Vermont Workers Compensation Employer Rules
Vermont requires workers compensation from the first employee. Coverage rules, exclusions, where to buy, posters, injury deadlines, and penalties.
Vermont Workers Compensation
Coverage for all employment, an owner exclusion that counts only once Form 29 is filed, a 72 hour first report, and stop work orders that can bar you from state contracts for three years
A landscaping outfit outside Montpelier asked me a question I now expect every spring. Three of the four owners had filed to exclude themselves from coverage. The fourth had not, because somebody in the office assumed the exclusion applied to the company rather than to each person. He tore a rotator cuff in April.
Vermont is unforgiving on that kind of paperwork gap, and generous about who counts as an employee in the first place. The Department of Labor states the rule without a threshold: workers compensation coverage is required for all employment, and employers are liable for anyone they employ, including independent contractors and subcontractors. There is no five employee grace band and no exemption for part time staff.
This page is the Vermont rulebook only: who has to be covered, who is genuinely outside it, where the policy comes from, and what the clocks are once somebody is hurt. How the insurance itself works, what it pays and how premiums get set is general ground covered in our guide to workers compensation insurance, and the wider state picture sits in the Vermont HR compliance guide.
Who Needs Coverage in Vermont
Every private employer with employees needs a policy, starting with the first one. 21 V.S.A. section 687 requires an employer, other than the State, a county or a municipality, to secure compensation to its employees by insuring with an authorized workers compensation insurance corporation, by obtaining guarantee insurance, or by establishing the financial responsibility the Commissioner requires.
The Vermont Department of Labor puts the same rule in plain language on its workers compensation pages: coverage is required for all employment. Full time, part time, seasonal and temporary staff all count. Nonprofit status changes nothing, and neither does a payroll small enough that the owner still runs it out of a spreadsheet.
The reach past your own payroll is the part small employers miss. The Department warns that employers are liable for anyone they employ, including independent contractors and subcontractors. If you bring in a two person crew that carries no policy and one of them gets hurt on your site, the claim is capable of landing on you. Collecting a certificate of insurance before work starts is not administrative theater in Vermont, it is the thing standing between you and somebody else’s injury.
Who Is Excluded, and Who Only Looks Excluded
Vermont’s exclusions live in the definition of employee at 21 V.S.A. section 601(14) rather than in a list of exempt employers. That distinction matters: you are not asking whether your business is covered, you are asking whether a particular person meets the definition of a worker. Most of the categories below are narrower than their common names suggest.
| Who | Vermont treatment | Source |
|---|---|---|
| Casual labor | Outside the definition only where the employment is both casual in nature and not for the purpose of the employer’s trade or business. A short job in your own line of work fails the second half | 21 V.S.A. section 601(14)(A) |
| Agricultural and farm labor | Outside the definition where the employer’s aggregate payroll is less than $10,000 in a calendar year. The employer may opt in by notifying the Commissioner, and holding a policy counts as notice | 21 V.S.A. section 601(14) |
| Farm labor at $10,000 payroll or above | Covered like any other employment | 21 V.S.A. section 601(14) |
| A family member living in the employer’s house | Outside the definition, unless the wages or salary are included in the payroll the premium is based on, in which case the person is an employee and compensated as one | 21 V.S.A. section 601(14) |
| Amateur sports participants | Outside the definition even where the employer contributes to the support of the sport | 21 V.S.A. section 601(14) |
| Sole proprietors and partner owners of an unincorporated business | Outside the definition only when all six statutory conditions are met, including a written contract stating the individual is not an employee, works independently, has no employees and has not contracted with other independent contractors | 21 V.S.A. section 601(14)(F) |
| Corporate officers | A corporation may elect to exclude up to four executive officers, meaning President, Vice President, Secretary, Clerk or Treasurer. The election is made on Form 29 | 21 V.S.A. section 601(14)(H); VT DOL Form 29 |
| LLC managers and members | An LLC may elect to exclude up to four managers or members, on the same Form 29 | 21 V.S.A. section 601(14)(H); VT DOL Form 29 |
| A corporation or LLC with no workers | Can sit wholly outside the coverage requirement where every officer or member has been excluded and the business employs nobody else | VT DOL Form 29 instructions |
| Part time and seasonal staff | Covered. Vermont sets no hours floor and no length of service floor | VT Department of Labor |
| Independent contractors and subcontractors | The Department states that employers are liable for anyone they employ, including independent contractors and subcontractors. Get proof of a policy, or an approved Form 29, before work starts | VT Department of Labor |
| Household workers who are not family living in the home | Section 601(14) carries no general domestic service exclusion. The one household carve out is the family member living in the employer’s house | 21 V.S.A. section 601(14) |
The owner exclusion is where Vermont companies lose money and coverage at the same time. Section 601(14)(H) lets a corporation or an LLC exclude up to four executive officers, managers or members, and the Department of Labor administers that election through Form 29, the Application for Exclusion from the Provisions of the Workers Compensation Act. It is per person, not per company. An owner who never signed the form is still an employee, which means premium keeps accruing on that payroll and a claim by that owner is still a claim. Full text of the definitions is at 21 V.S.A. section 601.
