Contributed Column

Personnel Points

by Dave Mount, Westaff

HR Law Changes for 2019

I generally spend time in my May column every year reviewing the HR implications of the new Vermont legislation that has been passed and signed by the governor. Nothing is final at press time, but there are two pieces of legislation that seem sure to pass, although it is uncertain whether Gov. Scott will sign either piece.

They are the minimum wage bill (S-23)and the family leave bill (H-107).

The minimum wage bill is the simpler of the two. It simply raises the minimum wage each year until it reaches $15 in 2024. Thereafter, the minimum wage will increase by 5 percent annually or the amount of inflation as measured by the Consumer Price Index, whichever is less. Tipped employees will continue to receive half the minimum wage, and employers will not be permitted to pass the cost of credit card charges to employees. That’s all a mouthful.

Raising the minimum wage to $15 per hour would make Vermont the seventh state to do so, joining New York, New Jersey, Massachusetts, Maryland, Illinois, and California. Economists are still studying the effects of the minimum wage increases on the economies of the states that have made the change.

There is a genuine fear that increases in such costs as childcare will not only offset the advantages of the higher wage to minimum wage earners, but it will also cost other workers more. Also, raising the minimum wage for people in some medical jobs will result in Medicare costs going up, and hence, our taxes. One estimate is that Vermont’s Medicare costs will increase by $40 million a year as a result of the increase. That remains to be seen, but it may be an unintended consequence.

H-107 is the family leave bill. Last fall, Gov. Scott and New Hampshire’s Gov. Sununu proposed a bistate solution to family leave, but the idea did not get much traction. The Legislature was determined to have a Vermont solution, and H-107 is a home-grown effort.

Under the bill, employee wages will be taxed at the rate of 0.55 percent. The money will go into a fund from which the state will pay the family leave. Employees will be allowed 12 weeks of maternity leave or bonding time with pay or up to eight weeks for other family issues such as illness of a family member. The maximum allowable leave in any one year is 12 weeks.

The state would either pay the benefits directly or purchase insurance from a private carrier. The latter option is in the current draft of the bill and gives the state until the middle of the summer to receive bids from insurance companies.

The benefit is a bit complicated. Recipients will get the state’s livable wage. If they earn more than the livable wage, they will receive up to 50 percent of the increment. This might punish higher wage earners who then might, in turn, not use the benefit even if they need it.

If you have any concerns on these two bills, be sure to call your legislator. Neither bill has fully passed yet and there may still be opportunities to either stop or modify them.

So, while I’m on the subject of legislation, there have been a number of articles recently about the retired teachers’ pension fund. The fund has only about 55 percent of the money needed to pay benefits due. The state has been short-changing the fund for several years going all the way back to the early 1980s. The result? In the budget for the next fiscal year, the state will have to pay $150 million in catch-up payments. These will go on for several more years until the fund fully catches up. We have a long way to go. •

Dave Mount is the founder of Westaff in Burlington.

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