Vermont — Wage & Hour

Vermont's minimum wage is $14.42 per hour, effective January 1, 2026. The rate adjusts annually each January 1 by the lesser of 5% or the percentage increase in the Consumer Price Index (CPI-U, U.S. city average, not seasonally adjusted) for the 12 months preceding the previous September 1, but may not decrease.

Source: 21 V.S.A. § 384(a)(1); VT Dept. of Labor press release (Oct. 6, 2025)

Vermont requires employers to pay employees at least 1.5× the regular wage rate for work in excess of 40 hours during a workweek. The statute does not require daily overtime or double-time premiums. Vermont's overtime rule, codified at 21 V.S.A. § 384(b), establishes the general requirement but carves out eight categories of employees to whom the state overtime mandate does not apply. These exemptions are in addition to—and independent from—the federal Fair Labor Standards Act white-collar exemptions (executive, administrative, professional, computer, and outside sales employees under 29 C.F.R. Part 541), which continue to apply under both state and federal law.

State-law overtime exemptions

Under 21 V.S.A. § 384(b), the following employees are exempt from Vermont's overtime requirement:

1. Retail or service establishments (subsection (b)(1)). Employees of any retail or service establishment, defined as an establishment where 75% or more of annual sales volume (goods or services, or both) is not for resale and is recognized as retail sales or services in the particular industry. This is a strict percentage test; employers whose sales mix does not meet the 75% threshold cannot claim the exemption.

1. Amusement or recreational establishments (subsection (b)(2)). Employees of an amusement or recreational establishment, if the establishment either (A) does not operate for more than seven months in any calendar year, or (B) during the preceding calendar year its average receipts for any six months were not more than one-third of its average receipts for the other six months.

1. Hotels, motels, and restaurants (subsection (b)(3)). Employees of an establishment that is a hotel, motel, or restaurant. This exemption is categorical—it contains no sales-mix test, no seasonal restriction, and no employer-election requirement. All employees of a hotel, motel, or restaurant fall within this exemption, regardless of job title, hours worked, or whether the establishment also qualifies as a retail or service establishment under subsection (b)(1). The statute does not define "hotel," "motel," or "restaurant."

1. Hospitals and healthcare facilities (subsection (b)(4)). Employees of hospitals, public health centers, nursing homes, maternity homes, therapeutic community residences, and residential care homes (as those terms are defined in Title 18), provided the employer satisfies three conditions: (A) the employer pays the employee on a biweekly basis; (B) the employer files an election to be governed by this section with the Commissioner of Labor; and (C) the employee receives not less than 1.5× the regular wage rate for hours worked in excess of eight hours in any workday or 80 hours in a 14-day period (mirroring the FLSA's 8-and-80 rule for hospital employees under 29 U.S.C. § 207(j)). This is a conditional exemption; failure to meet all three prongs means the general 40-hour overtime rule applies.

1. Transportation employees (subsection (b)(5)). Employees of a business engaged in the transportation of persons or property to whom the overtime provisions of the federal Fair Labor Standards Act do not apply. This exemption is keyed to FLSA coverage: if the employee is exempt from FLSA overtime under 29 U.S.C. § 213(b)(1) (motor carrier exemption), § 213(b)(3) (rail/air carrier), or another federal transportation exclusion, Vermont overtime does not apply either. The statute explicitly provides that subsection (b) shall apply to all other employees of such businesses—non-driver office staff, mechanics working on vehicles used in interstate commerce, and other employees who do not fall within the FLSA transportation exemptions remain subject to Vermont's 40-hour rule.

1. Political subdivisions (subsection (b)(6)). Employees of a political subdivision of Vermont (municipalities, counties, school districts, and other local government entities).

1. State employees covered by FLSA (subsection (b)(7)). State employees who are covered by the federal Fair Labor Standards Act. This exemption removes the state overtime rule for state workers already subject to federal overtime under FLSA § 207(a); the practical effect is that Vermont state employees receive overtime under federal law rather than duplicative state-law obligation.

1. Vermont General Assembly employees (subsection (b)(8)). Permanent employees of the Vermont General Assembly.

Interaction with federal overtime

Employees who are exempt from Vermont's overtime requirement under 21 V.S.A. § 384(b) may still be entitled to overtime under the federal Fair Labor Standards Act. The FLSA requires overtime at 1.5× the regular rate for all hours worked over 40 in a workweek for non-exempt employees, and the FLSA exemptions are narrower than Vermont's in several respects. For example, a server employed by a Vermont restaurant is exempt from state overtime under subsection (b)(3) but is not exempt under the FLSA unless the employee also meets the FLSA's executive, administrative, or professional exemption tests (duties + salary basis under 29 C.F.R. Part 541). Because most restaurant, hotel, and retail employees do not meet those tests, they remain entitled to federal overtime even though Vermont law does not require it. Employers must comply with the FLSA overtime mandate for those employees.