Section 601(14)(F) is the trap on the other side. A sole proprietor or partner is outside the employee definition only where every one of six conditions holds: the work is distinct and separate from the hiring party’s, the individual controls the means and manner of the work, holds out as being in business, works for the general public rather than exclusively for you, is not treated as an employee for tax purposes, and performs under a written contract that explicitly says all of that. Failing one condition drops the person back into your payroll. Our guide to employee misclassification covers how the federal tests interact with a state rule this specific.
Where the Policy Comes From
You buy the policy from a private insurance carrier authorized to write workers compensation in Vermont. The state does not operate a monopolistic fund, so there is no state office selling coverage and no separate Employer’s Liability gap to plug the way there is in the handful of states that do. 21 V.S.A. section 687 lists three routes and no others.
| Route | Who it fits | What it takes |
|---|---|---|
| Authorized private carrier, voluntary market | Almost every small employer | A policy from a workers compensation insurance corporation authorized to write in Vermont, under 21 V.S.A. section 687 |
| Residual market | New businesses and employers with a significant claims history that the voluntary market declines | Placement through an agent. The Department of Labor describes it as the coverage source of last resort |
| Guarantee insurance | Employers using a guarantee arrangement rather than a standard policy | Coverage obtained from a company authorized to issue guarantee insurance, under section 687 |
| Self insurance | Large employers with a balance sheet to back the risk | Form 30 application to the Department of Labor. The Department of Financial Regulation gives technical assistance and a recommendation, and the Commissioner may require surety bonds, cash deposits, reserves and excess risk insurance |
| Monopolistic state fund | Does not exist in Vermont | Section 687 recognizes authorized carriers, guarantee insurance and financial responsibility only |
Self insurance is a real option in the statute and a closed door in practice for a company with a few dozen people. The Commissioner sets terms and conditions designed to give employees the same security they would get under an insurance contract, which in practice means bonds, deposits, reserves or excess coverage on top of an approved application. Self insured employers also carry their own assessment, calculated at 1 percent of workers compensation losses during the preceding calendar year.
One option in the market is worth asking about before renewal. Every carrier authorized to write workers compensation in Vermont must make available, at the employer’s written request, a rate with a deductible provision binding the employer to reimburse the insurer for at least the first $500 of benefits, with the insurer still adjusting and paying the claims. For a business with clean loss history that trades a little cash exposure for a lower rate. Whatever structure you choose, keep the payroll records behind your class codes clean, because those are what settle a workers compensation audit later.
Posting and What a New Hire Gets
Vermont requires a posted notice, not a handout. Once coverage is in force you must post a notice of compliance in a conspicuous place telling employees that workers compensation protection has been secured for them. The Department of Labor publishes the notice as Form 31, Notice to Employees: Employer’s Liability and Workers’ Compensation.
That poster exists in English and in a long list of other languages, including Arabic, Bosnian, Burmese, Chinese, Dari, French, Karen, Kirundi, Nepali, Pashto, Somali, Spanish, Swahili, Ukrainian and Vietnamese. Post the versions your crew actually reads. A second workers compensation notice covers reinstatement rights under 21 V.S.A. section 643b and applies to employers who regularly employ ten or more people. The rest of the Vermont poster wall is listed on our Vermont minimum wage page.
