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State snapshot

Key considerations

Which issues would you most highlight to someone new to your state?

The Vermont legislature has adopted many laws to provide enhanced protection for employees.  These include broad non-discrimination provisions, protected leave requirements, paid sick leave, strict drug-testing limitations, Mini-worker Adjustment and Retraining Notification Act provisions requiring notice of lay-offs, and, most recently, social media account privacy protection. For example, the protected categories under the Vermont Fair Employment Practices Act includes:

  • sexual orientation;
  • gender identity;
  • place of birth; and
  • HIV status.

In addition, the Vermont legislature recently approved the recreational use of marijuana, effective July 1 2018. The law does provide some protection for employers, specifically allowing employers to prohibit the use of marijuana in the workplace.

What do you consider unique to those doing business in your state?

Many employers and employees choose Vermont as it is a good place to build a company that strives to prosper which also offers the opportunity to become a positive part of the community. While large businesses may find it challenging to grow due to tax burdens, the cost of healthcare and the difficulty of maintaining a workforce in a low-population state, there are many small businesses in Vermont. From an employment law perspective, it is employee-friendly and has many enhanced employee protections which apply to small and large businesses.

Is there any general advice you would give in the labor/employment area?

Vermont is an employee-friendly state. Employers should pay close attention to specific state law requirements and not rely solely on compliance with federal law. The Vermont Department of Labor website is a good starting point.

Proposals for reform

Are there any noteworthy proposals for reform in your state?

During 2018 Vermont is considering paid family leave, a $15 minimum wage bill, and prohibiting employers from asking applicants or previous employers to disclose the applicant’s pay history. 

Emerging issues

What are the emerging trends in employment law in your state, including the interplay with other areas of law, such as firearms legislation, legalization of marijuana and privacy?

Pregnancy accommodation  Effective January 1 2018, Vermont requires accommodation for all pregnancy-related conditions, even if there is no disability. The only exception is if an employer can prove an undue hardship. The new law also includes a new posting requirements (21 V.S.A. Section 495(k)). 

Social media privacy  Effective January 1 2018 Vermont limits access to employee’s social media accounts (21 V.S.A. Section 495(l)). The law contains exceptions for conducting appropriate investigations and accessing an employer-issued device. It also include retaliation protection.

Ban-the-box  Effective July 1 2017 Vermont prohibits an employer from asking for criminal history on an employment application (21 V.S.A. Section 495(j)). There is an exception for positions where the law imposes limitations on hiring employees with criminal backgrounds, but in this case the application questions must be limited to the disqualifying convictions. Employers may ask about convictions during the interview or condition employment on a criminal background check. 

Equal Pay Act  In 2014 the legislature strengthened Vermont’s equal pay laws. In 2013 the federal court, interpreting the former equal pay law, upheld the standard that women must be paid the same as men for similar work, unless justified with “bona fide business reasons”. The court held that a man’s ability to negotiate higher pay does not constitute a sufficient reason.

Employment relationship

State-specific laws

What state-specific laws govern the employment relationship?

Labor and employment laws are generally set forth in Title 21.   

Who do these cover, including categories of workers?

Generally, Vermont law applies broadly, placing the burden on employers to prove that there is no employment relationship. The test is different for different statutes.

The Fair Employment Practices Act applies to any employer “which has one or more individuals performing services for it within this State”.

Misclassification

Are there state-specific rules regarding employee/contractor misclassification?

Yes. For wage payment purposes, Vermont uses the ABC test.

For workers’ compensation, Vermont uses the right to control test and the nature of the business test. The Department of Labor provides a detailed summary.  

For workers’ compensation, the Department of Labor and the Department of Financial Regulation have recently clarified the status of independent contractors. An individual or business will be considered an independent contractor if all of the following elements are satisfied:

  • the individual or business is duly registered in Vermont as a corporation or limited liability company (LLC);
  • the contract is with the corporation or LLC; and 
  • the entity has:
    • four or fewer members, managers or executive officers;
    • no employees; and
    • the requisite Form 29 exclusions have been approved for each member, manager, or executive officer.

For unemployment, Vermont uses the ABC test. The Department of Labor provides a detailed summary.

In a recent unemployment case, the Supreme Court concluded that a single member LLC is not an individual and therefore not an employee for purposes of unemployment law (In Re Bourbeau Custom Homes, Inc, 2017 Vt. 51 (2017)).

Contracts

Must an employment contract be in writing?

