Committee reviews S.117 technical fixes on VOSHA rulemaking, workers’ compensation and layoff notices

Montpelier — The Vermont House Committee on Commerce and Economic Development on April 3 heard from Michael Harrington, Commissioner of the Vermont Department of Labor, and department staff on proposed technical changes to S.117 that would streamline Vermont Occupational Safety and Health (VOSHA) rulemaking, clarify wage-and-hour collections, adjust layoff-notice thresholds and make a range of unemployment insurance (UI) and workers’ compensation updates.

Committee members were told the package is largely technical but contains provisions that affect how the state adopts federal safety standards, how unpaid-wage collections are disbursed, and how the state receives notice of mass layoffs — measures that could affect workers, employers and departmental operations.

“We are required as we have a state plan to implement the minimum standard,” Commissioner Michael Harrington said, describing a proposed change to let VOSHA adopt federal minimum OSHA standards without duplicative state rulemaking in cases where Vermont does not intend to be more restrictive. Harrington said the change is intended as an efficiency and cost-saving measure; each filing currently costs the department about $2,500, and filings can number several per year.

Committee members discussed several worker-facing and administrative changes in the draft, including:

- VOSHA rulemaking: The department would be authorized to adopt federal minimum OSHA standards without full Vermont rulemaking when it does not intend to exceed the federal standard. Harrington said the department would continue to notify the committee when new standards are adopted and that the state/federal funding for VOSHA is traditionally a roughly 50/50 match.

- Wage-and-hour collections: The bill clarifies that back wages collected by the department should go to the employee first; the statutory language would be explicit that penalties are mandatory and that the department may only retain half of penalty amounts, removing ambiguity about prior interpretations.

- Minimum-wage rounding: Department economist Matt Barowitz recommended defining the rounding rule for the annual minimum-wage calculation to one decimal place to avoid legal uncertainty about decimal rounding.

- Subminimum wage authority: The draft would remove or limit the labor commissioner’s authority to set subminimum wages for people with disabilities; committee members asked the department to confirm whether any current programs or apprenticeships rely on subminimum rates and whether learners or apprentices are paid at the minimum.

- Notice of potential layoffs (WARN-style changes): The department proposed lowering the reportable-affected-employee threshold so the state receives notice on smaller layoff events (the department recommended 25 affected employees; the senate had recommended 20). Members discussed whether the employer-count should be statewide or limited to Vermont employees and whether notices should remain confidential to protect employers while still permitting the Agency of Commerce and Community Development (ACCD) and the Department of Labor to provide services. The committee also discussed the existing timing: employers may notify the state 45 days before a layoff while providing employee notice 30 days before; that creates a limited confidentiality window the department said it preserves until employees are notified.

- Employer successorships and employer tax rates: The draft would tighten rules to reduce so-called “pseudo-dumping,” where an acquiring employer splits operations into multiple entities and shifts payroll to gain lower unemployment tax rates. Harrington said the bill would require combined wage reporting in some circumstances so a successor cannot shed historical claim experience by moving workers to a new employer with a lower rate.

- UI electronic notice and reporting changes: The bill would permit voluntary electronic notification for UI claimants and employers (email and broader electronic methods) rather than requiring mailed paper notices; committee members asked whether text messaging would be included and were told the statutory language was drafted broadly to allow future technologies but the immediate intent is email.

- Disregarded and rounded earnings: The department proposed changing the claimant-earnings rounding rule so that reported wages would be rounded down rather than up, which department staff said is modestly advantageous to claimants. The department reiterated that 50% of reported wages are disregarded in partial-unemployment calculations and benefit reductions are applied dollar-for-dollar to the remaining amount.

- Short-Time Compensation (STC): The proposal would reactivate the federal STC program (previously left dormant in Vermont) as the department modernizes its system; STC allows employers to reduce hours rather than lay off workers while claimants receive partial benefits.

- Maximum weekly benefit transition (temporary $60 bump / $25 permanent increase): The committee heard background on an existing $60 temporary increase to the maximum weekly UI benefit that was intended as a bridge until system modernization permits a permanent $25 increase for all claimants. Department staff said the law currently provides that the maximum shall never decrease, so the draft pushes the trigger date for replacing the $60 bridge with the $25 permanent change to July 2026 to match expected system modernization timing and avoid an unintended rollback.

- Workers’ compensation specifics: Staff described several workers’ compensation provisions moving into S.117, including codifying medical case management under the preauthorization process, extending translation-service requirements to carriers, and raising penalties for chronically late benefit payments (the draft would increase certain late-payment penalties from up to 10% to 15% where multiple late payments occur). Dirk Anderson, director of workers’ compensation and safety, said carriers already use medical case management to help injured workers navigate care and that codifying preauthorization for case management brings clarity to an existing practice.

“We don’t want claimants to go into a procedure without knowing whether workers’ comp will pay for it,” Dirk Anderson said while explaining the proposed preauthorization extension to medical case management services.

Committee members repeatedly asked for data the department currently lacks: reliable statewide queries on late workers’ compensation payments and historic counts of preauthorization denials. Harrington and staff said legacy databases and reporting limits mean the department can only track late-payment instances that are brought to its attention; Harrington offered to begin targeted tracking and to return with additional data for the committee and to consult with carriers and advocates.

What’s next: Committee members asked the department to follow up with the Agency of Commerce and other stakeholders, to provide the requested data on late payments and to confirm whether any existing education, apprenticeship or learner programs rely on the commissioner’s subminimum-wage authority. Harrington said the department will also share comparative state practices and discuss where confidentiality for layoff notices might be appropriate.

The committee did not take a formal vote during the hearing and signaled it will consider amendments after receiving follow-up information from the department and stakeholder testimony from carriers and advocacy groups.