Vermont Workers' Compensation Payroll Guide
Vermont Workers' Compensation: Payroll Department Guide
At A Glance
- Vermont generally applies its workers' compensation law broadly to employment in the state, subject to statutory exclusions and federal jurisdiction
- Employers subject to Vermont workers' compensation requirements generally must secure workers' compensation coverage through an authorized insurance arrangement or an approved self-insurance arrangement
- Employees should report workplace injuries to their employer as soon as practicable after the injury occurs
- A workers' compensation claim generally must be made within six months after the date of injury, or within six months after death in a death claim, subject to statutory exceptions
- Vermont generally requires an employer to file a First Report of Injury with its insurance carrier or claims administrator within 72 hours after receiving notice or knowledge of a covered work-related injury that causes an absence of one day or more or requires medical attention, excluding first-aid-only injuries
- Vermont temporary total disability benefits generally equal two-thirds of the employee's average weekly wages, subject to applicable minimum and maximum compensation limits
- Vermont generally calculates average weekly wages using the employee's earnings during the 26 weeks preceding the injury
- Temporary partial disability benefits may apply when an employee returns to work but continues to experience a qualifying loss of earning capacity
- Workers' compensation benefits can include medical benefits, wage replacement, permanent partial disability, permanent total disability, vocational rehabilitation, and death benefits
- Payroll records can be important to determining an employee's average weekly wage and compensation rate
Compliance Overview
Vermont workers' compensation compliance requires coordination between payroll, human resources, management, the employee, the employer's insurance carrier or claims administrator, medical providers, and the Vermont Department of Labor. Payroll plays an important role because wage and employment information can be necessary to establish an injured employee's average weekly wage and administer wage-loss benefits.
The Vermont Workers' Compensation Act generally applies to employment in Vermont unless a statutory exclusion or federal workers' compensation law applies. Employers should determine whether their workforce is covered and maintain appropriate workers' compensation protection before an injury occurs.
Payroll should maintain accurate records of wages, hours, overtime, bonuses, tips, compensation changes, employment dates, and other earnings information that may affect a workers' compensation claim. Vermont's workers' compensation rules specifically address the information that should be included when calculating an employee's average weekly wage.
Employer Requirements
- Maintain required workers' compensation coverage when the business is subject to Vermont's Workers' Compensation Act
- Maintain current insurance carrier or self-insurance information
- Provide required workers' compensation information to employees
- Establish procedures for receiving and documenting workplace injury reports
- Report covered workplace injuries through the required process
- Provide accurate wage and employment information to the carrier or claims administrator
- Maintain appropriate payroll and employment records
- Coordinate workplace injury administration with HR and management
- Maintain appropriate documentation concerning employee work status and return-to-work arrangements
Coverage Requirements
Vermont law generally applies workers' compensation coverage to employment in the state, subject to statutory exclusions and exceptions. Employers should not assume that a small workforce is automatically exempt from workers' compensation requirements.
Certain categories of workers may be excluded from the statutory definition of employee. Examples can include certain casual workers, amateur sports participants, certain agricultural employment, volunteers, certain family members, sole proprietors and partners who satisfy statutory requirements, certain real estate professionals, and certain corporate officers or LLC members and managers who properly elect exclusion.
Vermont permits a corporation or LLC, with Commissioner approval, to exclude up to four executive officers or managers or members from workers' compensation coverage. The exclusion process has specific requirements and should not be treated as an automatic exemption based solely on ownership or job title.
Injury Reporting
- Employees should report workplace injuries to the employer as soon as practicable
- Employers should document the date, time, location, circumstances, and nature of the reported injury
- Except for first-aid-only injuries, employers generally must file a First Report of Injury with the insurance carrier or claims administrator within 72 hours of receiving notice or knowledge of a claimed work-related injury that causes an absence of one day or more or requires medical attention
- The employer should provide the injured employee with a copy of the First Report of Injury after filing it
- Employers should report injuries even when the employer disputes whether the injury is work-related
- Payroll should promptly provide wage and employment information requested by the carrier or claims administrator
Payroll Records
Payroll records are particularly important in Vermont workers' compensation administration because average weekly wages are generally calculated using the employee's earnings during the 26 weeks preceding the injury.
