in 2022, and both the wage replacement formula (about 60% of average weekly wages) and the benefit cap (85% of the previous year’s state average weekly wage) are much lower than in H.66.

This would appear to suggest that H.66 could attract greater participation rates that would undermine the reliability of modeling relying on Rhode Island.  AIV believes the Committee should examine this modeling reliability concern more closely.

Moving Forward

As noted above, AIV strongly recommended that the Committee review and consider the various details and issues outlined before proceeding further with H.66, and consider alternative approaches including provisions promoting and supporting voluntary paid leave policies.

To assist in reviewing other state programs, AIV provided copies of and links below to some documents and resources:

  • The Mercer report, “2022 State Paid Family and Medical Leave Contributions and Benefits” provides a good overview and breakdown of existing paid leave programs in other states. It is especially helpful in providing statutory and regulatory citations to help understand details. (Click here for the report)
  • The comparison chart for existing and pending paid leave programs in other states from the Bipartisan Policy Center provides less detailed information but covers states whose programs have not yet taken effect. (Click here for the chart)
  • A shortcoming common to both documents above is that they sometimes present dollar figures without explaining how they compare or are statutorily linked to state average wages. Looking at underlying statutes can address this (as well as show differences in coverage definitions), but for a simpler way to put dollars into rough context, AIV provided a link to state average wages in 2021 and 2022 from the Bureau of Labor Statistics. (Click here for the link)

AIV will also be following up with further work synthesizing the information available from these and other resources, including the underlying statutes and regulations, to present helpful comparative information.

AIV also provided the Committee a link to the already existing, General Fund-financed “Domestic and Sexual Violence Survivors’ Transitional Employment Program”, which already provides the kind of support for victims of domestic and sexual violence that the bill seeks to provide as mandatory paid “safe leave”. (click here)