Vermont Legislature SmartTranscripts:

[Rep. Elizabeth Burrows (Member)]: No, you're fine.

[Kendall Smith, Commissioner, Vermont Department of Labor]: Was impressive. Good

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: afternoon, everybody. It is Wednesday, 01/21/2026, and this is the General and Housing Committee. This afternoon, we are going to look into the impacts of whatever is happening at the federal level, however chaotic it may be, both things that have happened and things likely that may happen on the situation for labor, generally in the state. And we're going to hear from four different witnesses, but one of them is our esteemed legislative counsel, Sophie Stapney. And you know Sophie, but someone said you're esteemed, but it just means they want something from you. So take it away.

[Sophie Sedatny, Office of Legislative Counsel]: Hey. Well, afternoon. Sophie Sedatney from the Office of Legislative Council. And, yeah, there was a request to provide an update to this committee on some of the impacts of the first year of the administration on labor employment. I think there was also some interest on the funding side. I don't have the knowledge on the funding you'll need to ask and I'm sure you'll hear from the Department of Labor and Human Rights Commission and other entities on how their funding has been impacted. So what I decided to do, there's obviously so much that's been happening at the federal level, there's so much that's in flux, Executive orders are issued, lawsuits are filed, so things change at a very rapid rate. So what I decided to do was just to take a quick look at different federal agencies that are involved with labor and employment and just run through take pictures, some of the things that have happened with them. If I have your permission to go ahead and share my screen, now Holly, I'll go ahead and do that. So it starts with the National Labour Relations Board, and there have been significant impact on the National Relations Board. They were impacted by the federal budget cuts and staffing reductions in 2025. And from the very beginning of the year, so on January 27, one of the board members of the National Labor Relations Board was fired, along with the General Counsel. And the General Counsel has a really important role for the National Labor Relations Board because they are very active issuing memorandums and things like that. Without the board member, the board was lacking a forum. And so that froze most of the board level activity. But just recently in December, the Senate confirmed two new board members to the NLRB as well as a general counsel. So forum has been restored just within the last month. But looking ahead, the National Labor Relations Board has requested a cut of just under 5% to its budget for FY 2026 and is looking to reduce the NLRB workforce by approximately 100 full time positions. So from Vermont's perspective, to look at is that there's going to be an increase in the delays in union elections, unfair labor practice processing and board rulings. And again, just as a reminder, the NLRB oversees private sector employees. In Vermont, public sector employees are covered by our seven Labor Relations Act. Again, this is impacting private sector employees. And then with the change in the board, again, a shift from a Democrat led board to a Republican led board, inevitably that changes the priorities of the board and some of the decisions that will come out of the board.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: Sophie, how does the NLRB function? I mean, obviously rules and regulations go through the board, but do they hear cases?

[Sophie Sedatny, Office of Legislative Counsel]: So there are administrative law judges, there's like a whole system below their regional directors. So even when there was

[Kendall Smith, Commissioner, Vermont Department of Labor]: a back of form at the board level,

[Sophie Sedatny, Office of Legislative Counsel]: things were still moving forward at the regional level. But again, anything that's contested isn't going to come up.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: Does the board have a appellate, or in other words, if there's a hearing officer or whatever, does it automatically go up to the board for review or appellate review, or does the board's configuration matter in terms of how individual cases

[Sophie Sedatny, Office of Legislative Counsel]: are Right. Does, yes. And then the general counsel is the one that plays a really key role in terms of setting the direction for the board.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: So the board does have a review over decisions?

[Sophie Sedatny, Office of Legislative Counsel]: Yes, and I believe so, I mean, certainly make decisions. And again, I would say that has happened as administrations change and the competition of the board changes, things get, you know, things get focused on. And so this isn't that unusual. I think the challenge has just been lapping a quorum for almost an entire year will have caused issues. And we had touched on, oh, I just wanted to, I had this slide in there because I thought it was interesting because there were about a million employees, federal employees, that are no longer covered by collective bargaining agreements. There were 30 federal agencies that the right to effectively bargain for employees in those federal agencies was removed. And I don't know what the entire impact has been on Vermont, but I thought this was just a helpful look at where Vermonters employed by the federal government work, so I included this slide, because I thought it would be of interest. We had touched on the Federal Mediation Facilities and Service last week when we were talking about a bill that you have in front of you regarding creating mediator position in the State Labor Relations Board. So again, the Federal Mediation and Conciliation Service historically has provided free neutral third party mediation services, both to Vermont's public sector, employers and unions, as well as the private sector. And then in March 2025, there was an executive order to effectively disclose the agency. 95% of the mediators in Ashtomay were fired, even only five or six. There were challenges, and Vermont was part of the legal challenge, enjoined with one other attorney generals. The Rhode Island Federal Court permanently enjoined the executive order. And then the Southern District of New York Federal Court held that the Federal Mediation and Conciliation Services' most recent policy, which was limiting its services because again, they had been shrunk down to such a small size, was arbitrary and capricious. So my understanding is the administration is committed to allowing the FMCS to move forward. I think there's a challenge for Vermont in that the FMCS was providing mediation services for our public sector employees and employers in Hale, and that is not part of its federal mandate. Again, public employees are not part of the National Labor Relations Act. So it seems unlikely that that's, even if the FMCS is rebuilt, seems unlikely that that's going to enable the public sector here in Vermont to be able to use their services moving forward.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: Sophie, is the court challenges, though, were they going to permanently stop efforts to close it, or are they simply procedural in nature and they'll just find additional ways to do it?

[Sophie Sedatny, Office of Legislative Counsel]: No, the administration has indicated they're not going to move forward with appealing those decisions.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: But they have to rehire the 95% of the people that they, that's just the mediation, okay.

[Sophie Sedatny, Office of Legislative Counsel]: Right, and when I looked on their website, they do have listed about 60 mediators now, so they have certainly been hiring mediators back. I will say, and this is reflective throughout all these agencies, is even if these significant cuts are then changed, court decisions overturn them, you've still lost people. So they're probably hiring mediators. It's not a question of the old mediators being reinstated. So you're losing a lot of institutional knowledge through this, with the uncertainty. You lose people, but then you can't just hire back the same people that were fired once before because they've now moved on to something else. Turning to the Department of Labor. So in the one beautiful big bill that was passed, the budget bill, eligible tip workers are going to be able to deduct up to 25,000 in tips from income subject to federal income tax. And then qualified overtime compensation is also going to be a tax deduction up to 12,500 for single filers and 25,000 for married filers. The other thing some of the Department of Labor have done is they rescinded a Biden era rule that increased the minimum wage for federal contractors. So the rule in 2022 provided for a minimum wage of $15 an hour with an index for inflation, so that actually increased up to about 17.5 an hour. So that rule has been rescinded. So again, for federal contractors, that minimum wage is going to go back to whatever it was before. They're also not moving forward with a vice mayor rule that would have increased the salary threshold for white collar overtime exemption. So what that is, is hourly employees qualify for overtime. And then there's also for executive, administrative and professional employees, there's a two pronged test, a duties and a salaries test. And under the Biden administration, there had been a proposal to quite aggressively move up the salary threshold from the mid-thirty thousand a year up to like 58,000 in a pretty short period of time. And that rule was halted during when Biden was still in office, was halted by a federal court. And again, the current administration is not moving forward with appealing that. They're dropping their appeal of the poll that have been put on that rule. So right now the salary threshold for that white collar overtime exception is going to continue at where it is, which is around 35,000 a year. And then the Department of Labor is no longer enforcing twenty twenty four regulation on independent contractor status. So again, that's been a priority in previous administrations, is making sure that employers don't misclassify their employees contractors versus employees. If you're an independent contractor, you don't have access to benefits typically. So there's always concern to make sure that employees are correctly classified. And so again, this is a move away from enforcing a regulation that would have focused on independent contractors. Another thing is they've also withdrawn a rule that would have ended the use of waivers allowing employers to pay disabled workers less than federal minimum wage. And if you recall, we actually dealt with that at the state of last session in Act, it's in Act 40.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: Yeah. But that was only public employees, No,

[Sophie Sedatny, Office of Legislative Counsel]: it's just the way that had worked was that the Commissioner of Labor had the ability to request a waiver to allow individuals with disabilities to be paid less than minimum wage, and it was something Vermont had never used, and the Department of Labor was fine with that being pulled. So we no longer have that

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: And that labor is gone for both public and private.

