Two Opposing Paid Family and Medical Leave Insurance Plans

Following the announcement of the Governor’s paid family and medical leave plan in December, an alternative bill has formally been introduced in the legislature. The most notable difference is the funding structure, with the Governor’s proposal using existing revenue while the House proposal relies on a 0.58% payroll tax on businesses and employees.  

The legislative proposal, H.66, is framed as a social infrastructure investment to strengthen families and the economy. However, with 20,000 open jobs in Vermont, further examination is required to understand the combined impact of workforce reductions and a payroll tax on the economy. As expected, the bill includes 12 weeks of complete wage replacement for all workers, including seasonal and part-time workers, as well as self-employed individuals that opt-in. The payroll tax would be split between employee and employer to fund the proposed plan, with an exception for workers who make less than $20,000 a year, who would be exempt from paying into the system. With an expansive definition of family to include personal bonds, Vermonters would be eligible in a broad variety of instances. The Governor’s alternative plan announced in December would be administered by a private insurer with a cost of $2 million annually to cover state employees and offer 60% wage replacement for up to six weeks.