No Vermont statute I could verify requires a workers compensation pamphlet to be handed to a new hire. What the rules do require is timed to the injury rather than the hire: when you file the First Report of Injury you give the employee a copy at the same moment. The Department publishes a Work Injuries brochure written for employees, and dropping it into the onboarding packet costs nothing and removes the argument that nobody explained how to report. Keeping those acknowledgments in one place instead of a filing cabinet is exactly the kind of administrative drag FirstHR was built to absorb.
Injury Reporting Deadlines
Your clock is 72 hours and it starts when you learn of the injury. The employee clock for filing a claim runs six months, and the outer limit on starting a claim at all runs three years, which is why an employer who hears nothing for a season should not assume the file is closed.
| Clock | Deadline | Who it binds | Source |
|---|---|---|---|
| Notice of injury to the employer | As soon as practicable after the injury, recurrence or aggravation | Employee | 21 V.S.A. section 656; VT DOL claims filing |
| Claim for compensation | Within 6 months after the date of injury, recurrence or aggravation | Employee | 21 V.S.A. section 656 |
| First Report of Injury, Form 1 | Within 72 hours, Sundays and legal holidays excluded, of notice or knowledge of an injury causing lost time or requiring medical attention | Employer | Vermont workers compensation rules, Rule 3 |
| Copy of the First Report to the employee | Simultaneously with the filing | Employer | Vermont workers compensation rules, Rule 3 |
| Decision to pay or deny | 21 days from notice or knowledge of the injury. A denial goes in writing to the Commissioner and the claimant with the reasons | Employer and carrier | Vermont workers compensation rules, Rule 3 |
| Waiting period before wage benefits | The first 3 days are unpaid, but a disability of 4 days or more makes compensation retroactive to include those first 3 days | Carrier | 21 V.S.A. sections 642 and 650 |
| Penalty clock on late benefit payments | The greater of $10 or 5 percent for a first late payment, 10 percent for a second, 15 percent for later ones | Carrier | VT DOL workers compensation penalty memo, September 2025 |
| Occupational disease claim | Within 2 years of the date the disease is reasonably discoverable and apparent | Employee | 21 V.S.A. section 660 |
| Outer limit on starting a claim | 3 years from the date of injury | Employee | 21 V.S.A. section 660 |
| Claim denied after voluntary payments were made | Proceedings within 6 months from the date of denial | Employee | 21 V.S.A. section 656 |
| Reinstatement right after a work injury | Runs while the worker recovers within 2 years of the onset of disability and keeps the employer informed of interest and address | Employer with 10 or more people | 21 V.S.A. section 643b |
Two rows deserve a second look. The first is section 660: a want of notice, or a delay in giving it, is not a bar to proceedings where the employer or its agent had knowledge of the accident, or where the employer has not been prejudiced by the delay. In other words, a supervisor who watched the fall cannot later rely on the absence of a written report. The second is the late payment penalty. Carriers have reported quarterly since October 1, 2025, with the first report due January 15, 2026, so a pattern of slow benefit payments is now visible to the Department without anybody complaining.
Penalties for Going Without Coverage
The daily numbers look small until the per employee multiplier switches on. 21 V.S.A. section 692 starts at up to $100 a day for the first seven days without coverage and up to $150 a day after that, then escalates through a stop work order into a figure that scales with your headcount.
| Failure | Exposure | Source |
|---|---|---|
| Failure to secure coverage, found after a hearing | Administrative penalty of not more than $100 for every day for the first 7 days, and not more than $150 for every day after that | 21 V.S.A. section 692; hearing under section 688 |
| Still uninsured after the Commissioner investigates | The Commissioner shall issue an emergency order to stop work until workers compensation insurance is secured | 21 V.S.A. section 692 |
| Remaining uninsured after an order to obtain insurance | Not more than $250 for every day, and the employer may also be assessed not more than $250 for each employee for every day it fails to secure coverage | 21 V.S.A. section 692 |
| Working through a stop work order | Civil penalty of not more than $5,000 for a first violation and not more than $10,000 for a second or subsequent violation, or a criminal fine of not more than $10,000 or imprisonment for not more than 180 days, or both | 21 V.S.A. section 692 |
| Public notice at the site | When a stop work order issues, the Commissioner posts a notice at a conspicuous place on the work site telling employees the employer failed to comply and that work has been ordered to cease | 21 V.S.A. section 692 |
| State and municipal contracts | Prohibited from contracting, directly or indirectly, with the State or any of its subdivisions for up to 3 years from the date the stop work order issued | 21 V.S.A. section 692 |
| No First Report of Injury within 72 hours | $100 for each violation, where the injury caused an absence of one day or more or required medical attendance | Vermont workers compensation rules, Rule 3 |
| Being sued by an injured employee while uninsured | The Department of Labor warns that failing to provide coverage will have a negative impact on an employer’s legal defenses | VT DOL guide for Vermont business owners |
Run the arithmetic on a small crew and the escalation stops being abstract. Eight employees at up to $250 per employee per day is up to $2,000 a day, on top of the up to $250 daily penalty for staying uninsured after the order. Add the three year bar on state and municipal contracts and a Vermont contractor who lets a policy lapse can lose a bidding pipeline that took years to build. The penalty section is at 21 V.S.A. section 692.
