Senate committee hears detailed testimony on three labor drafts covering ag pay, vacation payouts and workers’ compensation

The Senate Economic Development, Housing & General Affairs Committee spent a large portion of its session reviewing three related labor drafts — commonly referred to in testimony as 652, 653 and 654 — that would change pay rules for agricultural workers, require payment of accrued leave at separation, and amend parts of the workers’ compensation system.

The Department of Labor’s commissioner, Michael Harrington, told the committee the department did not support advancing any of the drafts in their current form and urged more time for stakeholder conversations. Harrington and his staff described a mixed set of changes: some items that the department said were straightforward and could be implemented with little change, and other items that would require significant legal, technical and fiscal work before the state could adopt them.

Why it matters: The bills would affect payroll obligations, state employers, and the workers’ compensation fund. Several proposals carry multi‑million‑dollar price tags or raise administrative and privacy questions for state contracting, which committee members and agency witnesses said could change how the state does construction and procurement.

Harrington and his staff highlighted sections the department said needed further work. On agricultural minimum wage provisions (section 1 of the lead draft), the Labor Department recommended engaging the Agency of Agriculture, which has day‑to‑day experience with Vermont farms and seasonal labor. Harrington said the department was “neutral” on some pieces but urged more stakeholder testimony before the committee moved forward.

On payout of accrued vacation and other leave at separation (section 3), Harrington said the department wants clearer rules to handle common workplace arrangements such as unlimited leave and combined paid time off. He flagged operational questions — for example, how employers should treat payouts when an employee quits, is laid off, or is terminated for misconduct, and how payouts would interact with unemployment insurance eligibility.

Workers’ compensation changes drew the most detailed fiscal discussion. Harrington and Dirk Anderson, director of workers’ compensation and safety, summarized outside actuarial work the department had requested. The National Council on Compensation Insurance (NCCI) estimated a rate‑level impact in the roughly 4–7 percent range on the workers’ compensation system for one of the proposed changes. Harrington and Anderson told the committee that a change to include the value of employer‑provided health insurance premiums in the average weekly wage calculation (a provision in the drafts) would raise indemnity benefits for injured workers who already receive employer‑paid coverage and thus materially increase system costs. Harrington repeated the department’s recommendation to study those implications further and noted a Joint Fiscal Office (JFO) fiscal note would follow.

Contractors and procurement officials struck a different but related theme. Wanda Manoli, commissioner of Buildings and General Services (BGS), and witnesses from construction trade groups warned that new certified‑payroll reporting and prevailing wage collection requirements (referred to in the drafts as a certified payroll / “section g” submission) could impose new, significant administrative burdens on contractors and state agencies alike. BGS and Industry representatives described practical questions: who would receive and store wage records, how personally sensitive information would be protected, which state office would have authority to review the records, and whether contractors that operate across state lines would face duplicative rules. Manoli said BGS lacked an existing secure system to receive and retain the volume of wage data the draft would require, and that building such capacity would be a non‑trivial project.

Construction industry witnesses including Matt Muscredi of the Associated Builders and Contractors and other trade representatives said that some elements of the bill — such as weekly certified payroll or weekly transmission to a state agency — are more onerous than existing federal Davis‑Bacon or state practices (many jurisdictions instead collect certified payroll at periodic intervals). Muscredi said the Davis‑Bacon system provides a model for collecting prevailing wage data and suggested the committee consider alternatives to weekly reporting to achieve the same enforcement objectives.

Committee members also heard about a number of narrower changes: adding translation services and medical case management as benefits available to injured workers (sections 5–6), and increasing late‑payment penalties for workers’ compensation indemnity benefits (section 7). On translation and case management, the Department of Labor and insurers said these services are already used and generally supported; the department and insurers described those proposals as lower‑cost, implementation‑friendly steps compared with the wage and workers’ comp benefit changes.

On late‑payment penalties, advocates and worker‑side attorneys argued stronger penalties would deter a pattern of delayed payments that they said occurs frequently in practice. Insurer representatives said late payments are typically rare and, when they do occur, are often inadvertent or explained by circumstances (for example, waiting for medical documentation). The Department of Labor does not currently have a system report that can produce consistent, retrospective data on late payments; the department told the committee it could begin tracking penalty actions going forward if the committee wanted that evidence.

A separate but related thread of the hearing focused on prevailing wage, certified payroll and misclassification. Committee members heard that Agency of Transportation (AOT) contracts already require certified payroll and that AOT and federal contractors regularly submit certified payrolls for Davis‑Bacon work. BGS and several contractors said the drafts’ language would expand which agency collects wage records and the frequency of submission, creating privacy and storage questions and possible increases in contractors’ bid prices.

Where the committee stands: Multiple witnesses urged slowing down. Harrington said the department “would not support moving either of these bills or a combined bill forward at this time, especially not without more conversation and testimonies from interested parties.” Construction, procurement and business witnesses urged the committee to focus first on targeted fixes — for example: (a) establishing a clear, secure mechanism for certified payroll submissions modeled on other states or federal practice; (b) refining language about which wage records must be transmitted and to which agency; and (c) further analyzing the fiscal and administrative impacts of including health‑insurance premium value in the workers’ comp wage base.

Committee discussion and next steps: Senators and witnesses repeatedly recommended additional stakeholder work. Several members signaled willingness to keep lower‑cost items (translation services, medical case management, timely‑payment improvements) moving while deferring or holding the more complex wage and workers’ comp changes for additional study. The committee asked Joint Fiscal Office staff for more analysis and requested follow‑up reports from the Department of Labor, BGS, the Agency of Transportation and the Office of the Attorney General on technical and privacy questions about payroll reporting.

Ending note: The committee did not take final votes on any of the labor drafts at this session. Members asked staff to assemble additional documents (JFO fiscal notes, models from other states, and vendor/agency feasibility reports on secure payroll submission) to inform further deliberations.

Quotes (selected)

"When we review the bill, both bills together, there were some areas that were less concerning than others, some that were significant, concerns for us. And so in totality, we would not support, moving either of these bills or a combined bill forward at this time," — Michael Harrington, Commissioner, Vermont Department of Labor.

"What we're asking in here is that those wage records then go on to state agencies that may not have current methods in place before managing those. So there is going to be a significant impact," — Wanda Manoli, Commissioner, Buildings and General Services.

"If you do actually just find a way that's reasonable to do that subtype of reporting, then we will have a very accurate wage standard in Vermont," — Matt Muscredi, Associated Builders and Contractors.

"The National Council on Compensation Insurance estimated the change would increase system costs in the range of 4 to almost 7 percent, roughly $7 million to $13 million," — Dirk Anderson, Department of Labor (summarizing outside actuarial work).

Ending

Committee members asked staff to compile a targeted follow‑up package: a JFO fiscal note documenting workers’ comp system impacts; a comparison of how peer states collect certified payroll and protect wage data; and a brief from the Department of Labor clarifying which draft sections the department views as implementable with minimal change versus those requiring more study. The committee indicated it would revisit the drafts after staff and agencies provide those materials.