Source: 21 V.S.A. § 384(b) Source: VT Dept. of Labor, A Summary of Vermont Wage and Hour Laws

Vermont imposes different final-paycheck deadlines depending on whether the employee was discharged or quit. Under 21 V.S.A. § 342(b)(2), when an employer discharges an employee, the employer must pay all wages owed within 72 hours of the discharge. This tight window runs from the moment of termination, not from the next scheduled payday, and applies regardless of the reason for discharge (for cause, layoff, reduction in force, or any other involuntary separation initiated by the employer).

For voluntary separations—when the employee quits or resigns—the deadline is more flexible. Under 21 V.S.A. § 342(b)(1), an employee who voluntarily leaves employment must be paid on the next regularly scheduled payday. If the employer has no established regular payday, payment is due on the following Friday after the separation. This gives employers time to process final payroll in the normal cycle, recognizing that the employee controlled the timing of departure.

The statute draws no distinction between exempt and non-exempt employees; the 72-hour / next-payday rules apply to all employment relationships covered by Vermont wage law. Final wages include all earned but unpaid regular pay, overtime (if the employee worked over 40 hours in any workweek during the final pay period), and any accrued vacation or paid time off that the employer's policy treats as earned wages. Vermont law does not mandate vacation or PTO payout on termination, but if the employer's written policy or handbook characterizes unused PTO as earned compensation, it becomes wages subject to the final-paycheck timing rules.

Consequences of late payment

Employers who miss the statutory deadline face enforcement by the Vermont Department of Labor under 21 V.S.A. § 342a. The Department may investigate wage complaints filed by employees and order the employer to pay the owed wages plus interest and, in cases of willful violation, liquidated damages that can double the amount due. Employers who violate section 342 are also subject to a fine of up to $5,000 under 21 V.S.A. § 345.

Method of payment

Vermont does not prescribe a specific delivery method for the final paycheck. Employers may pay via direct deposit (if the employee previously authorized it for regular wages), paper check delivered in person or mailed, or payroll card, provided the method complies with section 342(c). Because the 72-hour clock for discharge runs continuously, employers who mail the final check should allow time for delivery or hand-deliver to ensure compliance. For voluntary quits on a regular payday schedule, mailing to the employee's last known address by the payday typically satisfies the statute, but the employer bears the risk if the check is delayed.

Source: 21 V.S.A. § 342 Source: 21 V.S.A. § 342a Source: 21 V.S.A. § 345 Source: VT Dept. of Labor, Wage and Hour Laws Summary

Vermont permits employers in the hotel, motel, tourist place, and restaurant industry to pay tipped employees a reduced basic wage rate of $7.21 per hour, effective January 1, 2026. This tipped minimum wage is exactly one-half (50%) of the standard minimum wage ($14.42) and adjusts automatically each January 1 by the same formula—the lesser of 5% or the percentage increase in the Consumer Price Index (CPI-U, U.S. city average, not seasonally adjusted) for the 12 months preceding the previous September 1.

Eligibility — industry and tip threshold

The tipped wage applies only to employees who meet two requirements under 21 V.S.A. § 384(a)(2):

1. Industry restriction. The employee must work for an employer in the hotel, motel, tourist place, or restaurant industry. Employees in other industries must be paid the full minimum wage, even if they receive tips.

1. Tip threshold. The employee must "customarily and regularly receive more than $120.00 per month in tips for direct and personal customer service." An employee who does not meet this $120-per-month threshold must be paid at least the full minimum wage of $14.42 per hour.

Tip-credit mechanics and employer "make-up" obligation

Vermont's tipped-wage structure is a tip-credit system. The employer pays the basic wage rate ($7.21) as a direct cash wage and takes a "tip credit" of up to $7.21 per hour, representing the difference between the basic wage and the full minimum wage. The employee's tips are credited toward the employer's minimum-wage obligation, but the employee must ultimately receive total compensation (cash wage plus tips) of at least $14.42 per hour for every hour worked.

If an employee's tips in any workweek, when added to the $7.21 cash wage, do not bring the employee's average hourly pay to at least $14.42, the employer must pay the difference. This "make-up" obligation is calculated on a workweek basis, not averaged over longer periods. Vermont Department of Labor guidance makes clear that employers cannot use tip surplus from one week to offset a shortfall in another week. The make-up calculation ensures that the employee receives at least the full minimum wage for every hour worked during that workweek.

Weekly tip reporting

Vermont regulations require tipped employees to submit a signed report to the employer on a weekly basis indicating the total amount of tips received and retained during the previous seven-day period. Employers must preserve these reports for three years.