The exposure that ends businesses is not the fine. Workers compensation normally buys an employer a predictable, limited liability when somebody is hurt at work. Drop the coverage and the Department is explicit that your defenses suffer if the injured employee sues, which puts an uncapped civil claim where a capped statutory one would have been. Safety programs sit alongside this rather than inside it, and the general duty and recordkeeping side is worked through in our guide to OSHA requirements for employers.
What to Do When Someone Gets Hurt
Work the sequence in order and the 72 hour clock takes care of itself. The steps below are the Vermont specific version, so pair them with whatever incident reporting you already run on site.
The Other Headcount: Ten Employees
Coverage starts at the first employee, but one more threshold sits inside the same chapter and it catches growing companies. An employer who regularly employs ten or more people, at least ten of whom work more than fifteen hours a week, owes a returning injured worker a right to reinstatement under 21 V.S.A. section 643b.
The duty is narrower than it first sounds and easier to comply with than most managers expect. The worker must recover within two years of the onset of disability and must keep the employer informed of a continuing interest in reinstatement and of a current mailing address. The right attaches to the first available suitable job, so you are not required to invent a position or lay somebody off to make room. On reinstatement the worker regains seniority and any unused annual, personal and sick leave and compensatory time held before the interruption.
Frequently Asked Questions
Does a Vermont business with one part time employee need workers compensation?
Yes. Vermont sets no headcount threshold and no hours floor. Section 687 requires an employer to secure the payment of compensation, and the Department of Labor states that coverage is required for all employment. The Department also warns that employers are liable for anyone they employ, including independent contractors and subcontractors.
Can I leave myself off my own Vermont workers compensation policy?
Usually, but a corporation or LLC has to file for it. Up to four executive officers, managers or members may be excluded under section 601(14)(H), using Form 29, and the election is made per person rather than per company. Sole proprietors and partners sit outside the employee definition only when all six conditions in section 601(14)(F) are met, including a written contract stating the individual is not an employee.
Where do I buy workers compensation insurance in Vermont?
From an insurance carrier authorized to write workers compensation in the state. Vermont has no monopolistic state fund, so Employer’s Liability comes inside the standard policy rather than needing a separate purchase. Employers the voluntary market declines go to the residual market, and self insurance runs through a Form 30 application with the Commissioner setting bonds, deposits, reserves or excess coverage.
How fast do I have to report a workplace injury?
Within 72 hours, Sundays and legal holidays excluded, of learning about an injury that costs time from work or requires medical attention, and the employee gets a copy of the same form at the same time. The decision to pay or deny is due within 21 days of notice or knowledge, in writing to both the Commissioner and the claimant if you deny.
What happens to a Vermont employer with no coverage?
Up to $100 a day for the first seven days and up to $150 a day after that, then an emergency stop work order, then up to $250 a day plus up to $250 per employee per day. Working through the order carries civil penalties up to $10,000 or a criminal fine up to $10,000 and up to 180 days in prison, plus a bar of up to three years on contracting with the State.
Are farm workers, casual labor or family members exempt?
Only narrowly. The farm exclusion stops once the employer’s aggregate payroll reaches $10,000 in a calendar year, and the employer can opt in below that line. Casual labor must also be outside your trade or business. The family exclusion covers a relative living in your house, and even that person is an employee if the wages sit in the payroll your premium is based on. Coverage requirements differ sharply from state to state, which our state by state workers compensation guide lays out.