Having completed the necessary work of completing a state budget and setting the statewide education property tax yield for 2026, the Vermont General Assembly largely wrapped up its work at the end of May.

In part II of the 2025 Vermont Legislative Recap, we look at several concerning proposals that did not become law this year and one new law that makes significant changes to the state’s Unpaid Leave mandate.

Workplace Extreme Temperature Regulations (Did Not Pass): During session, a group of lawmakers introduced an alarming proposal (S.153, H.348). to impose heavy-handed regulations on virtually every indoor and outdoor workplace where the temperature is not constantly between 60 and 80 degrees.

NFIB VT voiced concern over the cost, complexity and impracticality of the proposal in a climate and economy like Vermont’s. Thanks to small business owners across the state taking action, the bill did not move beyond an initial committee discussion this year.

We will continue to monitor and educate lawmakers about the problems this bill poses for a wide range of small businesses across the state.

$20/Hour Minimum Wage (Did Not Pass): Two proposals would’ve significantly increased the statewide minimum wage. S.67 (Sen. Clarkson) proposed increasing the statewide minimum wage to $18.60 per hour starting on January 1, 2026.

H.347 (Rep. Kate Logan) went even further, taking the minimum wage to $20 per hour, eliminating the tip credit, lowering the OT threshold for agricultural workers to 40 hours by 2036, and requiring time and a half overtime pay for most salaried workers who earn less than $58,656 per year.

Recent analysis of minimum wage laws by the Federal Reserve show government-mandated wage hikes like this will have a devastating impact on the retail, restaurant, and lodging sectors. Workers will ultimately see fewer job opportunities, fewer hours, and lower average earnings.

NFIB VT strongly opposed these hikes. Thanks to small business owners taking action, the state minimum wage remains at $14.01 an hour. It will continue to be adjusted for inflation annually.

Unpaid Leave Expansion (Signed Into Law): H.461 (Act 32) modifies the state’s unpaid leave law and goes into effect on July 1, 2025.

The existing law allowed a qualifying employee to take up to 12 unpaid weeks off in a 12-month period for parental leave and family leave.

H.461 allows employees to also use any portion of the 12-week allotment for safe leave or a qualifying exigency, and up to two weeks of the 12-week allotment for bereavement leave (but not more than five days consecutively).

Who Is Covered? Importantly, the bill retained the unpaid leave law’s existing small business exemptions:

< 15 employees: exempt from providing family leave

< 10 employees: also exempt from providing parental, bereavement, safe, and qualifying exigency leave

Employees qualify if they work an average of at least 30 hours per week.

Expanded Definition of “Family.” The new definition of family significantly expands the meaning of an employee’s relative for the purpose of family leave to include a broader range of parent-child relations, siblings, grandchildren, and grandparents.

Key changes to the definition of family include:

“Child” means covers an employee’s biological, adopted, or foster child; stepchild or legal ward; child of the employee’s spouse or domestic partner; child to whom the employee stands in loco parentis; person over the age of 18 to whom the employee stood in loco parentis; and any individual for whom the employee provides caregiving similar to a parent-child relationship.

“Parent” means an employee’s parent; parent of the employee’s spouse or partner (regardless of whether the relation is biological, foster, adoptive or step); legal guardian of employee or employee’s spouse or partner by civil union or domestic marriage; a person who stands in loco parentis to the employee currently or when the employee or employee’s spouse/partner was under 18.

“Grandparent,” “grandchild,” and “sibling” include those relations to both the employee and the employee’s spouse or domestic partner, regardless of whether the relationship is biological, foster, adoptive or step.

“In loco parentis” means a relationship where one individual has or had day-to-day responsibilities for caregiving and support of a child regardless of biological or legal ties.

“Partner” means partner by civil union or domestic partnership.

Expanded Parental Leave Uses. In addition to the birth of a child, an employee can use unpaid parental leave for pregnancy, recovery from childbirth or miscarriage, and to care for or bond within the first year after birth, adoption or fostering.

