The Vermont employee separation process can differ considerably from other states. Employee termination laws vary depending on jurisdiction, so regulatory compliance hinges on knowing state-specific employer obligations and employee rights.
This employee separation checklist and guide is designed to provide an overview of Vermont’s final paycheck requirements, separation notices, severance agreements, reporting employee termination, and withdrawing registration to do business in the state.
Vermont Employee Separation Checklist
- Provide final paycheck
- Issue separation notice
- Execute severance agreement
- Report termination
- Withdraw registration to do business
1. Final Paycheck Requirements in Vermont
Vermont state law outlines specific requirements for issuing final paychecks. If an employee is terminated, the final payment must be made within 72 hours. For those who resign, payment is due on the next scheduled payday, or the following Friday, if there is no scheduled payday. All earned wages must be included in this final paycheck.
Employers are not obligated to pay out accrued and unused vacation time (unless stipulated in the employee’s contract or company policy). The final payment can be made through regular pay channels or any other method specified by law. Employers who fail to comply with these regulations may face penalties, including payment of the unpaid wages, and a civil fine of up to $100 for each violation.
2. Firing Employees in Vermont
Because Vermont is an at-will employment state, firing employees is a relatively simple process. However, employers should note that they are required to notify employees of the availability of unemployment compensation. This notice must be provided at the time of separation. Using a notice that tracks model language issued by the U.S. Department of Labor helps ensure compliance.
Second, Vermont requires all employers who provide a group health insurance plan and have fewer than 20 employees to notify separated employees of their right to continue coverage under Vermont’s state-level COBRA law. This notice must be provided within 30 days of separation.
Finally, certain employers have additional notice requirements under Vermont’s WARN Act. Certain employers must provide advance notice to affected employees in the event of a business closing, or a mass layoff involving 50 or more employees.
Employers must notify affected employees either 30 or 45 days before the event, depending on the circumstances. A “covered employer” is defined as an organization with at least 50 full-time employees, or 50 part-time employees who each work a minimum of 1,040 hours annually.
Certain events, like a sale of business, strike, or lockout, do not trigger WARN Act notice requirements—unless they result in a mass layoff. However, exceptions to the notice requirements exist, such as unforeseen business circumstances, a faltering company, or a natural disaster.
The required notices must be delivered to the affected employees, their representatives, and relevant state and municipal officials, including the Vermont Commissioner of Labor and Secretary of Commerce and Community Development. These notices must include detailed information about the planned layoffs, the expected separation dates, employee rights, and available support services.
3. Severance Agreements in Vermont
When employers in Vermont execute severance agreements with their employees, they must clearly specify any federal and state law claims being released. In Vermont, this includes claims under the state’s anti-discrimination laws, equal pay law, leave laws, and minimum wage and overtime laws. Ensure that any release of claims only covers those that arose before the agreement’s effective date.
Furthermore, non-disparagement clauses in Vermont severance agreements cannot prevent employees from opposing, disclosing, reporting, or participating in investigations related to sexual harassment or sexual assault.
Remember to also review applicable federal employee termination laws and guidelines. For example, the NLRB’s 2023 McLaren decision restricts the use of non-disparagement and confidentiality provisions in severance agreements.
4. Reporting Employee Termination in Vermont
When your separated employee has an Income Withholding for Support Order (“IWO”), promptly report the employee’s termination to the child support agency, court, or attorney that issued the IWO. You may register for online reporting with the Federal Office of Child Support Enforcement here.
You also may report an employee’s termination by completing the Notification of Employment Termination or Income Status section of the IWO. Then fax or mail it to the child support agency that issued it. Have the following information available:
- Employee Name
- Employee Case Identifier
- Last Known Home Address
- New Employer Address (if known)
- Date of Employee Separation
5. Withdraw Registration to do Business in Vermont
If separating from your last Vermont employee ends your business dealings in the state, you may formally withdraw your business registration. The forms you will submit to the Vermont Secretary of State depend on your organization’s legal structure. However, For-Profit Corporations, Non-Profit Corporations, and Limited Liability Companies (LLCs) can all find and file the necessary documents via Vermont’s online portal.
Stay Compliant with Vermont Employee Separation Requirements
Staying compliant with Vermont Employee Separation Agreement requirements helps employers mitigate legal risk by recognizing employee rights on the state and federal level.
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