[Sophie Sedatny, Office of Legislative Counsel]: Right, but it's still, there was a move to have it federally just pull the ability to request a waiver, and that's now being withdrawn. And then a couple of other pieces from the employer side is that self water change through the payroll independent determination program, so that would enable employees to self disclose and remedy violations under the Federal Labor Standards Act and the Federal Medical Leave Act. And then a voluntary correction violations of ERISA, so that's the employment, sorry, that's the retirement fees for employers to the voluntary fiduciary correction program. So this is part of the administration's effort towards trying to reduce the amount of regulatory burden on employers and trying to encourage employers to sort of self correct and then removing some of the penalties that they would otherwise be facing for violations. Occupational safety and health. So I know a bill that's been under consideration in Vermont is heat injury and illness prevention in outdoor and indoor work settings. This is different from the bill that you'd be considering in Vermont. This is just dealing with heat, not cold. That is still under consideration. There's been public comments provided. There's been public hearings. It's not clear what the administration is going to do, but just to let you know that that has not yet been told. So it is still in consideration. There's also a proposal at the federal level to reduce the scope of the general duty clause. The general duty clause requires employers to provide workplaces that are free from recognized hazards that are poisoning or likely to cause death or serious physical harm. And so typically, employer, things like ergonomic adjustments, combustible coal dust. There are all kinds of harms that employers are required to, that are recognized as it's that employers are required to address. And this is looking to reduce the scope of the general duty clause. But specifically it's dealing with sort of in situations where things are extraordinarily dangerous, so like professional sports, where you can't really come up with rules to protect people, or this is the anticipation of things like marine portrayalnesses at Parkhurst. So it's not a full undermining of the general duty clause, but I just wanted to let you know that that is being addressed in occupational safety and health. And they're also seeking to lessen recordkeeping requirements, penalties, and debt election procedures. NIOSH, the National Institute of Occupational Safety and Health that deals with firefighting and mining and things like that, they also were under threat of being fully shut down. Again, there was significant pushback and NIOSH is now not being sort of like the Federal Mediation and Reconciliation Service, so that's now back being reinstated. But again, it was months and months and months of people leaving. Then even if you say people can be reinstated, you can't necessarily reinstate the people that had the knowledge that were there that were working before. So just as an example of some of the chaos this has caused. So the Federal Trade Commission, and again, there's committees doing what was considering banning non compete agreements, which I know that bill is now moved over to House Commerce and Economic Development. But at the federal level, there was a final rule that was banning non compete agreements nationwide, and then requiring employers to provide notice of that ban to current and former employees. So sort of effectively, retroactively banning non competes again.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: What's the status of that then? Did it not change? Oh, okay, I'm sorry,

[Sophie Sedatny, Office of Legislative Counsel]: go ahead. So in August '4, a Texas Federal Court held that it was unlawful and unenforceable, so that was sort of on hold. So that's not moving forward, so the final rule that's not moving forward. But the new chairman of the Federal Trade Commission has created a joint labor task force to investigate and prosecute anti competitive conduct, including non compete. So it seems like the FTC is moving away from having up the banquets rule around non compete, but it's still going to go after where there are really egregious non competes. And the most recent one is with healthcare companies, so that requests for information is being sent out to healthcare companies about restricted non competes, and they're focusing on that. So I don't think, it doesn't seem that the FTC is moving away entirely from looking at non competes. They're just going to do it more selectively rather than a general ban looking at particular industries, particular sectors. And then, thus the equity and inclusion has been a huge issue and part of the policy, fight with all of these moves at the federal level. So there were some executive orders that came out right at the very beginning of the administration that brought federal agencies and federal contractors from considering race, color, sex, sexual preference, religion or national origin, employment practices, rescinded policies imposing equal opportunity in DEI requirements on the federal government, and rescinding a policy prohibiting discrimination against federal employees on the basis of sexual orientation or gender identity. And then they've also directed federal agencies to investigate the DEI practices of private employers. So this has been a huge shift from previous administrations, and guidance has been issued both from the Equal Employment Opportunity Commission and the Department of Justice.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: Go ahead.

[Rep. Elizabeth Burrows (Member)]: What does directed federal agencies to investigate DEI practices of private employers mean? So they have been asking, let me do it quick,

[Sophie Sedatny, Office of Legislative Counsel]: see if I have some more information on that. They really are employers on notice that, particularly if there's any connection to federal funding of any kind, you're just being given a heads up. Like, for example, if you're seeking a grant or something, this is now going to be a focus. Do you have any DEI policies? Is what you're seeking the grant for in any part, in any way connected to DEI? If it is, you're not going to be eligible to get the grant funding. And I know that there were challenges for a lot of employers who, in terms of grants, under were the previous administration, in order to be eligible to get a grant, you needed to demonstrate, yes, we're being thoughtful about DEI and this is what we're doing. And so then it was like, well then, so the rules just change very rapidly in terms of eligibility for things like that. And it's really had a huge impact across the board. So again, I can just quickly touch on. So the EEOC and the Department of Justice guidance have held, for example, that requiring DEI training could give rise to a colorable, hostile work environment, for example. There also, blend that one on the next one, I don't want jump too far ahead. The Department of Justice memorandum that came out, this was for guidance for recipients of federal funding, applying federal anti discrimination laws to entities receiving federal funds. Unlawful practices include race based scholarships and programs, preferential hiring or promotional practices, designated safe spaces, as well as cultural competence or lived experience requirements, geographic or institutional recruitment strategies, diversity statement requirements, trainings on toxic masculinity or white privilege. So this applies to federal agencies and then recipients of federal funding. But again, was King with the caveat that private employers should also be looking at these issues.

[Kendall Smith, Commissioner, Vermont Department of Labor]: Can I ask a follow-up question?

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: Please.

[Rep. Elizabeth Burrows (Member)]: The use of safe spaces, I'm thinking of one specifically, and if I'm off space, I would love for that to be the case, But what could come to mind is somebody who has just come back from parental leave and are breastfeeding.

[Kendall Smith, Commissioner, Vermont Department of Labor]: Don't think it will cover that.

[Sophie Sedatny, Office of Legislative Counsel]: This is more if you have a room that this is reserved specifically for Hispanic students or this is for African American faculty or if there's some people can access it, but others can't, but on a protected category basis. And what about inclusive language?

[Rep. Elizabeth Burrows (Member)]: So if I'm thinking of private employers who, let's continue on with this line of thinking, legally have to offer a place to breastfeed, what it say in their handbook, it says chest feed instead of, like, is considered inclusive language. Could hypothetically, these federal agencies look at that and consider that DEI and that

[Sophie Sedatny, Office of Legislative Counsel]: make them ineligible for, is that just too nitty gritty or just like I don't know for sure. As I say, my understanding is that this has been very broad sweeping and so if there's anything that raises a suspicion that it could be DEI related, it's raised red flags, that seems like that would be a step too far, that's just like looking at me.

[Rep. Elizabeth Burrows (Member)]: Saudia beat me too. I did have a question, I was just going to say I have heard in the non profit world that even using language such as the word women gets flagged now in things. So I would say that that would be probably not so far fetched, because even things for women specific is also being flagged right now. So, that might not be that far off. Do you have any Can you share with us any sense of how this is actually being How this is actually affecting how it's taking effect. Is it these are really big blanket orders that could very well be, you you could train your policy against just about anybody that you want to in some way. Are there certain employers that are getting in trouble more from these, or investigated, and then if they're investigated, are there consequences? Is it mostly universities? Let