There is no specific requirement for written offer letters or employment contracts. General contract principles, including the statute of frauds, apply to employee contracts. Handbooks, employer policies, and supervisor or manager statements may also create implied contracts. 

Are any terms implied into employment contracts?

It is likely that the implied covenant of good faith and fair dealing will apply to a written employment contract, especially if it contains a specific term of employment. 

Are mandatory arbitration agreements enforceable?

There is no clear answer to this question. Vermont does have an arbitration law (12 V.S.A. Section 5651) which permits mandatory arbitration; however, it carves out civil rights and constitutional claims and requires detailed disclosure and acknowledgment. The law has been challenged successfully on pre-emption grounds outside the context of employment law. 

How can employers make changes to existing employment agreements?

Changes to employment agreements are subject to standard contact law principles, including mutual agreement and consideration.

Hiring

Advertising

What are the requirements relating to advertising open positions?

Notice or advertisement cannot indicate any preference, limitation, specification, or discrimination based on any protected category. 

Background checks

What can employers do with regard to background checks and inquiries?

(a) Criminal records and arrests

Vermont has adopted the ban-the-box restriction for initial applications. An exception applies for positions where the law imposes limitations on hiring employees with criminal backgrounds, but the application questions must be limited to the disqualifying convictions. Employers may ask about convictions during the interview or they may condition employment on a criminal background check. 

(b) Medical history

Employers may not require an employee to pay for a medical exam. 

Employers cannot require genetic testing, or use genetic testing results or genetic information from a person or a member of a person’s family (18 V.S.A. Section 9333).

(c) Drug screening

Vermont imposes significant limitations on the use of drug testing. For job applicants, employers may test only after giving the applicant an offer of employment on the condition of a test result. The employer must then provide the applicant with a copy of its policy, a list of drugs to be tested, and a statement to say that therapeutic levels of prescription drugs are not reported. The test must comply with the administrative provisions of the law (21 V.S.A. Sections 511-519). The law imposes stringent restrictions for the testing of existing employees, including a prohibition on random testing. An employer may test only if it has probable cause to believe that an employee is under the influence and the employer meets numerous other requirements. If a test is positive, an employer cannot immediately terminate the employee, but must allow the employee to seek treatment.

(d) Credit checks

Subject to limited exceptions, employers may not enquire about an applicant’s credit report or credit history (21 V.S.A. Section 495(i)).

(e) Immigration status

Employers may not recruit, solicit or refer for employment, or employ, an individual who is not authorized to work in the United States. 

(f) Social media

Effective January 1 2018, Vermont limits access to employee social media accounts (21 V.S.A. Section 495(l)). The law contains exceptions for conducting appropriate investigations and accessing an employer-issued device. It also includes retaliation protection.

(g) Other

None.

Wage and hour

Pay

What are the main sources of wage and hour laws in your state?

Vermont law includes a subchapter on wages and medium of payment (21 V.S.A. Section 341 and following) and a subchapter on minimum wages (21 V.S.A. Section 381 and following). 

What is the minimum hourly wage?

Effective January 1 2018 the minimum wage is $10.50. From January 1 2019 the minimum wage will be increased by a maximum of 5% annually, based on the Consumer Price Index for All Urban Consumers. 

What are the rules applicable to final pay and deductions from wages?

Wages must be paid weekly, or bi-weekly or semi-monthly with prior written notice. Wages must be paid no more than six days after the final day of the pay period. Direct deposit or payroll cards may be used with prior written authorization.

Only the following deductions to wages are permitted:

  • deductions for goods and services provided by the employer (with some restrictions);
  • deductions authorized by law (eg, taxes and benefit contributions); and
  • deductions for employer provided meals and lodging (with limitations).

 

Some deductions are expressly prohibited (eg, deductions for cash register shortages) and others may be made only after authorization. The Vermont Department of Labor provides a deductions chart. Employees who are terminated involuntarily must be paid within 72 hours of discharge. However, voluntary termination requires payment “on the last regular pay day, or if there is no regular pay day, on the following Friday” (21 V.S.A. Section 342(b)).   

Hours and overtime

What are the requirements for meal and rest breaks?

Vermont follows the general rule that “[a]n employer shall provide an employee with reasonable opportunities during work periods to eat and to use toilet facilities in order to protect the health and hygiene of the employee” (21 V.S.A. Section 304).

It also requires employers to provide reasonable time (paid or unpaid) and a private space (that is not a bathroom) for an employee to express breast milk (21 V.S.A. Section 305).

