Vermont to Launch Voluntary Paid Family and Medical Leave Program

On December 6, 2022, Vermont Governor Phil Scott announced that the state will launch a voluntary paid family and medical leave program that will provide workers in the state with such leave insurance by 2025. With the move, Vermont joins its neighbor New Hampshire as the second state with such an innovative voluntary program two years after the two states had previously announced a similar joint program.

The Vermont Family and Medical Leave Insurance Plan (VT-FMLI) will start being offered to state employees in July 2023, and then will be rolled out to other private employers and employees over the next two years.

What is covered under the VT-FMLI?

Under the first phase of the plan, Vermont state employees will be able to receive insurance coverage to provide 60 percent wage replacement for six weeks for qualifying events beginning in July 2023. According to the announcement, qualified events include:

• “The birth of a child and care of a newborn child up to one year after birth;
• The adoption of a child or foster care placement, and care for the newly placed child for up to one year after placement;
• Caring for an employee’s spouse, child, stepchild, foster child, [or] ward who lives with the employee, [or] parent or parent of the employee’s spouse who has a serious health condition;
• A serious health condition that makes the employee unable to perform the essential job functions of their job; or
• Any qualifying exigency arising [from] the employee’s spouse, child, or parent [who] is a military member on ‘covered active duty.’”

When will VT-FMLI be available?

The program will be rolled out in three phases. Phase I will begin for Vermont state employees on July 1, 2023. In Phase II, beginning on July 1, 2024, the program will be expanded to include other private and non-state public employers with two or more employees on a voluntary basis. Beginning on July 1, 2025, employees for employers that do not offer VT-FMLI, self-employed individuals, and employers with one employee, will be able to purchase coverage through the program through an individual purchasing pool.

Is the program mandatory?

According to announced details, the program will not be mandatory. Instead, the program will allow private employers and other non-state public employers to voluntarily select from a variety of plan design options to best support the needs of their employees and businesses. Employees will be able to choose to purchase benefits either from their employers, if available, or from the VT-FMLI individual purchasing pool, if not available from their employers.

Key Takeaways

Vermont follows New Hampshire, which opened enrollment for its voluntary leave plan in December 2022, as the second state with such a voluntary paid family and medical leave program available to eligible employees. In a statement issued along with the plan announcement, Governor Scott said that enrolling state employees first will create a pool that will then be opened up to other employees and that such a voluntary program will provide paid family and medical leave “more efficiently, affordably and quickly than imposing another mandatory broad-based tax.”

However, there is still some lack of clarity on what benefits will be available for employees under the program. According to sources, under Phase I, Vermont state employees will be able to take up to six weeks of paid leave in a twelve-month period and receive up to 60 percent of their average weekly wages, which for purposes of calculation will be capped at the Social Security Base Benefit Limit. Details of the program for Phase II and Phase III have not been determined but may be similar to those offered in Phase I.

Ogletree Deakins will continue to monitor developments related to the midterm elections and will post updates on the Leaves of Absence and Vermont blogs as additional information becomes available. Important information for employers is also available via the firm’s webinar and podcast programs.