[Sophie Sedatny, Office of Legislative Counsel]: me just go through this slide, because I think this would be helpful. So for the EE, you'll see if the losses, Title VII enforces a lot of the protected categories, race, gender, etcetera. So just quick background. So again, same thing as with the NLRB. There was a lack of forum starting at the beginning of last year because there were four commissioners. It went down to two because normally there are five, but they went down to two. But there's two of the Democratic commissions were fired. A third commissioner was appointed and confirmed in October, so they're back at three, they have a core office, three and five commissioners. The new chair of the EEOC has closed disparate impact investigations that are pending with the EEOC, enhanced enforcement of national origin discrimination, I'll loop back to this, and limiting the interpretation of Bostock. So I'll go through those. So normally if you're filing a federal discrimination claim, have to file with the EEOC first. You have to get a notice of a rate to sue. EEOC is saying, so disparate impact historically would be, you know, you have intentional discrimination. Disparate impact is you, the employer, has a policy that's a neutral seeming policy, like a height of five foot nine. You have to have a height of five foot nine to have this job. But it has a disparate impact on a protecting group, like women. There's going be more men that are over 5nine than there are women, unless it's a job related necessity. So this job actually requires people to be a certain height to do it. So they have closed all the disparate impact investigations that they have. They are enhancing enforcement of national origin discrimination. And so what the current fair has indicated is that the national origin discrimination is, that means that previously there was something called reverse discrimination. So I'm being discriminated on the basis of because I'm white, and that was called reverse discrimination. And under the new POC chair, she's saying there is no such thing as reverse discrimination, it's all discrimination. So if you discriminate against anyone because they're white or Hispanic or because they're male or because they're female, it's all discrimination. It's not that minority majority sort of distinction that used to be there before. And then Ballstott was a case from the Supreme Court that in employment, you couldn't discriminate against individuals on the basis of their gender identity. And so what the chair is saying is she's interpreting Fostart to limiting it, any discrimination claims, determination, failure to hire or promote, but not to harassment claims or other workplace issues and including facility access. So really that's getting into the bathroom issue. So there's just a significant sea change on this. So if you're an individual in terms of how that's going to impact employers, employers need to be aware of this because they need to make sure their policies are consistent with this. Because if they're not, then someone's going to be able to bring what would have been called before a reverse discrimination claim, but now would be a regular discrimination claim. But saying, well, you're not discriminating against me because based on my whiteness, my maleness, my whatever before you would have considered to be a minority, or majority rather, a majority category. Does that help? The last one I want to touch on was immigration and there is so much here. Just briefly, many, many people have been removed, who adhere lawfully, but have had work permits removed. So the estimate is 5,600,000 people who have based their protections, their work permits being canceled or removed. So that obviously has a significant impact on labor forces, I don't know to the extent in Vermont, but nationally. There's a new interim rule on minimum wage for H2A farm workers. So farm workers that come in on the H2A program, it's typically seasonal agricultural workers that come in. And I know in Vermont, there is a significant number of H2A visa holders that come in, that work in orchards and things like They typically don't work in the dairy industry because that's a year round, but they do come in and do a lot of seasonal work. So the minimum wage for H2A workers is being reduced. So before it was $17 and something an hour, now it's and you had to have free housing, free transport, now it's a lower amount and housing, an amount for housing is being deducted from that. So that's going to impact, good impact in the agricultural sector in Vermont in terms of the willingness of people to come in on those H-2A visas. What did you say the new minimum was? So it was $17.42 an hour, and now it's going to reduce that and it's going to deduct up to 30% of the hourly pay for housing costs. And again, there's different levels, so it's going to be down to $15.96 an hour for what's called skill level one, a reduction of 15%, and then level two, people that can work with their supervision, I think theirs goes up a tiny bit to $19.23 but when you add in the other adjustments, it's a significant reduction, particularly for the Skill one workers. I can send you that information separately. That would be great. The H-1B programme you may remember from September there was orders that were issued that H-1B workers and again these are the skilled workers that come in, so for example, Elon Musk, Melania Trump, they all came in as H-1Bs. They initially said that the Trump administration said it was going to cost $100,000 a year for an H-1B visa, and there was a massive outcry. So they walked it back and said, it will be $100,000 But just for first time H-1B visa applicants, it's not every year. The challenge with that is it really closes the door to H-1B visa for small businesses and for startups. So if you're a very, very big tech company, you'll be able to afford to bring people in, but it's going to really limit the ability for smaller businesses and for

[Rep. Elizabeth Burrows (Member)]: startups to recruit the best and brightest from overseas. Yes. And your H-1B sponsorship is tied to the original employer, or is it a window into, a doorway into other employers?

[Sophie Sedatny, Office of Legislative Counsel]: It's an employer sponsored visa, but you can change employers. You just have to go through, and to be honest, I don't know if you then have to pay another 100,000 if you switch employers. You can have what's called dual intent, you can, ultimately it's a pathway, historically it's been a pathway to citizenship. I believe,

[Rep. Elizabeth Burrows (Member)]: I could be wrong, that it's under the same, So you don't have to repay the fee. You have like sixty days from one employer to the other to make that change. Like you have to be at the original employer for sixty days? No, no. So if, say you're terminated, you have sixty days to find another sponsor. Which is, and then if you don't, it gets a little weird and messy for the employer and for you for obvious reasons. But I believe it's all under the same reason that you don't have to repay that fee.

[Sophie Sedatny, Office of Legislative Counsel]: And then I'm just adding this one in here as well, because it used to be if you were coming in for business or employment, you didn't have

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: to be

[Sophie Sedatny, Office of Legislative Counsel]: interviewed separately before you came into the country, or you also had flexibility in terms of where you could be interviewed. So if there were backlogs in your particular country, you could go to another country and do an interview there. This again also changed in September. So again, it's just an example of, there's just, even with legal immigration, there's just a lot of obstacles being put into place just to make it harder, more inconvenient, more challenging. So again, that's just one example of

[Kendall Smith, Commissioner, Vermont Department of Labor]: moving on that, and I think there are other questions.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: Questions? Sophie, thank you so much. We have the Department of Labor, or both of you? Has the testimony? Yes,

[Rep. Elizabeth Burrows (Member)]: all you have to do is There's power in numbers.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: I think we have one chair We have three chairs.

[Rep. Elizabeth Burrows (Member)]: Those can migrate too.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: Oh, no. We have three. We have three. Because you can use Debbie's chair since Debbie Dolgin is online. Yes, I give permission to use my chair.

[Rep. Deborah "Debbie" Dolgin (Member)]: Good. Thank you, Debbie.

[Kendall Smith, Commissioner, Vermont Department of Labor]: Thank you, everybody. Good everybody. My name is Kendall Smith. I'm the commissioner for the Vermont Department of Labor, and I'll have Chris and Robert introduce themselves as well. We'll go ahead and take this first.

[Chris Winters, Deputy Commissioner, Vermont Department of Labor]: Afternoon everyone, my name is Chris Winters, I'm the relatively new Deputy Commissioner at the Department of Labor.

[Robert Deppner, General Counsel, Vermont Department of Labor]: Good afternoon all, my name is Robert Deppner, I'm the General Counsel for Department of Labor. I've been here not quite forty years, about three and a half years.

[Kendall Smith, Commissioner, Vermont Department of Labor]: So we had prepared, at least at the start, very similar content to what legislative counsel Saudotti just went over. And so just, Sophie, I know that must have taken a tremendous amount of prep work because I've been doing some of that too. I think what we'll do is skip some of the things to not reiterate what she just shared. But I did have a quick question, so I apologize. We're about ten minutes late. Did you also touch on independent contractor rulemaking and gig economy rulemaking at the beginning of the Okay. Second You covered that. And then the home health workers? Yeah. Okay, so I'll just add two things to the list or maybe further down the rabbit hole in one of them. So I'm not sure if everyone in this room is familiar with independent contractor law or not. I'm seeing some head nodding.

[Unidentified Committee Member]: So I want to start from

[Kendall Smith, Commissioner, Vermont Department of Labor]: ground zero here. You have the ability to be what's considered an independent contractor versus an employee. And whether or not you fit that definition, there's a test and a set of factors that are considered. In the state of Vermont, there is one set of factors as it relates to unemployment insurance and a second or a very similar set of factors as it relates to workers' compensation. And so whether or not you meet these tests determine whether or not your opinion to UI, you can receive UI, same thing around your workers' compensation coverage. And then to make it even more messy and confusing, there's also a federal definition of independent contractors. So over this year, this has been a fairly fraught conversation in terms of how do we determine this, what counts, what doesn't count. And we are seeing, at least on the federal level, that conversation continue where the current administration has overturned a new six factor test, economic reality test, that the Biden administration put into place and reverting back to a more longstanding federal test in terms of who qualifies as an independent contractor when the feds are auditing it. And they're going into, I believe, potentially more rulemaking. I am not too worried about the federal conversation. I will just be really transparent. At this time in Vermont, we still revert to what we call the ABC test, overarchingly. And in a second, I can go through kind of the year end review of 2025 in terms of the misclass audits, investigations, and findings that be dealt in if that's of interest. And I would also welcome the next person that's going to testify, David, to add his perspective to this as well because he's also been engaged in this conversation quite a bit over the years. Other piece I wanted to follow-up

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: Before you move on, question. So, we have a Vermont rule. We have an evolving federal rule. And the Vermont rule, of course, is it possible for someone to sustain a situation, an employer where someone is an independent contractor for federal income tax purposes but not for state tax purposes?

