A Workers' Compensation bill was enacted on May 27, 2004, which modifies insurance coverage requirements for some Vermont business owners. Section 14 of the bill particularly exempts from workers'compensation insurance coverage the following:
Farm or agricultural employment when aggregate payroll is less than $10,000.
- Sole proprietor who is independent, with no employees and whose contract work is separate and distinct and performed pursuant to a written agreement affirming these facts.
- Small corporation where all officers are properly excluded and there are no employees.
Excerpted sections of the law changes in 21 V.S.A. 601(14) follow:
1. Farm Employment ; a worker or employee does not include:
An individual engaged in agriculture or farm employment for an employer whose aggregate payroll is less than $10,000.00 in a calendar year, unless the employer notifies the commissioner that the employer wishes to be included.
2. Sole Proprietor ; a worker or employee does not include:
The sole proprietor or partner owner or partner owners of an unincorporated business
- The individual performs work that is distinct and separate from that of the person with whom the individual contracts.
- The individual controls the means and manner of the work performed.
- The individual holds him or herself out as in business for him or herself.
- The individual holds him or herself out for work for the general public and does not perform work exclusively for or with another person.
- The individual is not treated as an employee for purposes of income or employment taxation with regard to the work performed.
- The services are performed pursuant to a written agreement or contract between the individual and another person, and the written agreement or contract explicitly states that the individual is not considered to be an employee under this chapter, is working independently, has no employees, and has not contracted with other independent contractors. The written contract or agreement shall also include information regarding the right of the individual to purchase workers' compensation insurance coverage and the individual's election not to purchase that coverage. However, if the individual who is party to the agreement or contract under this subdivision is found to have employees, those employees may file a claim for benefits under this chapter against either or both parties to the agreement.
3. Small Corporation ; a worker or employee does not include:
(H) Any executive officer elected or appointed and empowered in accordance with the bylaws of the corporation shall be an employee of the corporation. With the approval of the commissioner, an officer may elect not to come under the provisions of this chapter and if all officers of the corporation make such election and the corporation has no employees, the corporation shall not be required to purchase workers' compensation coverage. If after election, the officer suffers a personal injury and files a claim under this chapter, the employer shall have all the defenses available in a personal injury claim. However, this election shall not prevent any other individual, other than the executive officer, found to be an employee of the corporation to recover workers' compensation from either the corporation or the statutory employer.
Important note: any business that wishes to rely upon any of these exceptions must meet all of the requirements set out in the law. For example, if a general contractor wishes to rely upon the sole proprietor exception, all of the following must be met:
sole proprietor's work must be distinct and separate from contractor's
sole proprietor's work must meet all legal criteria, i v, as set out in the law
sole proprietor must have no employees
contractor and sole proprietor must enter into a written agreement explicitly affirming and agreeing to the above.
Similarly, if a small corporation wishes to rely upon this law change to obviate coverage, all officers of the corporation must be properly excluded by filing and obtaining Department approval of a Form 29 - Application for Exclusion from Vermont Workers' Compensation.
Although these law changes allow specific exemptions from mandatory workers' compensation coverage, businesses and sole proprietors should also be aware of the many valuable benefits offered by voluntarily obtaining workers' compensation insurance coverage. In the event a workers' compensation policy is in effect, an injured worker is entitled to many valuable benefits that may not otherwise be available to them. These benefits include medical, disability, permanent impairment, vocational rehabilitation and death benefits. In addition, the existence of a workers' compensation policy shields an individual/employer from personal civil or general liability for the same worker.
Further information concerning the workers' compensation law changes in H.632 are available on the workers' compensation website at http://www.labor.vermont.gov/sections/wcsafety/wc/index.html. If you have additional questions you may also contact the Workers? Compensation Division at (802) 828-2286.