Vermont
Workers' Comp Exemption
For a Vermont corporation or LLC, Form 29 is the key owner-exclusion filing: up to four executive officers or LLC managers/members can be excluded with Commissioner approval, and if every owner in that category is approved and the business has no employees, no policy is required. Sole proprietors and partners use a different §601(14)(F) test built around genuine independent-business facts and a written agreement; they do not file Form 29.
Entity types analyzed
- Sole proprietor
- LLC member
- Partner
- Corporate officer
Vermont separates unincorporated-owner treatment from the formal exclusion process for corporations and LLCs. A sole proprietor or partner can be outside the employee definition only when the statutory independent-business conditions are satisfied, while a corporation or LLC must obtain Commissioner approval on Form 29 to exclude up to four executive officers, managers, or members.
For a Vermont corporation or LLC, Form 29 is the key owner-exclusion filing: up to four executive officers or LLC managers/members can be excluded with Commissioner approval, and if every owner in that category is approved and the business has no employees, no policy is required. Sole proprietors and partners use a different §601(14)(F) test built around genuine independent-business facts and a written agreement; they do not file Form 29.
Owner treatment at a glance
Sole proprietorA sole proprietor of an unincorporated business may be outside the employee definition when the six statutory independent-business conditions in §601(14)(F) are satisfied. The written service agreement must expressly address independent status and the election not to purchase workers' compensation.
LLC memberWith Commissioner approval, an LLC may exclude up to four managers or members using Form 29. If all managers/members are approved for exclusion and the LLC has no employees, the LLC need not purchase workers' compensation coverage.
PartnerA partner owner of an unincorporated business may be outside the employee definition under §601(14)(F) when the statutory independent-business and written-agreement conditions are met. Employees of the partnership are not swept into the owner's exclusion.
Corporate officerA corporation may apply to exclude up to four executive officers using Form 29. If all corporate officers are approved for exclusion and the corporation has no employees, the corporation need not purchase coverage; a director who is not an officer and not otherwise an employee does not need Form 29 under Rule 25.
Vermont has one owner rule for unincorporated businesses and another for corporations and LLCs
Section 601 does not treat every business owner alike. Subdivision (14)(F) addresses a sole proprietor or partner owner of an unincorporated business through a six-part independent-business test, while subdivision (14)(H) creates a Commissioner-approved exclusion for corporation officers and LLC managers/members.
That means a sole proprietor should not download Form 29 just because an LLC owner uses it, and an LLC member should not rely on a contractor agreement designed for an unincorporated owner.
Start by identifying the legal entity. Then apply the filing and documentation rules written for that entity rather than choosing the form that sounds most like an exemption.
A sole proprietor or partner needs the six statutory independent-business facts, including a specific written agreement
The unincorporated-owner exclusion in §601(14)(F) requires more than the person's title. Among other things, the work must be distinct, the individual must control how it is performed, hold out to the public as an independent business, and not be treated as an employee for tax purposes.
The services must also be performed under a written agreement expressly stating that the individual is not an employee under the chapter, is working independently, has no employees, has not contracted with other independent contractors, and has elected not to purchase workers' compensation coverage.
If the owner later hires employees, the written agreement cannot be used to erase those workers' rights. Section 601 expressly preserves potential claims when the purported independent owner is found to have employees.
Form 29 is an approval process for up to four corporate officers or LLC managers/members—not a self-executing checkbox
Vermont Rule 25 says an executive officer of a corporation or a manager/member of an LLC who wants exclusion under §601(14)(H) must file Form 29 with the Commissioner for approval. No more than four people may be excluded under this route.
The application must be supported by organizational consent: a sworn statement/affidavit from a knowledgeable principal or attorney, or qualifying meeting minutes, plus additional records if the people are not already shown in the entity's organizational filings.
The exclusion therefore rests on both legal status and an approved filing. Keep the signed Form 29, approval, minutes/affidavit, and current Secretary of State entity records together.
A corporation or LLC can reach a true no-policy result only when every owner in scope is approved and there are no employees
Section 601 provides a narrow but useful outcome: if all officers of the corporation, or all managers/members of the LLC, make the election and receive approval, and the business has no employees, the corporation or LLC is not required to purchase workers' compensation coverage.
That is not a permanent company exemption if the facts later change. The first non-owner employee creates a new coverage obligation even though the owners' Form 29 exclusions may remain valid personally.
This distinction is particularly important for a one- or two-owner contractor. A valid Form 29 can support owner-only status, but once a helper is hired, the company needs to secure coverage for the worker rather than reusing the owner exclusion as a project-wide waiver.
An approved Form 29 continues until rescinded, but that does not freeze the business facts forever
The current Form 29 states that a previously approved exclusion remains in effect until rescinded, so a new application is not required merely because the workers' compensation policy renews. That is more durable than the annual certificates used in some states.
Durability makes change management more important, not less. An officer departure, new LLC member, entity conversion, or first employee can leave an old approval document factually incomplete even if the named person's exclusion has not expired.
Set a review at ownership meetings and before adding payroll. The file should always answer who is approved, whether the business still has no employees, and whether the organizational records still match the application.
Vermont's failure-to-insure penalties escalate and can lead to a stop-work order
Section 692 authorizes an administrative penalty of up to $100 per day for the first seven days an employer fails to secure required compensation and up to $150 per day thereafter. After investigation, the Commissioner can issue a stop-work order until insurance is secured.
Additional daily and per-employee penalties can apply after a stop-work order, and violating the order creates further civil or criminal exposure. That enforcement framework makes it dangerous to rely on an owner exclusion after the business has hired a covered employee.
Before a worker's start date, confirm that the company has either an active policy or a valid statutory reason no policy is required. Form 29 protects the approved owner; it does not cover the mistake of leaving a new employee uninsured.
Vermont owner checklist
- Identify unincorporated owner versus corporation/LLC before choosing the exemption route.
- For a sole proprietor or partner, satisfy and document all §601(14)(F) independent-business conditions and the required written agreement.
- Use Form 29 for no more than four qualifying corporate officers or LLC managers/members and obtain Commissioner approval.
- Keep organizational consent/minutes or affidavit with the approved Form 29.
- Treat the first non-owner employee as a new company coverage trigger even if owner exclusions remain active.
- Review the file after ownership/entity changes because Form 29 stays effective until rescinded rather than expiring annually.
Filing reference
Coverage ruleEmployers must secure workers' compensation for employees unless the worker falls within a statutory exclusion. A sole proprietor or partner owner of an unincorporated business can be outside employee status under the conditions in 21 V.S.A. §601(14)(F); corporations and LLCs use a separate Commissioner-approved exclusion process for qualifying owners/managers.
Construction ruleVermont does not publish a separate general construction employee-count minimum. Contractor classification is important: a hiring business should verify whether the worker has coverage or a valid exclusion, and employees of a sole proprietor, partnership, corporation, or LLC remain subject to the employer's coverage duty.
Form / electionForm 29 — Application to Exclude Corporate Officers or LLC Members from Workers' Compensation Coverage
RenewalThe current Form 29 states that a previously approved exclusion remains in effect until rescinded, so a new Form 29 is not required simply because a policy renews. Re-file/review when the entity, excluded people, ownership/management facts, or workforce changes.
Effective periodAn executive-officer/LLC exclusion takes effect no earlier than the Commissioner's receipt of a complete Form 29 application with the required organizational consent documentation and approval under Rule 25; it continues until rescinded.
Responsible agency
Vermont Department of Labor, Workers' Compensation
Official source library
These are the state-agency, statutory, or state-board materials used for this guide. The page was last source-checked on 2026-08-26.