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Vermont Department of Labor requires businesses to carry workers’ compensation

first_imgThe Vermont Department of Labor is reminding businesses that legislative changes taking affect July 1st could mean immediate closure of businesses found to be without required workers’ compensation insurance.Act 142 takes effect July 1st that requires the Department of Labor to close a business immediately if an employer fails to carry required workers’ compensation insurance. The legislation also stiffens penalties for failure to carry insurance of $150 to $250 per day that a business operates without insurance with stiffer penalties for failure to comply with a stop work order. Fines will be increasing on employers who fail to abide by the law by misclassifying workers’ as independent contractors to avoid costs and obtain an advantage over their competitors. These fines can be up to $5,000 per misclassified employee. Lastly, the legislation creates a fifth position at the Department to investigate misclassification by Vermont employers. Three new investigative positions were created in legislation passed in 2009. These investigators will be out on the streets to persuade employers it is in their best interest to comply with the law by obtaining the required coverage.Over the past year, the Vermont Department of Labor has been stepping up investigation of and enforcement against employers lacking workers’ compensation insurance coverage for their employees. Vermont, like other States, is encountering a serious problem that threatens the health and safety of its workforce – the misclassification of workers and the failure of employers to obtain required workers’ compensation insurance coverage for their employees.A recent sweep of the Church Street area of Burlington revealed several non-complying businesses. The Department ordered them to close if they could not provide evidence of workers’ compensation insurance coverage within five days. Some of the Burlington employers under investigation have admitted that they had deliberately avoided obtaining workers’ compensation insurance altogether to cut business costs; others had previously obtained insurance coverage but their policies had been canceled due to non-payment of premiums.In addition to stepping up coverage investigations, the Department will also be conducting employer seminars to help employers understand misclassification issues. These seminars will be directed towards helping employers understand that, in most cases, an independent contractor who does not have employees of its own is actually an employee of the business as it related to the workers’ compensation and unemployment insurance programs. Dates and locations of the employer seminars will be posted Labor’s website at is external).Vermont’s Workers’ Compensation system was first established in 1915, providing a ‘no-fault’ insurance program whereby employees may receive medical and disability benefits for a variety of work-related injuries and illnesses. If an employer carries the mandatory insurance, they are not subject to civil suit by an injured worker. If the employer fails to carry insurance and an employee is injured or becomes ill, that employee can sue for damages. Depending on the injury, that could result in the loss of the business, an owner’s home, or other assets. ‘Most often the cost of insurance is far less expensive than the resulting law suit’ commented Stephen Monahan, workers’ compensation and safety director for the Department of Labor. ‘We want employers to know we will be investigating about the higher fines and penalties in hopes they will choose compliance. Our division also has expertise through ProjectWORKSAFE that can identify ways to enhance workplace safety and health’ commented Monahan. Source: Vermont Department of Labor 6.29.2010last_img

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