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Vermont paid family leave law inches closer to reality

MONTPELIER — The Vermont House late last week advanced legislation that would establish a statewide paid family leave benefit funded by a payroll tax paid by workers, or employers who volunteer to cover the cost.
In a vote of 92-52 on Friday, lawmakers approved the program, which would be administered by a private insurance carrier and grant employees 12 weeks of family leave or eight weeks of medical leave per year. The body gave final approval on Friday.
While the paid family leave bill, H.107, won a wide margin of support, the vote demonstrated that Democrats may fall just short of the support they would need to revive the measure if the bill is vetoed by Gov. Phil Scott.
Rep. Robin Scheu, D-Middlebury, was lead sponsor of H.107. A member of the House Ways & Means Committee, Scheu believes that bill — if passed into law — will “change people’s lives.”
“I am so excited about this bill,” Scheu said during a phone interview. “I was thrilled to be asked to be the lead sponsor last fall. It’s something I very strongly believe in. This is one of the most meaningful things I’ve done since I’ve been in the Legislature. I’ve been honored to work on this and so thrilled to see it pass out of the House with the kind of support that you want to see for a bill like this.”
A slate of more moderate Democrats and independents joined Republicans in voting against the program, expressing concerns over the cost of the program and requiring employees to opt in.
Among the Addison County delegation, only Rep. Harvey Smith, R-New Haven, and Terry Norris, I-Shoreham, voted against the bill.
The bill now goes to the Senate, where it’s expected to pass by a comfortable margin. It will then head to Gov. Phil Scott’s desk. Scott has stated his discomfort with legislation that makes paid family leave a state mandate on businesses. He instead threw his support behind a voluntary, bi-state family leave proposal with New Hampshire Gov. Chris Sununu, a fellow Republican. That bi-state effort faces an uphill climb, as both the Vermont and New Hampshire legislatures are currently entertaining their own mandatory family leave bills, Scheu noted.
Scheu hopes Scott signs H.107, as there might not be enough votes for a veto override. The House, she said, made several changes to make H.107 more palatable, including giving businesses more flexibility in their contributions, and allowing businesses to opt-out if their own paid family lave programs are equivalent or more generous than the terms of H.107.
“We heard from lots of businesses that want to have this (benefit) for their employees,” Scheu said. “Research has shown that businesses reduce turnover costs and save money when they have programs like this. They retain employees and attract them.
“I think it’s a good thing for everyone; I see it as a win-win.”
Scheu has an extensive background in business. She worked for Bank of Boston as a commercial lender and director of retail banking for 14 years before moving to Middlebury in 1992. She was a senior vice president at Bank of Vermont for two years, worked as a nonprofit board consultant, an was executive director of the Addison County Economic Development Corporation for almost a decade.
She is past chair of Smart Growth Vermont and is a member of the Vermont Sustainable Jobs Fund board.
For the past two years, Democrats in the House have made enacting a statewide paid family leave program a top priority. They say that the benefit will help draw workers from out of state, and keep young families in Vermont.
Under current law, Vermont’s workers have scarce access to paid family leave programs: only 15 percent of employees are offered paid leave benefits by their employers.
“The focus of this legislation is to provide access to this benefit to those Vermonters who struggle the most,” Rep. Tom Stevens, D-Waterbury, told House lawmakers Thursday. “This program allows all working Vermonters to access a benefit that only a few lucky Vermonters have today.”
The mandatory 0.55 percent payroll tax used to fund the $76 million program would be paid by workers, unless employers volunteered to cover some or all of the benefit.
Employees on leave would receive 90 percent of their weekly wages if they make at or below the Vermont livable wage, which is currently $13.34 an hour.
Employees would receive only 50 percent of what they earn above that, unless they make 2.5 times the liveable wage (an annual salary of about $70,000 or more), when the program stops replacing wages. The most anyone could receive under the paid leave program is $1,334 per week.
By giving the largest portion of the benefit to people who make about $27,000 a year or less, Democrats designed the program so that low-income earners would be able to take advantage of it.
In some other states with paid family leave systems, the rate of employee wage replacement is uniform, but lower, offering workers 60-70 percent of their wages while they’re on leave.
Democrats say a lower rate makes it more challenging for low income residents to afford using the program.
“I think by taking the resources that we have and concentrating them on lower wage workers … I think that really gets to the heart of the problems that really needed addressing in other states, while really ratcheting back the cost of the program and easing the burden on employers,” House Speaker Mitzi Johnson said Thursday.
House Republicans voted in a block against the measure and opposed the policy because the tax used to fund the program would be mandatory, and employees would not be able to opt out of paying into the system each year.
The Joint Fiscal Office estimates that an employee making the median income in Vermont, about $58,000 per year, would pay about $318 annually to cover the 0.55 percent payroll tax.
“It’s a mandatory tax on the very people that we’re trying to protect,” House Minority Leader Pattie McCoy said before the vote.
“I mean we’re just saying here it is folks, and you’re going to pay in and you may or may not be able to ever get any money out of the system.”
Others said that the total cost of the new paid leave system represents the largest new investment the House has been willing to make this year — yet only a small portion of the population will be able harness the benefit.
“The collective $80 million, in my view, is way out line with the benefits that will help only 5 percent of the workforce,” said Rep. Marty Feltus, R-Lyndon.

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