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Many of our business clients are having to layoff employees, or let them go entirely, as a result of the “Stay at Home” Order from the State. Fortunately, the State has taken some action to lessen the financial sting; it most cases your rating will not increase.

This is the answer provided by the Department of Labor:

Frequently Asked Questions

EMPLOYERS

Q: What impact does the bill (H.742) signed by Governor Phil Scott on March 30, 2020 have on Vermont employers?

A: The bill will provide the following relief for employers:

Employer’s experience ratings will not be charged for benefits paid to employees for any of the COVID-19 related reasons (as detailed in Employee question ‘Am I eligible for benefits‘)

• If Employer rehires or offers to rehire employees within a reasonable time, employer will also be relieved of charges for up to eight weeks where:
  • Employer temporarily ceased operations in response to request from a public health authority, emergency order from the Governor or President, or actual exposure to COVID-19 at the workplace;
  • Employee becomes unemployed due to a state of emergency declaration or order/ directive of the President or Governor; or Employee isolates or quarantines at recommendation of medical professional or public health authority.

Q: What if I am forced shut down my business due to COVID-19 impact? Are my employees eligible for unemployment benefits?

A: If you are forced to temporarily shut down business operations, your employees will likely be eligible for unemployment benefits, assuming they meet all other eligibility criteria, and have a return to work date that occurs before the 10-week maximum. Under this circumstance, unemployment insurance claims made by impacted employees will be charged against the employer’s account.

 

In the context of Unemployment Compensation Insurance in Vermont, the term “employee” is not defined. The Department of Labor (“The Department”) simply refers to an “employee” as an individual who is entitled to be covered for unemployment purposes. Therefore, the distinction between employee and independent contractor is unclear, and contractors need to be cautious of the distinction and its implications.

In Vermont, it is the nature of the relationship between an employer and an individual that determines if they are an “employee” or an “independent contractor” for purposes of Unemployment Compensation Insurance. Accordingly, The Department presumes that an employment relationship exists between an employer and an individual hired and requires unemployment insurance coverage unless and until the employer is able to demonstrate each and every criteria of the three part so-called “ABC Test.”

The “ABC Test” three-part factors must all be met for an individual to be deemed an independent contractor under Department analysis:

A. The individual has been and will continue to be free from control or direction over the performance of their services, both under contract of service and in fact;

B. Services performed are either outside the usual course of business for which the service is performed, or service is performed outside all places of business of the enterprise for which the service is performed; and,

C. The individual is customarily engaged in an independently established trade, occupation, profession or business.

It is important to note that The Internal Revenue Service (IRS) uses a separate, less comprehensive test to determine if an individual is an employee or an independent contractor; and The Department follows Vermont law which uses the “ABC Test”. Therefore, It is likely that under Vermont law an individual may be considered an employee, whereas under the IRS test, the individual would be considered an individual contractor.

The experienced attorneys at Bergeron, Paradis & Fitzpatrick, LLP, can provide insight and direction into this complicated distinction, and represent your company’s interests if The Department of Labor is investigating your business for missclassified workers.