Qualifying Exigency Leave. H.461 adds leave related to qualifying exigency, which is defined in federal code (29 CFR 825.126), to the list of reasons for which an employee may take unpaid leave.

Safe Leave. H.461 adds leave related to safe leave to the list of reasons for which an employee may take unpaid leave. Safe leave is defined as a leave of absence because the employee or employee’s family member is a victim or alleged victim of domestic violence, sexual assault, or stalking, including taking leave for themselves or a family member to:

– seek or obtain medical care, counseling, or social or legal services related to domestic violence, sexual assault, or stalking

– recover from injuries (employee only)

– participate in safety planning

– relocate or secure safe housing

– respond to a fatality or near fatality

– meet with a state’s attorney or law enforcement officer

– relocate or secure safe housing for themselves

Notice and Documentation. H.461 continues to allow employers to require reasonable written notice of the intent to take leave. However, in the case of an unanticipated serious health condition, miscarriage, death of a family member, or short-notice qualifying exigency, the employee is only required to provide leave as soon as practicable.

The bill allows employers to request documentation to verify a family relationship for family leave, the need for safe leave, the use of bereavement leave, and the need for qualifying exigency leave. The bill outlines acceptable sources of documentation for each type of leave that must be accepted by an employer (see H.461, pgs. 9-10 for more information).

These changes are reflective of an ongoing national movement to expand and standardize state leave mandates.

NFIB VT raised concerns about many of these changes and was successful in arguing against effectively doubling the leave allotment from a total of 12 weeks to a combined 24 weeks per employee per 12 months.

Workers Compensation Changes (Signed Into Law): Lawmakers passed a suite of changes to Vermont’s wage and hour, unemployment and workers’ comp laws (S.117), many of which were technical in nature. Substantive changes include:

– employers must pay for translation services to assist injured workers who do not speak English fluently

– increased penalties for second (10% of benefit amount) and third (15% of benefit amount) instances of late workers’ comp benefit payments

– between 10/1/2025 and 10/1/2026, employers must report any late fee payments to the Vermont Department of Labor on a quarterly basis ($500 penalty for failure to comply)

32 Hour Workweek (Did Not Pass): At a time of chronic worker shortages and small businesses struggling to find help to keep their doors open, H.261 (Rep. Monique Priestley) would set the standard workweek at 32 hours and require time and a half pay beyond that.

With two job openings for every unemployed person in the state right now, and small business owners continuing to struggle with worker scarcity and higher labor costs, this bill would make life even harder on Main Street. NFIB VT strongly opposed.

Right to Disconnect (Did Not Pass): This proposal (H.263, Rep. Monique Priestley) would create a right for an employee to ignore communications from their employer outside of normal working hours. It establishes limited exceptions for emergencies such as threats to the business, its customers, or other employees; disruption or shut down of operations; and the potential for physical or environmental damage.

While well-intended, this would impede the ability of employers to communicate important changes and updates outside of normal work hours, among other issues. The exceptions are ambiguous would surely be challenged if enacted. NFIB VT opposed as written.

Credit Card Processing Fee Relief (Did Not Pass): Swipe fees are a financial thorn in the side of many small businesses, who often pay higher rates than larger competitors due to lower processing volume. While the average processing fee is around 2.2%, it’s common for smaller businesses to pay rates of 3.5% to 4% or more.

S.135 (Sen. Perchlik) and H.317 (Rep. Casey) would exempt the portion of a charge attributable to sales tax or gratuity from credit card processing fees. By one estimate, this proposal would provide more than $15 million in collective relief to Vermont businesses.

Exempting sales tax and gratuity from the processing fee makes sense because, in these instances, a small business is simply a pass through to the state or employees. Collecting and remitting funds that are not theirs to the appropriate recipient carries an administrative cost, which is compounded by the processing fee when a customer pays with a credit card.

NFIB VT will continue to support efforts like these to reform the credit card processing market.