In Vermont, failing to carry required workers compensation is illegal and carries steep, stacking penalties. If you have employees and no coverage, the state can fine you by the day, order your business to stop work until you insure, and pursue civil penalties up to 10,000 dollars or even criminal charges, and an injured worker can drop the comp system and sue you for full damages. This is not a paperwork violation; it is treated as a serious offense under 21 V.S.A. 692.
Who this is for: Vermont employers weighing the risk of going without coverage, and owners who have let a policy lapse and want to understand their real exposure.
The short version
- Being uninsured with employees exposes you to up to 100 dollars per day for the first seven days and up to 150 dollars per day after that.
- The Commissioner of Labor must issue an emergency stop-work order shutting the business down until you insure.
- Keep working uninsured after the order and penalties climb to 250 dollars per day plus 250 dollars per employee per day.
- Violating a stop-work order brings civil penalties up to 10,000 dollars, or criminal charges of up to 10,000 dollars or 180 days.
- An injured worker can sue you for full damages, and you lose the usual legal defenses that protect an insured employer.
The fines that stack by the day
Vermont does not treat going uninsured as a flat ticket. Under 21 V.S.A. 692, the penalty for failing to insure is up to 100 dollars per day for the first seven days and up to 150 dollars per day after that, for as long as you go without a policy. On top of the daily fines, the Commissioner must issue an emergency stop-work order, and if you keep operating uninsured after it, the penalties grow to 250 dollars per day plus 250 dollars per employee per day. For a business with several employees, the per-employee piece adds up fast.
| Consequence | What it is | Rough exposure |
|---|---|---|
| Daily fine, first week | For failing to carry required coverage | Up to 100 dollars per day for the first seven days |
| Daily fine after that | Continues until you insure | Up to 150 dollars per day after the first week |
| Stop-work order | The Commissioner orders you to cease all work until you insure | Business stopped, notice posted at the site |
| Penalties after the order | Added while you keep working uninsured | Up to 250 dollars per day, plus 250 dollars per employee per day |
| Stop-work-order violation | Working in violation of the order | Civil up to 10,000 dollars, or criminal up to 10,000 dollars or 180 days |
| State-contract debarment | Barred from bidding on or doing public work | Up to three years |
The stop-work order and the criminal exposure
Beyond the fines, Vermont can stop your business. When an employer is uninsured, the Commissioner of Labor must issue an emergency stop-work order requiring you to cease all work until coverage is in place, with a notice posted at the site so employees know. Continue in violation of that order and you face a civil penalty of up to 5,000 dollars for a first violation and up to 10,000 dollars after, or a criminal fine of up to 10,000 dollars or up to 180 days in jail, or both. Separately, willfully lying to avoid paying compensation can bring an administrative penalty of up to 20,000 dollars, and those penalties can follow a successor business that shares the same principals or officers.
The lawsuit you can no longer defend
Carrying a policy is what makes comp the injured worker's main remedy and keeps a lawsuit off the table. Go uninsured, and an injured employee can elect to sue you for full damages instead of taking comp, and in that suit you cannot argue the worker was careless, knew the risk, or was hurt by a co-worker. Worse, the uninsured employer carries the burden of proving the injury was not its fault, and a worker who wins also recovers costs, interest, and attorney's fees. A single serious injury lawsuit, with those defenses stripped away, can cost far more than years of premium, on top of the fines and the stop-work order.
A Springfield example
Illustrative, not a quote. A Springfield roofing company lets its workers comp lapse to save money over a slow winter. A roofer falls and is seriously hurt while the policy is down. The company is fined by the day, hit with a stop-work order that halts its crews, and defends a civil claim in which it cannot use the usual arguments and must prove it was not at fault, while it also faces up to 250 dollars per employee per day for having kept working uninsured. The combined cost dwarfs the premium it skipped. After the claim, the owner reinstates coverage, and we place a policy and rate the roofing payroll correctly. See our workers comp for roofers page.
Real questions Vermont owners ask
Is it illegal to not have workers comp in Vermont?
Yes, if you have employees. Failing to carry required coverage violates 21 V.S.A. 692. The state can fine you by the day, order you to stop work, and pursue civil or criminal penalties.
What is the penalty for not having workers comp in Vermont?
Up to 100 dollars per day for the first seven days and up to 150 dollars per day after that. If you keep working after a stop-work order, penalties climb to 250 dollars per day plus 250 dollars per employee per day.
Can Vermont shut my business down for going uninsured?
Yes. The Commissioner of Labor must issue an emergency stop-work order requiring you to cease all work until you secure coverage, with a notice posted at the worksite so employees are informed.
Could I face criminal charges for skipping coverage?
You could. Violating a stop-work order can bring a criminal fine of up to 10,000 dollars or up to 180 days in jail, or both, on top of the civil penalties and daily fines for being uninsured.
Can I be barred from public contracts?
Yes. An employer that fails to carry required coverage can be prohibited from bidding on or performing state contracts for up to three years, separate from the fines and stop-work order.
Can I be sued if a worker is hurt and I have no coverage?
Yes. An injured worker can elect to sue you for full damages, and because you were uninsured you lose the usual defenses and carry the burden of proving the injury was not your fault.
Is going without coverage cheaper than carrying it?
Only until something goes wrong. Skipping premium saves money short term, but the daily fines, a stop-work order, civil or criminal penalties, and a single injury lawsuit can cost far more than years of coverage.
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 own an LLC: do I need workers comp?
- 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?
- 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)
- Workers comp vs employers liability
- What workers comp does not cover
- Vermont roofer 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.