Senate panel reviews Department of Labor technical corrections, weighing modernization and federal alignment

Michael Harrington, commissioner of the Vermont Department of Labor, presented a package of 10 technical corrections to the committee on Feb. 20, saying the changes range from clerical clarifications to provisions that would align state practice with federal guidance.

Harrington told the committee the corrections "allow us to also communicate with folks through electronic means," explaining the proposal would let the department send statutorily required notices by email and other electronic channels once claimants or employers provide that contact information. He said the proposed language contemplates electronic notice broadly and that the new unemployment insurance (UI) system being implemented already includes text-message capability.

The committee heard detailed discussion of tax-schedule calculations used to set annual UI tax schedules. Harrington and staff told senators the department proposes replacing a reference to the "highest dollar amount" in current statute with an inflation-adjusted benefit-cost ratio that mirrors modeling from the U.S. Department of Labor. "The benefit to cost ratio is a common term that is used, in the UI world," Harrington said, arguing the change would better reflect trust-fund health across time.

Committee members questioned several administrative clarifications. Staff said the proposal would standardize rounding practices in multiple places in statute: disregarded-earnings calculations would consistently round down so claimants are not reduced by a penny, and minimum-wage calculations would be rounded to two decimal places. Harrington said those fixes are intended to avoid inadvertent reductions to claimant benefits.

The department also explained a proposal to reinstate the federal short-time compensation (STC) program, which Vermont had earlier sunsetted. Harrington described STC as a federally funded tool to partially compensate workers working reduced hours during partial layoffs; he said the renewed interest at the federal level and automation in the new UI system make resurrection feasible. Committee members asked how many Vermonters would use STC; Harrington said the state's existing part-time UI program has been used more often but that STC would be an additional federal tool.

On wage-recovery rules, the department recommended changing the order of recouped funds so wages owed to workers come before penalties and interest remitted to the department. "If we are able to recoup anything from some of these people who shortchange Vermonters, they should go to Vermonters and not to the department," Harrington said.

The committee discussed several workplace-safety and rulemaking changes tied to federal Occupational Safety and Health Administration (OSHA) standards. Department staff described a possible legislative mechanism to avoid repeating full administrative rulemaking every time federal OSHA issues a minimum standard the state must adopt; staff said the current process is costly (they estimated about $2,500 per rulemaking) and can result in multiple rule updates per year. Senators asked whether similar delegations exist in other state agencies and cautioned that such authority could raise oversight concerns.

Harrington and staff proposed lowering the threshold for required employer layoff notices (similar to WARN notices) from 50 employees to 25 to improve the department's ability to provide re-employment services. They also asked to clarify whether the statutory employer-size test is facility-based (employees in Vermont) or enterprise-wide (all employees of a multi-state employer). The department said it wants an employer-size definition that captures national employers whose Vermont operations are affected but clarified that the count of "affected employees" for notification should be those located in Vermont.

On employer successorship and restructuring, staff described recurring cases where buyers split a purchased business into separate legal entities'for example separating administrative staff from professionals'to obtain a lower UI tax outcome. The department proposes tightening successorship language so a purchaser cannot simply split operations to avoid inheriting a predecessor's tax rate.

The largest policy debate centered on an existing temporary enhancement that added a $60 weekly bump to the maximum weekly UI benefit after the pandemic. That bump was meant as a stopgap until the state modernized its system and could implement a different $25-per-claimant approach; staff said the statutory language limited a decrease in the maximum benefit and the bump was tied to modernization milestones. Harrington said the department's preference is to repeal the artificial bump and rely on the statute's normal calculation but acknowledged the change is substantive and not merely technical. Committee members signaled that extending the existing date to the modernization completion could be a narrower technical fix, while outright repeal would be a larger policy decision requiring fuller debate.

Members pressed the department for more data on improper payments and fraud during the pandemic. Harrington said the new system will improve fraud detection and reporting; he noted improper-payment rates have declined from pandemic peaks and that the most common ongoing fraud is identity-theft claims coming from overseas. He added the state often lacks a criminal-enforcement partner willing to pursue smaller-dollar frauds.

Committee members requested follow-up materials and witnesses. Senators asked the department to provide: written drafts of the proposed statutory language, a clearer fiscal and operational estimate of any rulemaking delegation, specific data on fraud and improper payments, examples and witnesses for successorship cases (the department said the tactic is rare but recurring), and a clearer timeline for the UI-system modernization that underlies several provisions.

Ending: The committee did not take a vote on the corrections package during the hearing. Members directed staff to circulate bill language and follow up with witnesses; senators indicated they would hold broader debate, especially about the $60 bump and any delegation of rulemaking authority to the department, once those materials and additional witnesses were available.