Short answer: Yes. Vermont requires workers' compensation when you hire one or more full- or part-time employees in the state, or when out-of-state hires work for you in Vermont, unless the Department of Labor has approved self-insurance. Sole proprietors need not cover themselves. Missing coverage can cost $50–$150 per day and, in extreme cases, a closure order.
The first-employee trigger
The Department of Labor's Guide for Vermont Business Owners states the coverage duty in those terms. Corporate officers are generally covered. Sole proprietors and partners of an unincorporated business are not covered and are not required to have coverage on themselves, though they may choose it. Corporate officers who want to be excluded must obtain prior approval from the Department. You may choose to include a family member who lives with you; tell your agent clearly who is covered when the policy is issued.
Other people the guide lists as not required to be covered
- Employment of a casual nature, not for the purpose of the employer's trade or business
- Persons engaged in amateur sports, even if the employer contributes support
- Persons engaged in agriculture or farm employment for an employer whose aggregate payroll is less than $2,000 in a calendar year, unless the employer chooses coverage
- Certain elected officials
- Volunteers
Independent contractors
Calling someone a contractor does not automatically shift the duty. A single individual acting as a contractor need not carry workers' compensation on themselves, but any contractor with one or more employees must cover those employees. If the contractor lacks coverage, or does not meet the legal definition of an independent contractor, responsibility defaults to you. Certificates of workers' compensation insurance should match the project period; a mid-job lapse can put the penalty exposure back on the hiring business.
Penalties
An employer who fails to provide workers' compensation insurance may be assessed $50 per day, not to exceed $5,000, for the period before receiving notice from the Commissioner of Labor. If coverage is still missing five days after notice, the daily penalty rises to $150 per day. Going uninsured also weakens legal defenses if an injured employee sues, and in extreme cases can lead to a state order closing the business.
Getting help and verifying coverage
The Workers' Compensation Program can be reached at 802-828-2286. Injured workers and employers use the Department's online tools and forms to check whether a policy is on file. Before a contractor starts work, ask for a certificate of workers' compensation insurance that names your project period—not a generic liability certificate.
Corporate officer exclusions
Officers who want out of coverage must obtain prior approval from the Department. Skipping that step leaves the officer on the policy—or leaves the corporation exposed if the carrier never recorded the exclusion. Put exclusions in writing and keep the Department approval with your insurance file.
Farm payroll edge cases
The $2,000 aggregate payroll figure for agricultural employment is a calendar-year test. A small farm that stays under the threshold one year and crosses it the next needs coverage for the year it crosses—not a retrospective guess after an injury. If you occasionally hire harvest help, track wages carefully and call the Workers' Compensation Program when you are close to the line.
Closing risk for uninsured employers
Beyond daily penalties, the business-owner guide warns that extreme cases can lead to a state order closing the business. An injured employee's civil case is also harder to defend when you lacked coverage. Those consequences make a same-week binder with a licensed Vermont carrier the priority for any new hire, including a first part-time cashier or seasonal helper.
Volunteers and amateur sports
Volunteers and people engaged in amateur sports (even when the employer contributes support) are listed among those not required to be covered. Mislabeling a paid seasonal worker as a "volunteer" to avoid a policy is a different problem—and one that can unravel after an injury. If money changes hands for work, ask the Department before you skip coverage.
Bottom line
Vermont starts the workers' compensation clock at the first hire. Get the policy—or a documented exclusion—before payroll begins. See our workers' compensation insurance overview.
Questions? Contact Alishahi Insurance or call (877) 711-4545. See insurance in Vermont.
Frequently asked questions
Is workers' comp required in Vermont?
Yes, when you hire one or more full- or part-time employees in Vermont, unless approved to self-insure.
Do Vermont sole proprietors need workers' comp?
Sole proprietors and partners of unincorporated businesses need not cover themselves, but must cover any employees.
What is the penalty for no workers' comp in Vermont?
$50 per day up to $5,000 before Commissioner notice, then $150 per day beginning five days after notice if still uninsured.
Are Vermont farm employers always required to carry workers' comp?
Farm employment for an employer with aggregate payroll under $2,000 in a calendar year is listed as not required to be covered, unless the employer chooses coverage.
Who is responsible if my Vermont contractor has no workers' comp?
If the contractor lacks coverage or is not a true independent contractor under law, responsibility can default to the hiring business.
Alishahi Insurance · 439 N Canon Dr, Penthouse, Beverly Hills, CA 90210 · (877) 711-4545 · CA License #4348151. General information only. This isn't legal, tax or financial advice or a coverage determination. Coverage depends on policy language and underwriting, and rules vary by state.