- Maintain gross wages for each of the applicable 26 weeks preceding the injury
- Maintain regular hourly wages and salary information
- Track overtime earnings
- Track tips and other reportable earnings
- Track bonuses
- Track the value of qualifying non-cash compensation such as room, board, food, electricity, telephone, uniforms, or similar benefits when applicable
- Maintain employment dates
- Maintain hours-worked information
- Maintain records of wage and compensation changes
- Maintain records of post-injury earnings and hours
- Maintain records of modified-duty wages and reduced hours
- Maintain records supporting salary continuation or other employer-paid compensation
Benefit Calculations
Vermont temporary total disability benefits generally are calculated at two-thirds of the employee's average weekly wages, subject to statutory minimum and maximum compensation amounts. Vermont law also provides for adjustments to compensation rates after specified periods of benefit receipt.
For purposes of calculating average weekly wages, Vermont generally looks to the employee's average weekly earnings during the 26 weeks preceding the injury. Special rules can apply when the employee has not worked for the employer for 26 weeks, when employment is casual, or when the employee has been absent from work for certain reasons.
- Average Weekly Wage: Generally based on the employee's earnings during the 26 weeks preceding the injury
- Temporary Total Disability: Generally two-thirds of the employee's average weekly wages, subject to statutory minimums and maximums
- Temporary Partial Disability: May apply when an employee returns to work but continues to experience a qualifying loss of earning capacity
- Permanent Partial Disability: Vermont provides compensation for qualifying permanent partial impairments
- Permanent Total Disability: Qualifying employees may receive permanent total disability benefits subject to Vermont law
- Death Benefits: Eligible dependents may receive workers' compensation benefits following a compensable work-related death
- Vocational Rehabilitation: Qualifying injured employees may receive vocational rehabilitation services
Medical Care
Workers' compensation benefits can include reasonable and necessary medical treatment related to a compensable workplace injury or occupational disease. Payroll generally does not administer medical treatment, but payroll information can affect the administration of wage-loss benefits when an employee's medical condition changes the employee's ability to work.
Payroll should coordinate with HR and the claims administrator when medical restrictions affect an employee's work schedule, compensation, job duties, or return-to-work status.
Modified Duty
An injured employee may return to work with medical restrictions or modified duties rather than immediately returning to the employee's regular position. Modified-duty arrangements can affect the employee's hours and earnings and therefore require accurate payroll tracking.
- Document the date modified duty begins
- Track modified-duty hours
- Track modified-duty wages
- Track changes in the employee's regular pay rate
- Maintain documentation of work restrictions
- Track overtime separately from regular earnings
- Report post-injury earnings to the claims administrator when requested
Return-To-Work
Payroll should coordinate return-to-work changes with HR, management, the employee, and the workers' compensation claims administrator. An injured employee's work status may change from complete disability to restricted duty and eventually to regular work.
Each change in work status should be reflected accurately in payroll records. Payroll should document changes in hours, wages, job duties, overtime, and other compensation following an injury.
Employee Classifications
Employee classification can affect whether an individual is subject to Vermont workers' compensation coverage. Payroll and HR should not rely solely on job titles, contracts, or tax forms when determining whether an individual is an employee or an independent contractor.
- Review employee and independent-contractor classifications
- Review sole proprietor and partner status
- Review corporate officer status
- Review LLC member and manager status
- Document approved exclusions when applicable
- Review subcontractor workers' compensation coverage
- Maintain documentation supporting worker classifications
Difficult Administrative Areas
- Calculating average weekly wages when an employee has overtime, bonuses, tips, commissions, or other variable compensation
- Calculating wages when the employee has worked for the employer for fewer than 26 weeks
- Handling employees with multiple wage rates or changing compensation arrangements
- Tracking post-injury earnings for employees working reduced or modified schedules
- Coordinating workers' compensation payments with salary continuation, paid leave, or other employer payments
- Maintaining accurate records when an employee changes positions or work locations after an injury
- Determining whether an individual qualifies for a statutory exclusion from workers' compensation coverage
- Maintaining accurate subcontractor documentation
- Responding promptly to wage statements and other information requests from the claims administrator
- Protecting confidential employee wage and medical information
Common Errors
- Failing to maintain required workers' compensation coverage
- Assuming a small workforce is automatically exempt from coverage
- Incorrectly classifying an employee as an independent contractor
- Assuming an owner or officer is automatically excluded from coverage
- Failing to document a corporate officer or LLC exclusion properly
- Delaying the reporting of a workplace injury
- Providing incomplete wage information
- Failing to include overtime, tips, bonuses, or qualifying benefits in wage calculations when required
- Failing to track post-injury earnings
- Failing to document modified-duty work
- Using outdated workers' compensation procedures or forms
- Failing to coordinate payroll information with HR and the claims administrator
Recent Court Cases
Vermont workers' compensation disputes can involve compensability, the employment relationship, medical evidence, average weekly wages, disability status, and other issues. Payroll departments generally do not determine legal compensability, but payroll records can become important evidence when wage-loss benefits or employment status is disputed.
