Vermont: New Rules for Wages, Unemployment and Workers’ Compensation
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APPLIES TO Employers with Employees in VT |
EFFECTIVE As Indicated |
QUESTIONS? Contact HR On-Call |
Quick Look
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Discussion
On May 28, 2025, Vermont Governor Phil Scott signed SB 117 into law, introducing major updates to the state’s wage and hour, unemployment compensation, and workers’ compensation laws. The law went into effect on July 1, 2025, with some provisions delayed until 2026 or 2028.
In the area of wage and hour law, the bill imposes stricter penalties for employers who willfully withhold wages. In such cases, employers may be required to pay up to double the unpaid amount, with half going to the employee and half to the state. Additionally, Vermont’s minimum wage will now be adjusted annually based on the lower of 5% or the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-U), rounded to the nearest cent.
Unemployment compensation rules are also undergoing major revisions. The threshold for mandatory layoff notifications has been lowered from 50 to 20 employees, meaning more employers will be required to notify the state in the event of a mass layoff or business closure. Employers and claimants now have the option to receive unemployment insurance notices electronically; however, those using third-party administrators should proceed cautiously to avoid disrupting SIDES participation.
Employers must also respond to wage and separation information requests within 10 days. In cases where a business is acquired and split among multiple entities, one must be designated to handle wage reporting and benefit tax responsibilities. The state’s Short-Time Compensation Program, which allows employers to reduce employee hours instead of conducting layoffs, will resume in 2026 following the completion of IT system upgrades. Certain unemployment benefit increases are also delayed until July 1, 2026, or earlier if the system is ready.
Lastly, workers’ compensation reforms under the bill include new requirements for medical case management, which is now defined and available when recommended by a provider or supported by evidence. Employers must also provide translation services for injured workers who are not fluent in English. Insurers are now subject to new timelines for approving or denying medical case management services. To ensure timely benefit payments, the law introduces escalating penalties for late weekly payments: 5% for the first offense, 10% for the second, and 15% for the third and subsequent violations. Starting October 1, 2025, employers must report late payments quarterly, and failure to do so may result in a $500 penalty.
Action Items
- Audit wage payment practices for compliance.
- Update layoff procedures, if applicable.
- Have appropriate personnel trained for compliance.
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2025 ManagEase