[Kendall Smith, Commissioner, Vermont Department of Labor]: Robert, have you seen that much in in this case since that

[Robert Deppner, General Counsel, Vermont Department of Labor]: Well, I will say that, and this is again Robert Debber, General Counsel for Labor, I would say that it is certainly possible for the Feds to issue a ten ninety nine to someone, but for them to be an employee for arguments. How the Feds classify them, we really can't do anything about it. And because the Feds are operating in terms of those evaluations from rule as opposed to statute like we are, that wouldn't necessarily affect us because the IRS rules on that are not going to necessarily preempt state UI definitions on what an employee is.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: So essentially our rule governs our tax system. The federal rule governs the remedies of the federal tax system.

[Kendall Smith, Commissioner, Vermont Department of Labor]: And they're able to come in and do their own investigation of businesses if they get complaints.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: Right. That it's not there are certain areas of the law where, like pollution control, what California does is really controlling because the federal rule doesn't matter because federal California rule is stricter and that's what works. That's not true here because here all we can do is control our own tax system for your income taxes. Are there areas where that hurts us and income because we rely on your federal returns amount for our state tax purposes?

[Kendall Smith, Commissioner, Vermont Department of Labor]: I'm having a hard time, I apologize, following the income tax nexus here where this really impacts unemployment insurance taxes and what you're paying in

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: a Yeah, recovery I guess it would. You just answered, indirectly answered my question. Okay.

[Kendall Smith, Commissioner, Vermont Department of Labor]: So I guess maybe no.

[Rep. Elizabeth Burrows (Member)]: No. But I would follow-up with many of other lawyers in the room to Okay. Back check

[Kendall Smith, Commissioner, Vermont Department of Labor]: So the other piece that I would add to the list that legislative counsel just went through is with regard to home health workers in what they get for wages and overtime law and obligations, where this is another area they've suspended enforcement and are doing rulemaking. I will be honest with you, this was a newer area for me preparing for testimony today. So if you want to follow-up on that, I'm happy to talk with our Department of Aging and Independent Living as well and get a little bit smarter on this issue in terms of the real world impacts for Lamontas. But we know we have an aging demographic, so I do think it's something to watch and will struggle with our long term care strategies and abilities and capacity. And we do see more and more Lamont's aging in place with home health aids in their houses. And so this is really helping these people get compensated, what overtime rules are they subject to or not. And again, the feds are dusting off who will make it in this space right now as well, but it's not to be used. It could be the implications of how that could impact us at the ground level here in Vermont. So I want to add those two things to the list. It's very comprehensive, what Sophie just went through. And there was a question around DEI and practical impacts in Vermont and how that's playing out and would flag the work women getting flagged. We did see a real world consequence of this with Vermont Works for Women had a federal grant. The grant was called WANTO, W A N T O. I apologize. I couldn't tell you what that acronym stands for right now. I've been to the my time. But they had one of their long toe grants rescinded back around this time last year. And it was really focused on women, those who identify as female, and what Vermont Works for Women does is try to promote good trades. So that was a big hit for their organization. So you had asked, are we seeing some real world examples? And that was something that happened about

[Sophie Sedatny, Office of Legislative Counsel]: a year ago with those

[Kendall Smith, Commissioner, Vermont Department of Labor]: changes. So unless you guys had any questions that you want us to try to answer about what Sophie just went through, I'm not going to regurgitate, like I said, a lot of that. It was very, very comprehensive. Some of the other things I will flag, though, in terms of federal changes that are going to influence the world of work, where we're playing a supporting role, is helping the agency of human services when it comes to the work requirements for SNAP, TANF, and Medicaid recipients. And Deputy Commissioner Winters is really leaning into that space. So I don't know, Chris, if you want to say a couple words about our partnership and

[Unidentified Committee Member]: cover Sure.

[Chris Winters, Deputy Commissioner, Vermont Department of Labor]: I'd be happy to. Thank you, Commissioner. For the record, my name is Chris Winters. I said, the new Deputy Commissioner before this. I've been in state government a long time. I had about twenty five years in the Secretary of State's office, starting as a staff attorney, then as the Director of Professional Regulation, and then as the Deputy Secretary of State, and in the last three years as DCF commissioner. And that AHS experience has really been helpful to some of my work at the Department of Labor. This is an example of that. HR1, the big budget bill, has new work requirements for folks who are on Medicaid or receiving SNAP or TANF benefits. And those changing eligibility and work requirements, we want to be very careful. There's additional reporting. It goes from every 12 months to every six months to determine eligibility. And so there now needs to be collaboration between the Agency of Human Services and the Department of Labor on some of that payroll data, wage and information data, so that they can verify that people who are receiving Medicaid may possibly are working, are engaged in community service, or job training, or some form of education, so they're knocked out of eligibility. And I think it's important to point out that many folks who do receive Medicaid are already employed in some way, Medicare, I should say. And so we're working with we have a labor and market information division, and they collect all of that data. And we're working with partners at the Agency of Human Services to make sure that we exchange that data for their purposes of determining eligibility. A lot of this stuff goes into effect on October 1, so we've got a pretty robust working group that's working really hard to make sure that we give them the information they need to determine the work requirements.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: Chris, do you have any sense as to what the impact this will be on Medicaid enrollment? It's hard to tell.

[Chris Winters, Deputy Commissioner, Vermont Department of Labor]: I think there are about 55,000 folks who are enrolled through our expansion and about 30,000 who currently work in some way and are affected by requirements. So the Agency of Human Services will be looking at whether there are exemptions that apply to those 30,000 individuals, other ways to qualify them, and then just have to make sure that they're getting the data that they need in order to verify that they are working and don't get kicked off the rolls. Because it goes from twelve months to six months, it's just another opportunity for people to get tripped up. It's quite an additional administrative burden on the Agency of Human Services to verify this eligibility. So it's kind of hard to predict the outcome, but it's going to be a little bit harder to maintain eligibility, and maybe a lot harder for certain officials.

[Kendall Smith, Commissioner, Vermont Department of Labor]: Can I ask why does that change me? It's a federal

[Chris Winters, Deputy Commissioner, Vermont Department of Labor]: That was the big budget bill.

[Kendall Smith, Commissioner, Vermont Department of Labor]: Following the federal law. That wasn't a state decision. They call it HF-one, but one of the bills, we passed by

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: some So, of we're less familiar than I am than I might be. So, one of the requirements in Medicaid is that there's a list of things you have to be or be doing in order to qualify. And there is a work requirement, and that work requirement was there before. No. No, so a work requirement is new. Well, what if you're retired?

[Kendall Smith, Commissioner, Vermont Department of Labor]: So this is with Medicaid, you'd be on Medicare, most likely. Right,

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: or if you're well and poor. So you have to work, and if you're disabled, you'd be on Medicare?

[Chris Winters, Deputy Commissioner, Vermont Department of Labor]: Potentially. There are a number of disabled individuals who still work and would be required to work. It's an eighty hour requirement every month, at least eighty hours. And this has to be verified every six months? Yes. But there are exemptions for people who are pregnant or a veteran or medically fragile, how that's defined in the law. Right.

[David Mickenberg, Working Vermont]: A couple of other exemptions.

[Robert Deppner, General Counsel, Vermont Department of Labor]: If I could add, if you are disabled under federal social security disability or something like that, usually you are automatically eligible for Medicaid and then as a general proposition you wouldn't have a work requirement because the feds had already said you are disabled. But

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: for at least 30,000 of the 55,000, they are working. But now that has to be verified and there's a work limitation and work regulations, yes.

[Rep. Elizabeth Burrows (Member)]: So are we needing to budget anything for staffing or resources for the Department of Labor to complete federal obligations?

[Kendall Smith, Commissioner, Vermont Department of Labor]: Not yet. So we have 11 regional job centers around the state right now that are open five days a week. And anyone can walk in at any time and say, I'm looking for a job or help me with my resume or want to do a mock interview. We also support employers. So employers call us up and say, I need five people to do X, Y, and Z, and we try to do that matching. Really, this verification has to be done by the agency of human services. And so what we're working through right now is how do we do that? How do we share data? So right now we hold most of the wage records for the state. So they could send us a list of names and say, do these people have wages? And then we're able to say simply yes or no. What we're trying to do too though is for people that are not currently working more proactively is get them connected in with those regional job centers and our job specialists so we can help get them employed if they need that. And there is also an allowance for also community engagement activities. I could not say the full list right now of what counts as volunteerism and community engagement. So if that is more appropriate for you, that is also allowed in certain circumstances if you aren't able to meet the eighty hour work requirement. So we already have a pretty robust network of being able to place people in jobs. And I think right now it is connecting with this population and helping get them into openings so that they can continue their coverage for SNAP, TANF, Medicaid, etc. So

[Unidentified Committee Member]: that 20,000 notes, that targets people that have to work and it's nothing to do with the people that are on disability or any people that are already receiving Medicare or Medicaid and they're exempt from needing to work.

