Overview
H.347 (2025-2026, Vermont) proposes expanding minimum wage and overtime protections, repealing the tipped minimum wage, tightening the rules for exemptions (executive/administrative/professional), and maintaining the Attorney General’s authority to enforce employee misclassification complaints. The act would take effect on enactment.
Main purpose and intent
- Increase coverage and protections for workers under Vermont’s minimum wage and overtime laws.
- Eliminate the tipped minimum wage and raise standards for employees who currently qualify for exemptions.
- Preserve and maintain robust enforcement, specifically preserving the Attorney General’s ability to enforce misclassification complaints.
Key provisions and changes
1) Definitions and coverage (Sec. 1)
- Redefines “employee” and related terms to expand who is covered by wage and hour protections.
- Repeals some exemptions and narrows categories that are exempt from minimum wage and overtime.
- Establishes a salary-based exemption threshold for executive, administrative, or professional employees, with annual adjustments.
2) Minimum wage and overtime (Sec. 2)
- Increases the basic minimum wage:
- Beginning January 1, 2026: $20.00 per hour.
- Subsequent years: the minimum wage increases annually by 5% or the percentage change in CPI-U (whichever is smaller), with a floor that the wage cannot decrease and rounding to the nearest cent.
- Tipped employees:
- Prohibits service or tipped employees from being paid less than half the minimum wage, and beginning January 1, 2026, prohibits paying tipped employees below the standard minimum wage (for those who regularly receive more than $120 per month in tips).
- Federal wage comparison:
- If the federal minimum wage exceeds Vermont’s rate in any year, the greater of the two rates applies.
3) Overtime and agricultural wage protections (Sec. 2)
- General overtime: time-and-a-half pay for work beyond 40 hours per week, with specific exemptions retained or adjusted.
- Agricultural employees:
- Phased overtime schedule:
- 60+ hours/week at 1.5x starting January 1, 2026.
- Phased reductions in weekly threshold over subsequent years (56, 52, 48, 44, then 40 hours), with each threshold tied to overtime pay at 1.5x.
- Exemption for immediate family (parent, spouse, or child) remains, i.e., not covered by the overtime expansion if the worker is that relative.
- Note: The bill expands overtime protections for agricultural workers, with staged reductions in weekly hour thresholds over time.
4) Exemptions and salary thresholds (Sec. 1)
- Establishes a minimum salary threshold for the executive, administrative, or professional exemption.
- Threshold is set at $1,128.00 per week as of January 1, 2026, with annual adjustments beginning January 1 each year thereafter (5% or CPI-U increase, whichever smaller), and cannot decrease.
5) Misclassification enforcement authority (Sec. 3)
- Maintains and clarifies the authority of the Commissioner of Labor to administer employment enforcement, including misclassification issues (the text indicates maintaining the Attorney General’s enforcement authority as to misclassification despite any prospective repeal).
6) Repeals and effective date (Sec. 4, Sec. 5)
- Repeals several prior provisions (3 V.S.A. § 222d; 21 V.S.A. §§ 346, 387, 712, 1379).
- Effective date: the act takes effect upon passage.
Who would be affected
- Most private-sector workers in Vermont, including non-agricultural employees currently exempt under wage/hour rules, likely become covered or have higher wage floor protections.
- Agricultural workers would gain overtime protections on a phased basis, expanding beyond existing exemptions.
- Employers across sectors would need to adjust wage structures, overtime policies, and tip practices.
- Employers with tipped workers would move away from tipping-based wage structures toward the higher minimum wage baseline.
- Employers would need to monitor and apply the updated executive/administrative/professional exemptions with the new salary threshold.
- Regulators (Labor Commissioner) would have continued enforcement authority, including misclassification oversight, and the Attorney General’s role in misclassification enforcement would be preserved.
Procedural and timeline notes
- Effective date: upon passage (immediate effect once enacted).
- Wage and overtime changes are phased with specified dates:
- January 1, 2026: minimum wage reaches $20.00/hour; agricultural overtime thresholds start at 60 hours as the overload point; tipped workers must be paid at least a wage consistent with the new minimums.
- January 1, 2026 onward: executive/administrative/professional exemption salary threshold set at $1,128.00 per week, adjusted annually thereafter.
- Subsequent years: annual wage increases by 5% or CPI-U, whichever is smaller; minimum wage and specific overtime thresholds adjust accordingly.
- Repeals and definitions changes become law with the act’s enactment, impacting existing statutes and regulations.
Summary
H.347 aims to significantly raise Vermont’s minimum wage to $20/hour by 2026, eliminate the tipped minimum wage, expand overtime protections (especially for agricultural workers on a phased schedule), and tighten/clarify exemptions with a concrete salary threshold. It also preserves enforcement power for misclassification, with continued authority for investigation and enforcement by the Attorney General and Labor Department. The bill represents a broad expansion of wage protections across most workers, with staged implementation and annual index-linked adjustments.
