The Word in the House 4/11/2019 - Paid Family Leave Supports Working Families

The need of parents to bond with a newborn, or a son or daughter to tend to an ill elderly parent, or any number of similar situations can have an impact on a person’s ability to stay on the job.  These situations not only impact our work-life balance but can also cause significant financial impacts as well.  Providing Vermonters with the ability to take time to care for themselves and their loved ones will support people when they need it most and build a foundation for future generations to thrive.

The Federal Family Medical Leave Act ensures certain rights for workers to take time off to care for family members when necessary but does not provide for financial assistance to do so. However, there is a need in today’s economy for such a benefit. A majority of Vermont businesses are small and employ a significant percentage of the workforce. Yet these are the very businesses that struggle to provide robust benefit packages to their employees and struggle to retain the workers who leave to work for larger companies that can.  Vermont small businesses overwhelmingly support the creation of a strong, universal family and medical leave insurance program. Recognizing this, the Vermont House passed the Paid Family Leave Insurance (PFLI) bill (H.107) last week on a 92 to 52 vote.

Governor Scott supported a PFLI program in partnership with New Hampshire that would apply to state employees and to any employers that chose to opt into the program. However, the legislature considered this option and concluded that there were several drawbacks. First, a voluntary program would not cover all employees unless their employers opted in. Second, fewer participating individuals would mean higher premiums and higher risk. Third, the wage replacement benefit of 60% would represent a substantial pay cut.

As passed H.107 is an insurance program that allows an employee to take time off for an eligible reason without a significant loss of income. A person is eligible for the benefit if 
a) they earned wages during six months of the last 12 months; and
b) they earned an amount equal to 1,040 hours times the minimum wage. 
The benefit would be 90% of an employee’s average weekly wage up to $533 per week and 50% of the excess above that amount up to a maximum of $1,334 per week. The leave duration would be up to 12 weeks for parental bonding or up to 8 weeks of their own medical leave or family care leave with no more than 12 weeks in a 12 month period.

The insurance premium would be a payroll deduction on wages up to the Social Security maximum ($132,900 in 2019) at a rate of 0.10% of wages for the first six months and 0.55% afterward. For a worker making minimum wage, the premium would be about a penny an hour rising to 5 and a half cents per hour after six months. For someone making $50,000 per year, the cost would be $50 rising to $275 for the year. The employer has the option of paying none, some, or all of the premium for the employee. The state will seek to contract with an insurance carrier to run the program, which is similar to the Governor’s proposal.  Several insurance carriers have expressed an interest in doing so.  Companies that offer similar benefits that are as good or better than the state program can opt out, and their employees will not be subject to the premium withholding; or they can opt in and replace their program with the state program. The bill now moves to the Senate for review and possible amendment.

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