[Kendall Smith, Commissioner, Vermont Department of Labor]: Is it 30?

[Chris Winters, Deputy Commissioner, Vermont Department of Labor]: There is fifty five and thirty, so it's probably 25,000 that already fit one of the exemptions.

[Sophie Sedatny, Office of Legislative Counsel]: Okay, yep. Thank you.

[Kendall Smith, Commissioner, Vermont Department of Labor]: We're playing, again, we're just bringing this up again, it's a federal change that the state has to implement. And so we're supporting the agency of human services in trying to do this in the best way for Vermont and help those that so we can keep their coverage, like I said. So that was just a relevant flag for you all in terms of what's going on in regard to federal changes. What I wanted to share if you're interested, so thinking what is actually happening on the ground in Vermont right now as it applies to employment law, what are we seeing, what are we hearing from the Department of Labor? I've pulled together some twenty twenty five year end review numbers if you want to hear what are the complaints we're receiving in the employment world, if that would be of interest, and the backdrop of all these federal changes. So for wage and hour, and actually before lunch is up, do want you to discuss a little bit what our wage and hour program does?

[Robert Deppner, General Counsel, Vermont Department of Labor]: Sure, so I'm also the general counselor. I'm also the director of the wage and hour program in Vermont. We investigate complaints of unpaid wages generally. We're a complaint driven division. We have three investigators, we have a staff attorney, and myself, and our investigators investigate all sorts of complaints. We have authority over unpaid wages, unpaid benefits, unpaid overtime, sick time, that sort of thing, but the vast majority of complaints are unpaid wages.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: Pages that literally haven't been paid that are owed.

[Robert Deppner, General Counsel, Vermont Department of Labor]: Yes, that is

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: the it because of a misclassification or just people not getting paid?

[Robert Deppner, General Counsel, Vermont Department of Labor]: Sometimes that can enter into it. That gets into the definitions of what we consider an employee under either our wages and medium payment, which is the overtime provision, and the minimum wage law. I mean there are actually different definitions of employee. So that's where we start with determining whether or someone's an actual employee or not. But beyond that, sometimes it is someone didn't get their wages paid, sometimes it's a misunderstanding between the employer and the employee. And by statute we're required to try to resolve those informally first if we can. And so sometimes you just have employers that didn't understand exactly what they needed to do. I think the vast majority of it, we have a law where you need to get paid, I believe it's seven business days, depending on whether you were fired or whether you quit. And so sometimes people are waiting on day eight saying, where is my check? If you call the employer, oh, it's all the work. I mean, it's that there can be all sorts of kinds of things.

[Kendall Smith, Commissioner, Vermont Department of Labor]: So in terms of what came across the desk for that program, they had three forty five complaints of unpaid wages, 23 complaints of unpaid benefits, 23 complaints of unpaid overtime, 18 complaints of unpaid sick time, 15 complaints of unpaid tips, and two complaints of unpaid prevailing wage. So that would be, again, if you're wondering what's really going on in the world out there, what are we fielding, what are we seeing, what are we hearing, at least as it relates to the wage and hour program, those were our stats for 2025. Elizabeth. Thank you. Those are stats for 2025.

[Rep. Elizabeth Burrows (Member)]: Yep, last year. And do you have a sense of how that compares to other states? I don't. I could look into that, just don't want me to how it compares.

[Unidentified Committee Member]: I just would love to be able to

[Rep. Elizabeth Burrows (Member)]: do the next job.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: Yeah, I would too. How about, is that more than '24 or less? We could pull that. I mean, you have any sense of have the complaints gone up because of all of this?

[Robert Deppner, General Counsel, Vermont Department of Labor]: I don't have a good sense of whether or not the complaints have gone up significantly. In talking to my staff, as I do frequently, there hasn't been a significant increase. None that they have been like, oh my gosh we're getting it well. In fact, since over the course of the past couple of years, we have reduced our backlog significantly And so we actually have a little more capacity to make the phones and do all that kind of stuff. So I have not been getting complaints of they're overworked in that way. And with this extra capacity, we've been doing a lot more outreach than we used to getting out to employers and talking around the state so that we could get out in front of some of these issues.

[Kendall Smith, Commissioner, Vermont Department of Labor]: Doctor Bloom, that's on that. Just so that I

[Unidentified Committee Member]: can picture you in your work, how does a person file a complaint? Did I go to a website? Is there Do you extract data from that website? Is there a way for the public to see that data instead?

[Robert Deppner, General Counsel, Vermont Department of Labor]: Thank you, I'm glad you asked. So there's lots of ways you can do it. On the web we have a complaint form, a fillable form where you can fill it out and it gets sent to the main email address for the investigators and Then they'll take that information and they'll reach out to the complainant. You can also download the form online, can email it to us, email us directly. There's a phone number that you can call periodically. We have people just come in and say, hey this happened, we can self refer if we hear something around, we've done that before.

[Unidentified Committee Member]: So do you have a standard, like let's say a complaint comes in by a carrier pigeon. When you're calling the complainant, do you have a standardized way of collecting information about what their complaint is, or how do you gather them?

[Robert Deppner, General Counsel, Vermont Department of Labor]: Well broadly it is standardized in practice, not informed. Because we have a small unit, they're all trained pretty much the same, and so it's really pretty basic. If you call the complainant, what's going on? What's your name? Where did you work? Who's your employer? Who is doing payroll? Just tell us what's going on. And so that's really the first step is just getting that very basic information to know what's going on. If they have any documentation, that's helpful. Then we can then call the employer. Again, as I said, we are required to try to sort these informally if we can before we open an official investigation. And so we really want as much information as a complainant can give us so that we can take it back to the employer and say, this is the complaint, here's the information we're provided, let's save you.

[Unidentified Committee Member]: And then do you, you get

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: over a three month period, what if

[Unidentified Committee Member]: you get 50 complaints about one employer? Do you track that data? Do you track data about false complaints so that you know, that tells you that the public doesn't understand your role? Do you track that sort

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: of stuff?

[Robert Deppner, General Counsel, Vermont Department of Labor]: Well, in our database, it's called Case Tracker. Believe we can look There

[Kendall Smith, Commissioner, Vermont Department of Labor]: is a physicality.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: What does it do?

[Robert Deppner, General Counsel, Vermont Department of Labor]: Start getting into legal databases and creativity is not what you find for. But we can look by employer thing. Have a secondary in SharePoint, the way that we have developed our case tracking in SharePoint. We can run searches for employer name or individual name on that. So really once it's begun a formal investigation and it gets put in as a formal case file in that system, it's pretty easy to run a search for an employer and just see where all comes up. Frequently, and this is my experience anecdotally, the employers that are settling things informally usually aren't getting a bunch of calls. Usually it's a oh this is a mistake, we figured this out, it's the employers that fight you that really want an investigation, by golly this didn't happen, where you start generating more documentation. And then we have a process once we make a finding, we send that out to both the employer and the complainant. If we have five complainants and we send out five findings, and then once the appeals process has gone either with success by the department or they just don't appeal it, then those will get aggregated. Say it's five people and one employer, those will get aggregated and sent to one of our attorneys, one of our staff attorneys then takes it to superior court, aggregates those findings under that employer and then requests a judgment from the court. So essentially sues them for payment of the final order that was generated by the department.

[Kendall Smith, Commissioner, Vermont Department of Labor]: Thank you.

[Robert Deppner, General Counsel, Vermont Department of Labor]: Yes, ma'am.

