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 up to 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, in the order you will need it: who has to be covered, who is genuinely outside the requirement, where the policy comes from, what goes on the wall, which clocks start once somebody is hurt, and what going without coverage costs.
Who Needs Coverage in Vermont
Every private employer with employees needs coverage, starting with the first employee. The rule sits in 21 V.S.A. section 687 of the Vermont Statutes Annotated, and it applies to every employer other than the State, a county or a municipality.
The statute requires you to secure compensation for your employees in one of four ways: insuring with an authorized workers compensation insurance corporation, obtaining guarantee insurance, establishing the financial responsibility the Commissioner requires, or participating in an approved nonprofit self-insurance corporation.
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 you are liable for anyone you employ, independent contractors and subcontractors included. Bring in a two person crew with no policy, and if one of them gets hurt on your site, the claim can land on you. In Vermont, a certificate of insurance collected before work starts is the paper 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 puts the question on each person rather than on the business: does this individual meet 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)(C) |
| 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)(D) |
| Amateur sports participants | Outside the definition even where the employer contributes to the support of the sport | 21 V.S.A. section 601(14)(B) |
| Sole proprietors and partner owners of an unincorporated business | Outside the definition only when all six statutory conditions are met: work distinct and separate from the hiring party’s, control over the means and manner of the work, holding out as in business for themselves, working for the general public rather than exclusively for one party, no employee treatment for tax purposes, and a written contract. The contract must state the individual is not an employee, works independently, has no employees and has not contracted with other independent contractors, and must also cover the individual’s right to buy workers compensation coverage and election not to | 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 | Outside the definition when engaged in any type of service in or about a private dwelling, unless the employer notifies the Commissioner that it wishes to be covered. Holding a policy counts as that notice | 21 V.S.A. section 601(14)(E) |
The owner exclusion is where a paperwork gap turns into real money. 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.
The election is made per person, not per company. An owner who never signed the form is still an employee, so 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 must be distinct and separate from the hiring party’s, and the individual must control the means and manner of doing it.
The individual must also hold out as being in business, work for the general public rather than exclusively for you, not be treated as an employee for tax purposes, and perform under a written contract that explicitly states they are not an employee under the workers compensation chapter, work independently, have no employees and have not contracted with other independent contractors.
The same contract must also spell out the individual’s right to buy workers compensation coverage and their election not to. Failing one condition drops the person back into your payroll, and if the contractor turns out to have employees after all, the statute lets those employees claim benefits against either party to the contract, you included.
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, meaning a state-run insurer that is the only place to buy coverage. So there is no state office selling policies, and no Employer’s Liability gap to plug with a separate purchase the way there is in the handful of states that do.
21 V.S.A. section 687 lists four routes and no others. The table below splits the carrier route into the voluntary and residual markets, lists the nonprofit self-insurance corporation under self insurance, and keeps a state fund row only to show that Vermont has none.
| Route | Who it fits | What it takes |
|---|---|---|
| Authorized private carrier, voluntary market | Any employer an authorized insurer is willing to write | 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 | The Department of Labor’s guide for business owners calls it the assigned risk plan, for employers unable to find a willing insurer in the voluntary market |
| 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. Section 687 also allows participation in a nonprofit self-insurance corporation approved by the Commissioner of Financial Regulation |
| Monopolistic state fund | Does not exist in Vermont | Section 687 recognizes authorized carriers, guarantee insurance, self insurance and approved nonprofit self-insurance corporations only |
Self insurance is a real option in the statute and a closed door in practice for a small or mid-size company. The Commissioner sets terms and conditions designed to give employees the same security an insurance contract would, which in practice means bonds, deposits, reserves or excess coverage on top of an approved application. Self insured employers also carry their own assessment under 21 V.S.A. section 711, calculated at 1 percent of their workers compensation losses.
One option in the market is worth asking about before renewal. Every carrier authorized to write workers compensation in Vermont must make a rate with a deductible provision available at the employer’s written request. Under it, you reimburse the insurer for at least the first $500 of benefits, while the insurer still adjusts and pays the claims. For a business with a clean loss history, that trades a little cash exposure for a lower rate.
Whatever structure you choose, keep clean payroll records behind your class codes (the job classifications your premium is priced on), because those records 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.
The Department’s mandatory posters page carries that poster 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.
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 owe the employee a copy as promptly as possible.
The Department also publishes a Work Injuries brochure written for employees. Dropping it into the onboarding packet, with a signed acknowledgment of receipt, 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
As the employer, your reporting clock is 72 hours under the state’s workers compensation rules, and it starts when you learn of the injury. The employee’s clock for filing a claim runs six months, and the outer limit on starting a claim at all is three years. So 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 | 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 an absence of a day or more or requiring medical attention. It goes to your insurance carrier, which transmits it to the Department electronically | Employer | Vermont workers compensation rules, Rules 3.1100 and 3.1210 |
| Copy of the First Report to the employee | As promptly as possible after the filing | Employer | Vermont workers compensation rules, Rule 3.1120 |
| 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 3.2200 |
| Waiting period before wage benefits | The first 3 days are unpaid, but if total disability continues past the third day for 7 consecutive calendar days or more, compensation is paid for the whole period | Carrier | 21 V.S.A. section 642 |
| 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 | 21 V.S.A. section 650(f), as amended by Act 40 of 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 the employee’s notice of injury. Section 660 says a missing or late notice does not bar proceedings on the claim where the employer or its agent knew about the accident, or where the delay did not prejudice the employer, meaning it did not leave the employer at a disadvantage. 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. Act 40 of 2025, which amended that penalty, also required every late fee to be reported to the Commissioner quarterly for one year starting October 1, 2025, with the reasons attested, meaning formally certified. For that year, a pattern of slow benefit payments reaches the Department without anybody complaining. The Commissioner reports the findings to the General Assembly by January 15, 2027.
Penalties for Going Without Coverage
Under 21 V.S.A. section 692, going without coverage starts at up to $100 a day for the first seven days and up to $150 a day after that. From there it escalates through a stop work order into a figure that scales with your headcount. The daily numbers look small until that per employee multiplier switches on.
| 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 | An administrative penalty of up to $100 per violation, after notice and an opportunity for a hearing, where the injury caused an absence of one day or more or required medical attention | 21 V.S.A. section 702 |
| 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 as much as $250 a day for staying uninsured after the order.
Then there is the bar of up to three years on state and municipal contracts. For a Vermont contractor who lets a policy lapse, that can mean losing 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.
What to Do When Someone Gets Hurt
When someone gets hurt, get them medical care, write down what happened and file the First Report of Injury with your carrier within 72 hours. Work the seven steps below in order and that clock takes care of itself. They 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 your liability reaches anyone you employ, independent contractors and subcontractors included.
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. Section 687 also accepts guarantee insurance and membership in an approved nonprofit self-insurance corporation.
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 a day of work or requires medical attention. The form goes to your carrier, and the employee gets a copy promptly after. 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, up to 180 days in prison or both. The order also brings 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.