Measure seen as ‘terrible’ by string of business groups
Business groups lined up against a House bill that would treat vacation and other “earned time” as compensation and require companies to pay it out if an employee doesn’t use that time before separating from the company.
House Bill 74 was approved by the House earlier this session, thanks to a handful of Republicans who backed the bill, but it got very little support and a lot of negative testimony during an April 20 hearing of the Senate Commerce Committee.
The bill’s sponsor, Rep. Michael Cahill, D-Newmarket, anticipated this by starting out by talking about what the bill was not when introducing it to the committee.
“It doesn’t require any employer-paid vacation,” he said, and also noted that it exempted all companies with fewer than 15 employees. “But those larger ones who do choose to offer vacation and paid time off, we do away with the policy that, upon termination, any vacation earned time that is not used just vanishes.”
He called such policies “terrible” and the “wrong thing to do.”
But business groups said it should be their prerogative.
“This bill is short, but it does something profound,” said David Juvet, senior vice president of policy for the Business & Industry Association of New Hampshire. “It changes a benefit into something completely different: compensation. I’m here to stress that employee benefits are not compensation. They are benefits, provided to retain and attract a workforce.”
Cahill stressed that the bill tried to achieve a balance. It only applies to employees who leave “in good standing” or are laid off, without touching the employer’s “sacrosanct” ability to make their own benefit plans.
Labor Department complaints
Lost vacation time is a big issue, testified an official from the state Department of Labor. More than 491 wage and hour complaints filed at the department since August were over unused paid time. Of those 100 cases, about a quarter so far have gone in favor of the employee — 13 with a hearing and another 13 when the employer settled without one.
But all too often, cases are dismissed if a policy states that the benefits are terminated along with the employee, Cahill said.
Cahill was backed by Rep. Chuck Grassie, D-Rochester, who testified that he was laid off with no notice in the initial weeks of the pandemic. He had worked to help keep the company going, while others — perhaps seeing the writing on the wall — took their vacation. But when he learned that both his wages and benefits would be gone that midnight, he felt helpless. Sure, he could challenge the decision, but “if you are in a blue-collar job, you are not going to file a complaint if there is a chance they will take you back.”
Everybody else lined up against the bill. Andrea Chatfield, speaking on behalf of the HR State Council of New Hampshire, questioned the phrase “good standing,” since it’s not defined in the bill or anywhere else in the law.
Does it mean they simply work to their last day and not steal from the company? What if they separated by mutual agreement because of the employee’s “very poor performance,” she asked.
“It’s yet another nightmare for the human resources professional to figure out,” she said.
Gary Abbott, executive vice president of Associated General Contractors of New Hampshire, argued that the bill would create chaos when it came to the benefits of some seasonal workers.
“People would not take vacation and take an extra paycheck when they leave,” Abbott said.
Abbott was followed by Joshua Reap, president of the Associated Builders & Contractors of New Hampshire and Vermont, who said that if vacation time were considered wages, it would wreak havoc on the prevailing wages rate system required on federal contracts.
It would also disrupt the state university system’s benefit package, testified Catherine Provencher, chief administrative officer of the University System of New Hampshire.
The system allows employees to accrue 45 days of unused time, of which they can get paid for 30 if they leave. If they were required to pay out the other 15 days, it could cost the system $3.7 million.
And although the 15-employee threshold would exempt most members of the state chapter of the National Federation of Independent Business, that didn’t mitigate the organization’s opposition.
“That threshold is an invitation,” said Bruce Berke, the state chapter’s president. “Today 15. It could be 10 or five or every employer tomorrow.”
The NH Municipal Association also spoke against the bill, as did the NH Hospital Association.
The latter organization opposes “the state dictating the benefit package for the private employer,” said Paula Minnehan, senior vice president of state government regulations.
Committee members asked few questions and did not vote on the bill in their executive session following the hearing.
More than 491 wage and hour complaints filed at the Department of Labor since August were over unused paid time. About a quarter of those cases have gone in favor of the employee.