[Kendall Smith, Commissioner, Vermont Department of Labor]: So I didn't talk about our stats for misclassification, which we were just talking about as it relates to independent contractor law. So I can share some of those as well. So our workers' compensation program tracks misclassification as it relates to workers' compensation coverage. We actually collaborate on a report with the attorney general's office that's due every January that they just submitted, and I'm happy to send that link to the committee if that's of interest. But in a nutshell, with workers' comp, we opened 105 misclassification investigations, those comprised of 87 investigations from the division's review of over 4,000 NCCI. NCCI is an insurance association. The National Council of Compensation Insurance. You'll hear them at NCCI a lot in the building when they do leak impact analysis in different areas. Seven investigations were from complaints received from the public, 10 investigations from referrals from other VDOL units, one investigation from the list of employers newly liable for unemployment insurance violations, and one investigation from other pending or closed VDOL investigations. Those 105 investigations resulted in 43 citations. That was two citations from previously pending investigations, 41 citations from newly opened investigations, and the total assessments, so fines, totaled 292,740, so just under 300,000. And then in terms of unemployment insurance misclassification

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: Before we go on, again, same question. Do you have anecdotal sense or any other sense as to any change?

[Kendall Smith, Commissioner, Vermont Department of Labor]: I would have to do the trend line and come back. We can get that. I just didn't filter it in terms of the trend.

[Rep. Elizabeth Burrows (Member)]: Yes. I think this is just a general comment that I think for the folks that are giving us the testimony that are so in it, in the weeds and with boots on the ground. It's really hard to actually take in, like you've clearly done all the work to bring it all together and to bring it to us, but to just rattle off numbers, you know, is I've seen a lot of folks nodding, so I'll just be the person that's going to say it out loud. It's just completely need context, we need comparison and we need it in writing because otherwise, know, even for the public to be able to find that information in your testimony is like impossible to find, you know,

[Kendall Smith, Commissioner, Vermont Department of Labor]: they don't even know

[Rep. Elizabeth Burrows (Member)]: what term to look up.

[Kendall Smith, Commissioner, Vermont Department of Labor]: We can absolutely submit a memo after trying to figure out the thirty minutes federal employment updates, what would be interested to you all. So I brought front of a smorgasbord. And

[Rep. Elizabeth Burrows (Member)]: this isn't a comment just to you guys. I'm just sort of record, I guess, saying.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: Just think context is what would look like a board change because the subject matter here is, well, what's happening because of the federal scene rather than simply what's the OL's performance. And so, for example, I at least am quite satisfied with your General Counsel's indication that anecdotally, he feels that he hasn't heard a lot from his three people, because the numbers are so small, he would have. I mean, if there was a big change, he would have heard. Right.

[Rep. Elizabeth Burrows (Member)]: But Yeah. Even the cases, like when you were listing off the numbers, that would be really helpful if I was writing.

[Sophie Sedatny, Office of Legislative Counsel]: We can

[Kendall Smith, Commissioner, Vermont Department of Labor]: keep that in a memo back to the email to review.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: And in your memo, if you do a memo, I would suggest that you come to a conclusion. In other words, don't just tell us, well, here's how much it was in 'twenty four, 'twenty five, what we're seeing now in 'twenty, tell us, and we don't see as change, or whatever your conclusion is. Yeah.

[Kendall Smith, Commissioner, Vermont Department of Labor]: No problem. So I am keeping an eye on the time and you'd asked us here from 01:30 to two. I did prepare information about our federal funding, as well as a bill that we've introduced, as well as the status of our UI modernization project. What would be

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: a process I think your federal funding, if it has significance, we'd like

[Unidentified Committee Member]: to hear it. Great. But I would also, and I have to go into the minute unfortunately, but I would also really love to, because I came into office right when the UI explosion or implosion occurred, I'd really love to know how about the updates.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: We do have one more. David, are you around for a while? We have until, let's say five of three. Are you with us for a bit? Sure. Okay, alright, Go ahead.

[Kendall Smith, Commissioner, Vermont Department of Labor]: So we're about 60% federally funded overall as a department. That breaks down differently across our four divisions. We have four divisions, that's labor market information, unemployment insurance, workforce development, and then workers' comp and safety. That also sets out workers' comp program as well as VOCHA and Project WorkSafe. Each of those four divisions have different federal funding levels within them. The US Department of Labor, which is who we report up to and receive most of that federal funding from, has been subject to the continuing resolution right now. So for us, we have been in a holding pattern in terms of what is our upcoming FY 'twenty seven fiscal year budget that you all are going to litigate because we're still waiting for our federal FY 'twenty six numbers. So the federal government runs on a different fiscal year calendar than state government. They run October through October versus us July through July. So that always creates a little bit of complexity in terms of how that matches up. Yeah, I heard you. I know. So the areas that we've been most concerned about is actually the funding for our workforce development programs and division in terms of what the federal government was discussing, frankly cutting out of the federal funding we received that funds many of our programs and work that happens out of those regional offices that I mentioned earlier. The good news is yesterday, late breaking, it appears there is kind of a conference committee agreement in Congress on US DOL's budget, and we are not expecting catastrophic downs. In the House version of the bill, there was a lot of cuts proposed that would have been very impactful. What they have agreed upon does not include many of the things that we were concerned about. So there is going to be some changes in the workforce development funding that we potentially receive, specifically in we operate under what's called, we know it's Workforce Innovation and Opportunity Act. And so WIOA has many different titles, but that's where most of our federal workforce funding comes from. One of the line items in WIOA supports adults. So again, when any of us were to walk into a regional job center and somebody sits down and works with you, if you are eligible because there is an eligibility piece to WIOA, that's where they're going to fill their time. That's what we're going to pay out of. The USDOL budget has overall 10,000,000 less for that line item and that program. But what I don't know is how that will be distributed across the states yet. So it's possible we might not see any change to our allocation there because we tend to get the small state minimums, or we might get a little down. I don't know yet. So the conference committee report still needs to be formally voted on by both the congressional house and senate signed by the president, and then The US deal has to do these allocations. So there'll still be a little bit of time before I can definitively say we're getting a million less here or 500,000 less there or no change at all. There is one area where they are investing quite a bit more money. It's into a program called RESEA. And what that does is if you are a UI claimant, there is an algorithm that runs and it allegedly identifies those that are most likely to exhaust their benefits. And then it basically mandates that you have to participate in reemployment counseling and services if you're going to continue to receive UI. So the federal government is investing $79,000,000 more into that program, I assume based on their philosophy of trying to get people to work. And so again, we'll have to see how that gets distributed across the states, but we can expect an up in that regard. So overall, I'm feeling a lot better today than I was with the framework I've seen previously as it relates to our federal funding picture. But there is still, just to be very fair and transparent, a little bit of time and uncertainty to go until this really becomes final and we see what the allocations look like. But that being said, when the appropriations committee is reviewing our budget, it's not going to be very exciting otherwise, pending this federal money where we basically have a 3% up in terms of the growth target across the board. We do have some general funds where we might be able to offset changes should they come down the pike.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: That's really good news about the conference committee. Mean, there are other agencies not in that position, where the House or Senate bill looks terrible.

[Kendall Smith, Commissioner, Vermont Department of Labor]: Yep, we feel very lucky in that regard. If you want to hear about UI modernization just really quickly, so we have a very old unemployment insurance IT system. It is 55 years old to be exact. Yes. I don't know how techy people in this room are, but it runs on what's called COBOL, C W

[Unidentified Committee Member]: I P Hotel.

[Kendall Smith, Commissioner, Vermont Department of Labor]: If you want to walk our call center right now where they're taking planes, it looks like a Pac Man game, at least that's what my mind thinks when I see the screens in terms of what the coding and the software looks like. So with some of the ARPA funds that we received, the state invested about $30,000,000 into upgrading and rebuilding the system from soup to nuts. So our new system is going to go live spring summer twenty twenty six. We haven't released an exact date yet because we've been very strong with our vendor that the system needs to work. And we are going to take our time testing and testing and testing again and training and communicating. Over the next couple of months, we will obviously have to announce what the date is to prepare everybody. But we are about 90% through development. I know you guys didn't want to hear numbers, but just bear with me. 90% through development, about 60% through the business testing. We're starting training. And really, this is the crunch time in terms of communicating out. So later this spring, we're going to be starting to interact with various stakeholder groups, town halls, so both employers and claimants know how to use the new system. One of the things that we just recently finished doing was a review with Vermont Legal Aid in terms of making sure the system will be accessible to everybody that uses it and trying to address some of their longstanding frustrations with the system and the folks that they support through the wiseling process. And we think we can take probably about 75% of the suggestions and things we're asking for from them. So we're feeling pretty good about where we are in that regard. And so if that's something that Katie is interested in, I do think, depending on your agenda and what you take up, I would love to come back. If you set aside a specific hour just to talk about the UI system modernization, would be happy to do that with you.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: Thank you.

