An act relating to eliminating certain exemptions from the minimum wage and overtime, including the tipped minimum wage; increasing the minimum wage; and requiring that inmates receive the minimum wage for work performed
S.128 would substantially revise Vermont’s wage-and-hour laws in three main ways. First, it would raise the state minimum wage from $12.55 to $25.00 per hour beginning January 1, 2026, with future annual increases tied to the lesser of 5 percent or CPI-U inflation, and it would prohibit any decrease in the minimum wage. Second, it would phase out the tipped minimum wage for hotel, motel, tourist place, and restaurant workers by requiring tipped employees to receive the full minimum wage beginning January 1, 2026. Third, it would narrow several existing exemptions from the definition of “employee” under Vermont’s minimum wage law, while leaving some categories intact, such as certain agricultural family workers, domestic service workers, federal employees, and some nonprofit workers.
The bill also changes correctional labor law. It would require offenders working in Vermont correctional institutions to be paid at least the state minimum wage, unless federal law requires a different rate for a particular position. The Department of Corrections would be directed to update its wage policies by January 1, 2026 to conform to the new requirements, and the bill preserves existing authority for deductions, savings, and allocations from offender wages for maintenance, victims, dependents, commissary purchases, educational materials, and release funds.
If enacted, the bill would amend 21 V.S.A. § 383 and § 384, and 28 V.S.A. § 751b, significantly expanding wage protections for workers covered by Vermont’s labor laws. It would affect employers across the state, especially hospitality and restaurant businesses, and would impose a new wage floor for inmate labor in correctional facilities. The bill would also require administrative changes by the Department of Corrections to align policy with the new inmate wage mandate.
No committee transcripts or recorded votes were provided, so there is no direct evidence of formal support or opposition in the available materials. Based on the bill’s content, it appears to reflect a strong pro-worker and wage-equity policy approach, particularly for low-wage service workers and incarcerated workers. The most likely points of contention are the large increase in the minimum wage, the elimination of the tipped wage subminimum, and the requirement to pay inmates the full minimum wage, all of which could raise labor costs for employers and the corrections system.
This bill would amend Vermont’s minimum wage and overtime framework by raising the general minimum wage, eliminating the tipped wage subminimum for covered hospitality workers, and reducing certain statutory exemptions from wage protections. It would also require incarcerated workers to be paid at least the state minimum wage and would compel the Department of Corrections to revise its wage policies accordingly. The measure would therefore expand wage obligations for private employers and the state corrections system, while affecting the statutes governing employee definitions, wage rates, and offender labor compensation.
No votes or committee testimony were provided, so the formal legislative record in the supplied materials does not show measured support or opposition. The bill’s stated purpose and structure suggest a generally pro-labor, pro-wage-equity sentiment, with emphasis on higher pay for low-wage workers and incarcerated labor. At the same time, the scale of the proposed minimum wage increase and the elimination of the tipped wage likely make the bill controversial among employers and industry stakeholders.
The most notable points of contention are likely to be the proposed jump to a $25 minimum wage, the end of the tipped minimum wage, and the requirement that inmates be paid the full minimum wage. Hospitality and restaurant employers would likely object to the tipped-wage change and higher labor costs, while corrections officials may raise operational and budget concerns about paying inmates at the state minimum wage. Some stakeholders may also question the removal of existing exemptions from wage-and-hour coverage, particularly for certain categories of workers currently excluded from the law.