What insurance is required before hiring employees?

Required Business Insurance Before Hiring Employees in Vermont

Before hiring employees in Vermont, businesses must secure specific insurance coverage to comply with state regulations and protect their workforce and operations.

Mandatory Insurance Types

• Workers' Compensation Insurance: Vermont law requires employers with one or more employees to carry workers' compensation insurance. This coverage protects employees who suffer work-related injuries or illnesses by covering medical expenses and lost wages.
• Unemployment Insurance: Employers must register with the Vermont Department of Labor and pay unemployment insurance taxes. This insurance provides temporary benefits to employees who lose their jobs through no fault of their own.
• Disability Insurance (Temporary Disability Benefits): Vermont mandates temporary disability benefits coverage for employees unable to work due to non-work-related injuries or illnesses. Employers typically provide this through a private carrier or the state program.

Additional Insurance Considerations

• General Liability Insurance: While not legally required, this insurance is recommended to protect your business from third-party claims of bodily injury or property damage.
• Employment Practices Liability Insurance (EPLI): This insurance helps cover claims related to employment issues such as discrimination or wrongful termination, supporting compliance with employment laws.

Operational Tips

• Ensure your workers' compensation policy is active before the first employee starts work to avoid penalties and compliance issues.
• Register promptly with the Vermont Department of Labor for unemployment insurance to manage payroll tax reporting smoothly.
• Maintain accurate records of all insurance policies and employee coverage to support compliance audits and reporting requirements.
• Consider automation tools to manage insurance renewals, payroll tax filings, and employee classification to reduce administrative burden.

As of 2026, staying updated on Vermont’s insurance requirements is essential for operational compliance and protecting your business and employees effectively.