- Vermont workers' compensation litigation concerning the average weekly wage can require detailed review of the employee's earnings and employment history
- Disputes concerning whether an individual qualifies as an employee or independent contractor can affect workers' compensation coverage
- Disputes involving medical restrictions and earning capacity can require payroll records showing post-injury hours and wages
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Frequently Asked Questions About Vermont Workers' Compensation
- Does Vermont require workers' compensation insurance?: Vermont generally requires employers subject to the Workers' Compensation Act to secure workers' compensation protection, subject to statutory exclusions and applicable federal requirements
- Does Vermont have a minimum number of employees for workers' compensation coverage?: Vermont's workers' compensation law generally applies to employment in the state rather than relying on a broad minimum-employee threshold
- Are part-time employees covered by Vermont workers' compensation?: Part-time status alone does not automatically exclude an employee from Vermont workers' compensation coverage
- Are seasonal employees covered by Vermont workers' compensation?: Coverage depends on the employment relationship and applicable statutory exclusions. Seasonal status alone should not be assumed to eliminate coverage
- Are independent contractors covered by Vermont workers' compensation?: Coverage depends on whether the individual qualifies as an employee or satisfies the applicable statutory requirements for independent-contractor treatment
- Are sole proprietors covered by Vermont workers' compensation?: Certain sole proprietors may be excluded from the definition of employee when they satisfy applicable statutory requirements. Employees of the business may still be covered
- Are corporate officers covered by Vermont workers' compensation?: Certain executive officers may elect exclusion with Commissioner approval. Vermont permits qualifying corporations to exclude up to four executive officers
- Are LLC members and managers covered by Vermont workers' compensation?: Certain LLC members and managers may elect exclusion with Commissioner approval, subject to applicable requirements
- How quickly should an employee report a workplace injury in Vermont?: Employees should report injuries as soon as practicable after the injury occurs
- How long does an employee have to make a Vermont workers' compensation claim?: A claim generally must be made within six months after the date of injury, subject to statutory exceptions
- How quickly must an employer report a workplace injury?: Except for first-aid-only injuries, the employer generally must file a First Report of Injury with its insurance carrier or claims administrator within 72 hours after receiving notice or knowledge of a covered injury that causes an absence of one day or more or requires medical attention
- How are Vermont workers' compensation benefits calculated?: Temporary total disability benefits generally equal two-thirds of the employee's average weekly wages, subject to statutory minimum and maximum compensation rates
- How is the Vermont average weekly wage calculated?: Average weekly wages are generally calculated using the employee's earnings during the 26 weeks preceding the injury
- What payroll records are important for a Vermont workers' compensation claim?: Important records can include wages, hours, overtime, tips, bonuses, other qualifying compensation, employment dates, wage changes, and post-injury earnings
- What happens when an injured Vermont employee returns to work?: The employee may return to regular or modified work depending on medical restrictions and the circumstances of the claim. Payroll should accurately track hours, wages, duties, and changes in compensation
- Does Vermont provide vocational rehabilitation?: Vermont workers' compensation can provide vocational rehabilitation benefits for qualifying injured workers
- What is Vermont's workers' compensation waiting period?: Temporary total disability benefits generally exclude the first three days of disability, with the day of the accident counted as the first day under the statutory rule. If disability continues for seven consecutive calendar days or more, compensation is generally payable for the whole period
- What are common Vermont workers' compensation payroll mistakes?: Common mistakes include failing to maintain coverage, misclassifying workers, delaying injury reporting, maintaining incomplete wage records, failing to track post-injury earnings, and using outdated procedures
- Where can employers find official Vermont workers' compensation information?: Employers can obtain official workers' compensation information through the Vermont Department of Labor and Vermont's workers' compensation statutes and rules
