Almost all Vermont employers are required to carry workers’ compensation insurance. Employers that provide workers’ comp protection are shielded against civil suits from injured workers.
Vermont strives to maintain near-universal workers’ comp coverage. This means that generally, everyone working in Vermont must have workers’ comp insurance. Only employees who meet certain criteria are exempt:
Even when it's not required, buying workers' compensation is a smart financial move. Your health insurance company might deny a claim for an injury related to your work, which could leave you responsible for costly medical bills.
Vermont won’t require you to provide insurance coverage for an independent contractor unless the person assigns one or more additional workers to your project. If the contractor is working alone, then you won’t need to provide coverage.
The state applies a number of tests to determine whether the individual working for you is a contractor or an employee. A contractor could be considered an employee for workers’ comp purposes if:
Because determining employee vs. contractor status can be complex, the state encourages employers to seek legal advice or to check with the Vermont Division of Workers’ Compensation before making a worker classification decision.
To save money on workers' comp insurance, it's important to make sure you classify your employees correctly. Employees with desk jobs or other jobs with a low risk of injury cost less to insure. This also helps you avoid misclassification fines.
In some cases, small business owners can choose to buy pay-as-you-go workers' compensation. This type of workers' comp policy has a low upfront premium, and lets you make payments based on your actual payroll instead of estimated payroll. It's useful for businesses that hire seasonal help or have fluctuating numbers of employees.
Finally, a documented safety program can help lower workers' comp costs. A safer workplace means fewer accidents, which helps keep your premium low.
When an employee suffers a workplace injury or occupational disease, workers' compensation covers the cost of medical care related to the injury or illness. It also provides part of the wages lost while the employee is unable to work.
Workers' compensation benefits in Vermont include:
Policies usually include employer's liability insurance, which can help cover legal expenses if an employee blames their employer for an injury. The exclusive remedy provision in most workers' comp policies prohibits an employee from suing their employer once they accept workers' comp benefits.
For details, visit the State of Vermont Department of Labor.
Vermont business owners can compare quotes and purchase a policy from private insurance companies. Insureon offers this service with its online insurance marketplace.
If you’re unable to purchase a workers’ compensation policy through the voluntary market referenced above because of your firm’s high-risk status, you can purchase coverage from the Vermont assigned risk market. The National Council on Compensation Insurance (NCCI) manages this insurance pool, serving as the state’s workers’ comp provider of last resort.
Vermont employers who qualify can self-insure their workers’ compensation claims. This means they’ll pay for their own workers’ comp claims rather than submit them to an insurance company.
To qualify for self-insurance, they must file an application with the Vermont Department of Labor and meet standards for assets, profit, and cash flow. In addition, they must post bonds and provide a guarantee that they can meet excess liability.
Violating Vermont's workers' compensation law is a serious matter. If you fail to comply, you may have to pay a civil penalty of $100 per day for the first seven days you failed to maintain coverage, and $150 for each day after. The daily fines for noncompliance increase after you receive an order to obtain insurance.
The state warns that failure to comply may not only negatively impact your ability to defend yourself in any future workers’ comp-related lawsuits, but it may also result in the state shutting down your business.
If one of your employees dies as a result of a job-related illness or injury, the person’s dependents are entitled to receive death benefits. These include payments to cover burial and funeral expenses not to exceed $10,000 and up to $5,000 for transporting the body to the burial location.
Workers’ comp insurance also provides weekly survivor income benefits. This amount, based on whether the person had a spouse and one or more children, ranges between 67% and 77% of the worker’s prior weekly pay. The same minimum / maximum caps apply to this benefit as to other workers’ comp benefits in Vermont.
A workers’ compensation settlement is an agreement between the injured employee, employer, and insurer that cancel a workers’ compensation claim. This benefits both the employee and the employer.
In Vermont, many workers’ comp claims end in settlements. This means the parties to the claim – the injured employee, the company, and the insurer – must agree on a lump-sum payment in return for the employee (or the employee’s survivors) agreeing to forgo future payments.
There are two basic forms of settlements in Vermont:
A non-medical, limited settlement closes out disability-income benefits, but leaves future medical payments open.
A total lump-sum settlement closes out the entire claim in return for the insurer paying the employee (or person’s survivors) a specific amount of money.
The Vermont Division of Workers’ Compensation must approve all workers’ compensation settlements. All entities must submit a Compromise Agreement (Form 16) with the division, along with a letter detailing the issues in dispute and disclosing how settlement funds will be distributed.
Once the state approves the settlement, it is final, except in cases of insurer fraud.
In Vermont, employees must file a workers’ comp claim within six months of the injury. That period can be extended if they can prove the employer had prior knowledge of the precipitating incident.
If you are ready to explore workers’ comp options for your Vermont business, start a free online application today to compare quotes from top-rated insurance carriers.