Finally, Vermont requires employers to consider requests for flexible work arrangements and sets forth certain compliance obligations (21 V.S.A. Section 309).

What are the maximum hour rules?

There are detailed restrictions on hours worked by children under 16 years of age (21 V.S.A. Section 434 and 437). 

How should overtime be calculated?

Overtime is calculated at one-and-a-half times the regular wage rate.

What exemptions are there from overtime?

Vermont includes limited exemptions for employees of:

  • any retail or service establishment;
  • an amusement or recreational establishment;
  • hotels, motels, or restaurants;
  • hospitals, public health centers, nursing homes, maternity homes, therapeutic community residences, and residential care homes;
  • transportation companies (where the work is exempt from the Fair Labor Standards Act);
  • a political subdivision of Vermont; and
  • any state covered by the Fair Labor Standards Act.

Record keeping

What payroll and payment records must be maintained?

Employers must keep an accurate record of hours worked and wages paid. Employers must also provide employees with a statement which fully itemizes each wage payment, including:

  • the total hours worked;
  • the hourly rate;
  • gross pay; and
  • each deduction.

Records should be kept for at least three years.

Discrimination, harassment and family leave

What is the state law in relation to:

Protected categories

(a) Age?

 Vermont’s age discrimination protection covers anyone 18 years or older (21 V.S.A. Section 495(a) and (c)).

(b) Race?

 Vermont’s Fair Employment Practices Act provides protection for both race and color (21 V.S.A. Section 495(a)). 

(c) Disability?

Vermont’s Fair Employment Practices Act provides protection for a qualified individual with a disability (21 V.S.A. Section 495(a)). A ‘qualified individual’ is an individual with a disability who is capable of performing the essential functions of the job or jobs for which the individual is being considered, with reasonable accommodation to the disability (21 V.S.A Section 495d(6)).

(d) Gender?

 Vermont’s Fair Employment Practices Act provides protection for both sex and gender identity (21 V.S.A. Section 495(a)).

(e) Sexual orientation?

 Vermont’s Fair Employment Practices Act provides protection for sexual orientation (21 V.S.A. Section 495(a)).

(f) Religion?

Vermont’s Fair Employment Practices Act provides protection for religion, with a limited exception for employment decisions by religious organizations (21 V.S.A. Section 495(a)).

(g) Medical?

Vermont protects discrimination against HIV status (21 V.S.A. Section 495(a)).

(h) Other?

Additional protections under the Vermont Fair Employment Practices Act include ancestry, national origin, and place of birth. Effective January 1 2018, Vermont requires accommodation for all pregnancy-related conditions, even if there is no disability. The only exception is if the employer can prove an undue hardship. The new law also includes new posting requirements (21 V.S.A. Section 495(k)). Subject to limited exceptions, employers also may not discriminate against an employee because of their credit report or history.

Harassment

What is the state law in relation to harassment?

Under the Vermont Fair Employment Practices Act all employers are required to have a specific policy against sexual harassment. The policy has specific requirements, including listing the names, addresses, and telephone numbers of person(s) to whom complaints should be made, and a reference to the appropriate state and federal discrimination enforcement agencies. Employers are encouraged to provide training to employees and additional training to supervisors and managers. Vermont law recognizes individual liability for supervisors or managers found to have engaged in harassment.

Family and medical leave

What is the state law in relation to family and medical leave?

Vermont has a wide variety of leave laws. The Vermont Parental and Family Leave Law provides up to 12 weeks of unpaid leave during any 12-month period for qualifying reasons. Many of the requirements are similar to federal law, but there are some important differences.

The Vermont Parental and Family Leave Law applies to smaller employers – parental leave is required for employers with at least 10 employees and family leave is required for employers with at least 15 employees. The law has a broad definition of ‘family members’, including parents-in-law and adult children. It also imposes a higher burden of proof on an employer to provide clear and convincing evidence if the employer does not permit the employee to return to work after the leave. Unlike the Family and Medical Leave Act, the Vermont Parental and Family Leave Law does not permit an employer to force an employee to use accrued paid time during the protected leave. It also imposes additional obligations on continuing non-healthcare benefits during the leave. 

In addition to the 12 weeks of leave, the law contains a short-term leave provision, allowing employees to take up to four hours of unpaid leave in any 30-day period to participate in prescribed family, medical, and professional activities. The total time is limited to 24 hours in any 12-month period. 

