If your Vermont LLC has any non-owner employees, yes, it must carry workers compensation insurance, because Vermont requires coverage once you have employees under 21 V.S.A. 687. Vermont also treats an LLC's members and managers as covered by default, the same as employees, so they are on the policy unless the LLC formally excludes them. An LLC may elect to exclude up to four members or managers by filing Form 29 with the Department of Labor and getting its approval. Whether you have staff, and whether you exclude your members, is what sets your obligation, not just your payroll.
Who this is for: Owners of a Vermont LLC, whether a single-member LLC with no staff, a multi-member LLC, or an LLC running a payroll of W-2 employees.
The short version
- An LLC with any non-owner employee must carry workers comp; there is no headcount threshold once employees exist.
- Vermont covers LLC members and managers by default, the opposite of a sole proprietor, so they are in unless you exclude them.
- The LLC may elect to exclude up to four members or managers by filing Form 29 with the Department of Labor.
- If you have more than four members, at least one stays covered because only four can be excluded.
- Clients and general contractors routinely require proof of coverage before your LLC can start work.
How Vermont treats LLC members
Vermont does not treat an LLC member the way it treats a sole proprietor. A sole proprietor is outside the system unless they opt in; an LLC's members and managers are inside it by default and have to opt out. That means if your LLC carries a policy, or is required to because it has employees, the members are covered persons unless the LLC files to exclude them. The exclusion is capped at four members or managers, done on Form 29 through your agent and carrier, with the Department of Labor's approval. So the practical questions are how many members you have, whether you employ anyone else, and whether you want the members on the policy or excluded. Unlike some states, Vermont does not carve construction owners out of this choice, so the up-to-four exclusion is available the same way in the trades as anywhere else.
What applies to your LLC
| Your LLC setup | Is comp required? | What owners and staff should know |
|---|---|---|
| Single-member, no employees | Not required if you exclude yourself | You are covered by default; file Form 29 to opt out, or keep coverage for your own injuries |
| Two to four members, no other staff | Not required if all members are excluded | Members are in by default; up to four may be excluded on Form 29 |
| Five or more members, no other staff | Yes | Only four can be excluded, so at least one member stays covered and a policy is required |
| Any LLC with non-owner employees | Yes | Employees covered from day one; up to four members may still be excluded |
Electing to exclude, or keeping coverage
Because members start inside the system, an owner-run LLC decides whether to keep that coverage or file to drop it. If you want your own on-the-job injuries paid by comp, you leave the members on the policy. If you would rather keep member pay out of the premium, you file Form 29 to exclude up to four of them and rely on other coverage for your own injuries. Many owner-run LLCs that hire staff keep only the employees on the policy, which lowers the premium while still protecting the business from an employee-injury lawsuit. The limited liability in an LLC shields your personal assets from many business debts, but it does not by itself answer an injured employee, which is exactly what comp is built to handle.
A Winooski example
Illustrative, not a quote. A two-member electrical contracting LLC in Winooski runs the business with one W-2 apprentice. Because the LLC has a non-owner employee, Vermont requires a policy, and the apprentice must be covered. The two members are covered by default; both still pull wire in the field and want their own injuries paid, so they leave themselves on the policy rather than filing Form 29 to exclude themselves. When a builder they want to work for requires proof of coverage, the LLC already has a policy and can produce a certificate the same day. If a member or the apprentice is hurt on the job, the injury is covered and the LLC keeps its legal protection. We make sure the electrical work is rated correctly so the price is fair. See our workers comp for electricians page.
Real questions Vermont owners ask
Does my Vermont LLC have to carry workers comp?
If it has any non-owner employees, yes. Its members are also covered by default, so unless you file to exclude them, they belong on a policy too. Up to four members may be excluded on Form 29.
Am I covered as an LLC member in Vermont?
Yes, by default. Vermont treats LLC members and managers as covered unless the LLC files Form 29 to exclude them. That is the opposite of a sole proprietor, who is out unless they opt in.
Do I need comp for a single-member LLC with no employees?
Not if you exclude yourself. Because a member is covered by default, you either keep coverage for your own injuries or file Form 29 with the Department of Labor to opt out. With no employees and yourself excluded, no policy is required.
How many members can I leave off the policy?
Up to four. Vermont lets a corporation or LLC exclude up to four executive officers, managers, or members by filing Form 29. If you have more than four members, at least one has to stay covered.
How do I exclude myself as a member?
The LLC files Form 29, the application for exclusion, through your agent and carrier, and the Department of Labor must approve it. Vermont does not carve construction owners out of this, so trades owners can use the same exclusion.
Does having W-2 employees change things for my LLC?
Yes. Even one non-owner employee makes coverage mandatory from day one. The policy covers your employees and protects the LLC, so an injured worker generally cannot sue the business directly.
Why do clients ask my LLC for proof of coverage?
General contractors, landlords, and commercial customers require proof to manage their own risk. Even when you have covered everyone required, you usually cannot start the job without showing a certificate.
Why Vermont owners choose Morrow
- We shop the right market for you. In Vermont you buy workers' comp on the open market from any private carrier licensed in the state, because there is no state fund, and if no carrier will take you the NCCI-run Vermont Workers' Compensation Insurance Plan (the assigned risk pool) is the guaranteed fallback, so we can shop your rate freely and still have a backstop for hard-to-place work.
- We catch pricing mistakes. Your price depends heavily on the category your work falls into for pricing (the class code). Put people in the wrong category and you overpay for years. We review your payroll and classifications before you buy.
- Proof of coverage, fast. Need a certificate (proof of coverage) for a general contractor or a landlord before Monday? We turn those around the same business day for most carriers.
- We help lower the score that drives your price. Insurers give you a score based on your past claims that raises or lowers your cost (the experience modification rate). We review it each year, flag errors, and connect you with return-to-work and safety resources that bring it down.
- Real people when a claim happens. When someone gets hurt, we stay involved through the life of the claim, not just at renewal.
Related Vermont guides
Every Vermont business is set up a little differently. These companion guides answer the same question for other situations, plus the national explainers behind the terms used here.
- Business insurance in Vermont (start here)
- Workers comp: the owner's overview
- I'm a sole proprietor: do I need workers comp?
- I own a corporation (C-corp or S-corp): do I need it?
- We're a partnership: do we need workers comp?
- We're a nonprofit: do we need workers comp?
- My workers are 1099: do I still need it?
- Only part-time or seasonal staff: do I need it?
- I only employ family: do I need workers comp?
- Remote or out-of-state staff: do I need coverage?
- What happens if I don't carry workers comp?
- How much does workers comp cost?
- How do I get workers comp (even if turned down)?
- What insurance do I need for a contractor license?
- Workers compensation insurance, explained
- What workers comp costs (national guide)
- Do sole proprietors need workers comp?
- What workers comp does not cover
- Vermont electrician workers comp
This guide is general information, not legal advice. Vermont rules and penalty amounts can change, so verify current requirements with Vermont Department of Labor, Workers' Compensation and Safety Division or a licensed advisor before you rely on them. Last updated: July 2026.