[Unidentified Committee Member]: Congratulations. I know that was a really big

[Sophie Sedatny, Office of Legislative Counsel]: It was. Yeah, Mary lets you

[Kendall Smith, Commissioner, Vermont Department of Labor]: know, it will be worlds better than what exists now for folks. Low bar. Yeah, fair, fair. So that sounds like it will be worlds better than what exists now,

[Sophie Sedatny, Office of Legislative Counsel]: but we still, we have

[Kendall Smith, Commissioner, Vermont Department of Labor]: a couple months left to go. And so that's going to be, just to be blunt, that's our number one priority over the next couple of months, is making sure that that rolls out as smoothly and well as it can.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: Thanks. Congratulations on focusing on getting it ready.

[Kendall Smith, Commissioner, Vermont Department of Labor]: Don't judge us, but yes.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: Any Any final questions? We had on our list, Rowan Hawthorne, that I gathered, the three of you are representing me.

[Rep. Elizabeth Burrows (Member)]: Yes, this

[Kendall Smith, Commissioner, Vermont Department of Labor]: Robin. Yes, we will follow-up if you want to know what kind of those trend lines are that I was going through over time in terms of why I thought they were helpful and illustrative is there are federal changes, but in terms of what are we seeing, hearing and feeling,

[Sophie Sedatny, Office of Legislative Counsel]: and what gets elevated up, that would be a good juxtaposition. Great. But thank you.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: Well, thank you very much, really, for your time, and for the three of you coming. Much appreciated.

[Kendall Smith, Commissioner, Vermont Department of Labor]: You're welcome, anytime.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: David. Okay.

[Sophie Sedatny, Office of Legislative Counsel]: You. I'll check.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: Thank you and thank you for taking time to come and waiting.

[David Mickenberg, Working Vermont]: David Mickenburg here on behalf of Working Vermont, a KHLB Labour Union that represents approximately almost 40,000 working Vermonters in Vermont, so thank you for the time. As the previous witness said, Sophie did an excellent job of the number of labor law changes that have happened in the course of one year, it's almost daily. I'm going to highlight a few of them and return to a couple to get into a bit of detail, and then highlight a few that weren't mentioned, the Department so, of also added their health perspective. On non competes, as Sophie mentioned, the Biden administration had implemented a rule through the Federal Trade Commission banning non competes, meaning companies were no longer allowed to require as a condition of employment somebody to sign a contract saying if they leave the job, they will then not go to a competitor. The rule was applicable to individuals making around 151,000 and below, so for higher paid employees, non competes were still possible, but this would apply for folks under that threshold. Interestingly, about 30% of all American workers are subject to non competes and just to put it in context, about 30% of those workers that are subject to make below $13 an hour. We've seen cases the country, interestingly in the research that I've done, around like sandwich shops. Jimmy John's is a case that was out of New York in which they were making workers' signed documents. It is regularly used in low pay positions and the Biden administration was attempting to ban that practice. So the Trump administration came in that, rule had been appealed to court by employer groups. The court initially found in favor of the employers, and then when the administration changed, Trump administration decided to not pursue the appeal by administration who was appealing to the next level court, the Trump administration decided to not pursue the appeal, in essence, the rule is gone, Federal Trade Commission hasn't issued it, so there's a bill one in your committee and one in house commerce and a lot of work that was done, I'll just take the opportunity to highlight this around this issue, a lot of work done, I was a part of these conversations with a lot of employer groups through the course of the summer and the fall to talk about whether Vermont, like many other states, would want to move forward with banning non competes, particularly for lower wage work, middle class and

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: middle class. Just for your information, that bill's been moved over. There already was

[David Mickenberg, Working Vermont]: a

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: bill over in commerce, and there was one here, and we just moved the one from here over to commerce. Great, okay, so they're all together in commerce.

[David Mickenberg, Working Vermont]: The bill that they're

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: probably going to be working

[David Mickenberg, Working Vermont]: on this would be around $2.00 5 and in that bill they set the threshold at $100,000 so they wouldn't apply too and there seemed to be some general agreement that lower wage workers should not be subject to non competes, it's a restraint on their ability to work. And

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: their stay or pay is I think an issue.

[David Mickenberg, Working Vermont]: Yes, that is part of that as well, and just to be clear, non competes have nothing to do with traits, I mean, you could say there's something to do with it, but really it's a separate body of law compared to trade secrets and non disclosure agreements. There are other ways to protect trade secrets, recipes and things like that, short of preventing somebody from going out and getting a new job. So that was one major change that's been highlighted by others. Independent contractor you've heard about, I don't need to go into the details, but from our perspective, it went from a test on the federal level that was more permissive of finding that somebody was an employee. And for us, it's sort of the core of the labor movement is employee status. If you're not an employee, you don't have the rights that are given under law. So you don't have the protections of anti discrimination laws. You don't have minimum by and large. There could be some exceptions, but you're not entitled to minimum wage. You're not entitled to unionize. I mean, by and large without employee status, you have very few rights. And so this has been a long conversation that's been happening both on the federal level and here in Vermont around the distinction between an independent contractor and an employee. And we have been arguing for quite some time, both here in the legislature and folks nationally that the test should be as expansive as possible because more protection for workers when they're designated as an employer. There are legitimate cases of independent contractors and those should be acknowledged and used in the appropriate circumstances. So the Trump administration went from the Biden test, which was more expensive in terms of protecting employers to a more narrow test, focusing on really two pieces, which is the nature and degree of the workers control of work and the workers opportunity for profit or loss. And all of these cases are litigated on a fact by fact basis. Just so you know interestingly in Vermont, we were talking about what's happened in Vermont, done a lot of work on misclassification and one of the big issues that came up a number of years ago, that's ten years ago now, was the issue about single member LLCs and whether they should be considered independent contractors or not. Prior to a Supreme Court decision, the barber decision, single member LLCs were not, were generally considered employees as long as they meet the test for employment, the ABC test on employment insurance, the UI and Booker's comp has a different test. The Supreme Court said that single member LLCs could be considered independent contractors and that's the current state of the law. So if you see, when we see those numbers from DOL, I'd be interested to see from 2017, whether there's a drop in the number of misclassification claims because of the Supreme Court decision. So I'll pause there on independent contractors. And it's a complicated area of the law. There's the law itself, multiple tests for an employee or whether somebody is an employee or not. But for the purposes of what we're talking about today, federal changes, essentially the Trump administration has been made it easier to make somebody an independent contractor, which we see a lot in the gig economy and other areas, construction, we see it in a lot of different parts of the company.

[Rep. Elizabeth Burrows (Member)]: Can you just clarify, did you, the single person LLC?

[David Mickenberg, Working Vermont]: Single member.

[Rep. Elizabeth Burrows (Member)]: Single member, yeah. That can qualify as or it does, I missed.

[David Mickenberg, Working Vermont]: I mean, there are, I mean, the court wasn't definitive. Okay. It's more of a can than does, it's not automatic.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: Right, that's right. That's the same,

[David Mickenberg, Working Vermont]: you can't just get an LLC and say, I'm a single member LLC, I'm automatically and just to be clear, that's for the purposes of unemployment insurance.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: Unemployment insurance, okay. That's what

[David Mickenberg, Working Vermont]: that case was about. Okay, thank you. Yes. The NLRB, there was a lot that happened at the National Labor Relations Board, if people are familiar, I think you've heard a lot about in the last year or so, the National Labor Relations Board, it's the entity that's responsible for sort of protecting employees' rights to organize and determining the results of elections, and also adjudicating unfair labor practices on either side, employer or employees. So the National Labor Relations Board is a very critical entity for those that don't qualify for Vermont's labor, under Vermont's Labor Relations Act, but go through the federal process. And the administration, the current administration immediately removed the general counsel of the NLRB and then removed one of its members, a democratic elected member who term had yet and making the board inoperable because they didn't have a quorum. So for about a year, the board has not been able to operate. And subsequent to that time, the president has appointed two board members and they've been approved by the Senate. So the board is now operating. They've also approved the new general counsel. So the NLRB is operating again. There has been, there was a case out of the Fifth Circuit Court of Appeals, SpaceX versus the NLRB, they challenged the sort of constitutionality of the provision in the NLRB statute, which says you can only remove members for cause. And the court agreed with SpaceX and others that it is questionably constitutional in terms of the for cause provision for removing NLRB members, and so the president would have more authority to remove members in the NLRB, even if their term hadn't expired. And that was appealed to the Supreme Court and the court denied cert, meaning the Supreme Court decided not to hear the appeal, so that's a long way. I'll quickly skip over Wage and Hour. You heard about the somewhat, I think it's 300,000 federal employees that have lost their jobs. I'll mention one last thing about project labor agreements. Don't know

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: if How can many employees here have lost their jobs?