Vermont’s paid sick leave law stipulates that employees can accrue up to 24 hours per year at a rate of one hour for every 52 hours worked. From 2019 the total annual hours will be increased to 40.  Subject to some exceptions, the law applies to any employee who works more than 18 hours.  Employers can use their combined time off plans, but they must incorporate all legal requirements, including the carry-over (or cash-out) options.

Finally, Vermont has separate laws for:

  • witness leave;
  • jury leave;
  • military leave;
  • legislative leave; and
  • town hall meeting leave.

Privacy in the workplace

Privacy and monitoring

What are employees’ rights with regard to privacy and monitoring?

There is no state law on wiretapping and eavesdropping.

In general, Vermont recognizes the common law tort of an invasion of privacy (see Denton v. Chittenden Bank (163 Vt. 62 (1994))).

There are several laws to protect an employee’s privacy interests, including restrictions on conducting polygraph tests, HIV tests, genetic tests or drug tests, and inquiring about credit history, criminal background, or a job applicant’s health insurance coverage status.

Are there state rules protecting social media passwords in the employment context and/or on employer monitoring of employee social media accounts?

Effective January 1 2018 access to employee social media accounts is limited (21 V.S.A. Section 495(l)). The law provides exceptions for conducting appropriate investigations and accessing an employer-issued device. It also includes retaliation protection.

Bring your own device

What is the latest position in relation to bring your own device?

There is no specific law regarding bring your own device, but Vermont’s new social media account law creates an exception for an employer-issued electronic device.  

Off-duty

To what extent can employers regulate off-duty conduct?

 There are no specific laws relating to an employer’s interests in off-duty conduct. 

Gun rights

Are there state rules protecting gun rights in the employment context?

 No statute addresses gun rights in the workplace.

Trade secrets and restrictive covenants

Intellectual Property

Who owns IP rights created by employees during the course of their employment?

There is no state law relating to works made for hire. However, Vermont has its own Trade Secrets Act (9 V.S.A. Section 4601 and following) which provides injunctive relief for actual or threatened misappropriation of a trade secret.

Restrictive covenants

What types of restrictive covenants are recognized and enforceable?

Generally, non-compete, non-solicitation, and confidentiality agreements are enforceable where they are reasonably tailored to protect the legitimate interests of the employer. Protectable interests may include securing proprietary confidential information, goodwill, relationships with customers, and investment in specialist training.  

Non-compete

Are there any special rules on non-competes for particular classes of employee?

A school of barbering or cosmetology must not require, as a condition of training for licensure, that a person enter into a contract to not compete with the training organization or an affiliate (26 V.S.A. Section 281(c)).

Labor relations

Right to work

Is the state a “right to work” state?

No.

Unions and layoffs

Is the state (or a particular area) known to be heavily unionized?

Yes. Vermont is generally friendly to unions – a large portion of the state’s public workers are unionized.

What rules apply to layoffs? Are there particular rules for plant closures/mass layoffs?

The Vermont Mini-worker Adjustment and Retraining Notification Act (21 V.S.A. Section 411 and following) applies to employers with 50 or more employees and requires various notices on plant closure or mass layoff. A ‘mass layoff’ is a permanent employment loss of at least 50 employees at one or more worksites in Vermont during any 90-day period. The notice requirements include providing notice to:

  • the secretary of commerce and community development and the commissioner of labor at least 45 days before the effective date; and
  • the local chief elected officer or administrative officer of the municipality, the affected employees, and the bargaining agent (if any) at least 30 days before the effective date.

The law also contains specific requirements for the contents of the notice and numerous exceptions.

Discipline and termination

State procedures

Are there state-specific laws on the procedures employers must follow with regard to discipline and grievance procedures?

None for private employers. 

At-will or notice

At-will status and/or notice period?

Subject to many exceptions, Vermont is an employment-at-will state. 

What restrictions apply to the above?

Common exceptions to at-will employment include:

  • statutory protections;
  • contractual agreements;
  • torts; or
  • violation of public policy. 

Courts have held repeatedly that certain provisions in employee handbooks may establish an implied contract for employment, creating an exception to the at-will rule.

Final paychecks

Are there state-specific rules on when final paychecks are due after termination?

Employees who are terminated involuntarily must be paid within 72 hours of discharge. Voluntary termination requires payment “on the last regular pay day, or if there is no regular pay day, on the following Friday” (21 V.S.A. Section 342(b)).