[David Mickenberg, Working Vermont]: In Vermont, no, I do not know that, but that's a good question, I can check.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: Yeah. Okay.

[David Mickenberg, Working Vermont]: I don't know if folks are familiar with project labor agreements. Project labor agreements are agreements in construction projects often used in the private sector and in government contracting and it's essentially an agreement between workers and the employers as to the wage rates and benefits that will be set for that individual project. They've been around forever, used essentially as a tool of efficiency and to ensure labor harmony, that there's not a strike or walk off on the job, and to ensure that the projects come in at budget and on time. And so the one instance of a project labor agreement being used in the state of Vermont was the Addison Bridge that was done under a project Labor Agreement at the Assistance of New York. Project Labor Agreements, in the Biden administration they passed what's known as the Chips and Science Act of 2022, which was a $280,000,000,000 allocation of funds to support the building of computer chips domestically. As part of that, there was not a clear requirement, but certainly incentivized for people deceiving Chips Act money to use PLAs, probably. It was very clear that the administration wanted people who are receiving these funds using PLAs. The change in administration, while they didn't revoke the language that talked about PLAs and CHIP Act, the same sense of necessity to use them has been reduced and we've seen a very real world impact in Vermont on this. There is a company in Vermont that received significant funds under the CHIPS Act that was going to be operating under a PLA that would have provided about a thousand jobs over construction workers over many years to build a new chips plant. They interestingly enough are doing the exact same thing in the state of New York in a different plant, same company, different plant. They've decided that in Vermont, doesn't warrant a project labor agreement, but in New York, they're fine moving forward with a project labor agreement. And so it's that subtle shift in federal policy, and I think you'll probably hear more about this in the coming weeks, but that subtle shift in federal policy that can have real world impacts, it's a thousand jobs that would have been working for years on a plant here in Vermont under the Project Labor Agreement. They may be working, but they won't be

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: under a Project Labor Agreement. Correct.

[Rep. Elizabeth Burrows (Member)]: Yes, sorry. Guess I'm me understand. Sure. When you say a project specific agreement, it sounds like the opposite of what you're saying is happening. So I would understand that to mean it's a short term, maybe a year or two or five year maximum agreement. And I would think that that is less beneficial than whatever they are operating. Are you saying that they would have operated under no agreement? If it leaves it to no agreement, this would at least have guaranteed sorry, go ahead. No, no, yeah, want

[Unidentified Committee Member]: It you

[David Mickenberg, Working Vermont]: would set both period of time and then if the project's not done at the end of that time, they would renegotiate the PLA, the project labor agreement, but really importantly, it sets the wages and benefits that will be paid during the period of that time. Now the company can go out to bid with any contractors, union, non union, low wage, it's more of a free for all and the ability to contract outside of a set agreement, so, which is problematic for many workers, you know, so. Interestingly enough on the PLA side, and it's just, I'll just go back to say, it just strikes me as curious as somebody who's working with building construction trades here in Vermont, that it would be okay for New York, the same company, same project, same funds, okay for New York to operate under a project labor agreement, but Vermont workers don't deserve the same type of treatment. But there was a similar provision in the Biden administration related to federal construction jobs, so jobs that are being done by the federal government, federal buildings and other things. There was a Biden administration requirement that PLAs be used in federal construction jobs. The Trump administration initially decided to revoke that requirement, but then subsequently went back after some litigation and some review of their policy, back and decided that they would not be eliminating the PLA requirement in federal construction jobs, they would be looking to whether or not these agreements are quote, practicable and cost effective. Plenty of other stuff I could talk about, but I think those are the highlights. I'm happy to answer any

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: questions. Questions of Dave? Fairly

[David Mickenberg, Working Vermont]: miserable. Well, I ended on a good note,

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: right? Well, thank you so much. Thank you. JP, did you have anything you wanted to add or you're just watching?

[JP Isabelle, Vermont AFL-CIO]: I'm just watching. Would just JP Isabel from IFL CIO. I would just touch upon when we Sophie mentioned the haptic graph of the the federal workers. I would just mention that during the shutdown, this past October and November, I don't have a number because, mostly because the employees themselves aren't allowed to talk about this stuff at work in. So that's one of the things, there's a real level of fear among the federal workforce. If I ask or question something, is there gonna be retribution on me, program,

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: my project, that sort of thing.

[JP Isabelle, Vermont AFL-CIO]: So during that shutdown, what we did was we gave out some gas cards to help folks be able to get to and from work because, and again, it gets complicated just with the different agencies and everything that are in Vermont. Some of them were getting paid during the shutdown because they're what's called a fee agency. And some folks weren't getting paid during the shutdown. So that was really difficult to try to figure out and even kind of track down everybody around those systems. So I know when, I just wanted to highlight that to just say that, we should see that graph, we see that there are thousands of Vermonters in the federal workforce, but it really is really different departments and branches and everything. And so it's not as interconnected, I think, when we think of government employees and maybe even think about state employees. There's not a lot of interaction among those folks. Certainly, I know there's been a lot of peaceful protests against ICE in this state. And while I may personally support some of those actions, I just would remind folks that those are people doing their job for the federal government and they're trying to follow the rules that they've been given and try to keep their job. And yeah, lots of people have been laid off and fired or quit, But frankly, still need good people doing those jobs. And so that's always tough for us to balance when your government is doing things that you may not necessarily agree with, but, and you put, you have allies and employees in those positions that makes doing their job really difficult. And so, during all this, the divisiveness of this all, would just have you all keep in mind the individual themselves, just trying to get their job done amongst all of this chaos that we've kind of been hearing about

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: throughout the afternoon. Thank you. Well, we're now moving towards House 4, and we're about to go to adjourn for the day. Tomorrow, at 9AM, we have a series of testimony that comes with the Northeast Kingdom Day, which is tomorrow, and representatives of the kingdom, all sorts of representatives of the kingdom will be in the house. I don't know the details as to all the people that will be here generally. Has anyone here on the committee been in touch with? We have a bunch scheduled. We have three scheduled. Or two scheduled, think, at 09:00. And then, we have lunch because, then, do we have, what else do we have, because it's not, what, I feel, what else?

[Kendall Smith, Commissioner, Vermont Department of Labor]: Seven. And

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: then there's a vote

[Kendall Smith, Commissioner, Vermont Department of Labor]: for each of our 32.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: The vote for which is mine?

[Rep. Elizabeth Burrows (Member)]: Retirement.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: It's just the vote for my, for this, the one that just cleans up the federal state problem. We just don't think there's gonna be any testimony. Mean, it's just so we're just gonna do it, assuming that the committee votes for it. Yes. First, can always decide not to vote. Vote no. Now's your chance. And then, we're gonna have, at 01:00, we're gonna have a review of legislative reports. We should talk for that maybe over lunch, but basically what it is is that I'm not sure what's going on because I have two different spreadsheets. One is a spreadsheet that has lots of reports on it, and one is a spreadsheet that has a half dozen reports on it. Let's talk.

[David Mickenberg, Working Vermont]: It's just those five.

[Rep. Marc Mihaly (Chair), Vermont House General & Housing Committee]: It's just those five. The others be, I shouldn't think about. Okay, we'll talk. And then after that, we have a number of bills that are simply going to be introduced. My question is, is six sixty seven, is that simply an introduction? It doesn't say As a fanatic. Yes, okay, it's an introduction. So I have on this one, but it might be out of date, four bills. Right? Is that still the case? Then we have house full. So, in sum, we resume tomorrow at nine a. M. We'll have seven witnesses. We've asked that the witnesses focus on our issues, and one of them is a witness that we heard before, Laurelie Tester. Remember Laurelie? She's the Chamber of Commerce in the Northeast Kingdom Chamber of Commerce. And she, it was clear, felt rushed, she had to get through. She has a lot to say, she didn't have a chance to say it all, so that's one of the reasons we invited her back, to give us more detail. And Rural Edge is, by the way, their equivalent of Champlain Housing Trust or others, and it's a local housing. But we'll hear, we'll learn about the kingdom. 09:00, any final thoughts before we go offline? And we have the floor in fifteen minutes. But there's no one wandering