Tip ownership and pooling

Under 21 V.S.A. § 384(e), tips are the sole property of employees. Employers may not retain any portion of employee tips, and may not require employees to share tips with managers or supervisors. Vermont law permits tip pooling or sharing arrangements among employees who customarily and regularly receive tips (e.g., servers, bartenders, bussers, hosts), provided managers and supervisors are excluded.

Credit card tips and processing fees

When patrons pay tips by credit card, federal rules permit employers to deduct the credit card processing fee from the employee's tips, provided the employee still receives at least the full minimum wage ($14.42 per hour) after the processing fee is deducted. Vermont Department of Labor guidance advises employers who use this practice to notify employees, either through an employee handbook or a written policy, that credit card processing fees will be deducted from credit card tips.

Source: 21 V.S.A. § 384 Source: VT Dept. of Labor press release (Oct. 6, 2025) Source: VT Dept. of Labor, Information on Tipped and Service Employees

Vermont requires employers to pay wages weekly as the default rule, but permits biweekly or semi-monthly payment after the employer gives notice to employees. Under 21 V.S.A. § 342(a)(1), any employer doing business in Vermont must pay each employee each week, in lawful money or checks, the wages earned by the employee to a day not more than six days prior to the date of payment. This establishes both the timing (weekly) and the maximum lag period (six days) between the end of the work period and payday.

Biweekly and semi-monthly payment — notice requirement

Employers who wish to pay on a biweekly (every two weeks) or semi-monthly (twice per month) basis may do so, but only after satisfying a notice requirement. Under 21 V.S.A. § 342(a)(2)(A), the employer must give "notice to each employee" before switching from weekly to biweekly or semi-monthly pay. The statute does not require that the notice be in writing, does not specify the form of the notice, does not require signed acknowledgment or posting, and does not prescribe a minimum advance notice period. The text was amended in 2023 (Act 85, Adj. Sess., § 79, effective July 1, 2024) to remove the word "written" that appeared in earlier versions of the statute; the current requirement is simply "notice to each employee."

Once notice is given, the employer may pay biweekly or semi-monthly, provided wages are paid for work performed "to a day not more than six days prior to the date of payment." The six-day look-back rule mirrors the weekly-payment rule: regardless of pay frequency, employees must be paid within six days of the end of the period for which wages are calculated. For example, if an employer pays biweekly on Fridays, the paycheck must cover wages earned through at least the prior Saturday (six days before Friday). Employers may not extend the lag period beyond six days simply because they are paying less frequently.

Collective bargaining agreement exception

If a collective bargaining agreement provides for a different pay schedule, the employer may pay employees covered by that agreement on the schedule specified in the CBA, and the look-back period may extend to 13 days (rather than six) prior to the date of payment under 21 V.S.A. § 342(a)(2)(B). This exception applies only to employees who are parties to the collective bargaining agreement; non-union employees at the same employer remain subject to the weekly-payment default or the biweekly/semi-monthly-with-notice rule.

What "notice" means in practice

Because the statute does not define "notice" or prescribe its form, and the Vermont Department of Labor has not published interpretive guidance specifying whether notice must be written, delivered individually, or provided a minimum number of days in advance of the frequency change, employers should exercise care in how they provide it. The statute's text requires notice "to each employee," which suggests individual notice (or at least notice directed to each affected employee, such as a payroll announcement or a notice included with a paycheck) rather than a general workplace posting. Employers should document the notice—such as a dated memo to employees, an email, or a signed acknowledgment form—to demonstrate compliance in the event of a wage-payment dispute or Department of Labor investigation. Even though the statute does not require written notice, documentation is the employer's only practical means of proving that notice was given.

Interaction with 21 V.S.A. § 343 — employer cannot condition employment on non-weekly pay

Under 21 V.S.A. § 343(b), an employer may not require an employee to agree, as a condition of employment, to accept wages at any period other than the statutory weekly default. This provision prevents employers from using the biweekly/semi-monthly option as a take-it-or-leave-it term imposed on applicants or new hires. The employer may offer biweekly or semi-monthly pay and give the required notice under section 342(a)(2)(A), but the employee retains the right to insist on weekly payment, and the employer cannot make acceptance of a less-frequent pay schedule a hiring or continued-employment requirement.

School-district employees — elective withholding

Vermont permits school-district and supervisory-union employees to elect in writing to have a set amount or percentage of after-tax wages withheld by the district in a district-held bank account each pay period, under 21 V.S.A. § 342(a)(3). This is a voluntary savings mechanism; it does not alter the employer's obligation to pay wages on the schedule required by subsections (a)(1) or (a)(2).

Enforcement and remedies

Employers who violate section 342 by failing to pay wages on the required schedule face civil liability under 21 V.S.A. § 344, which provides that the employer shall forfeit to the employee twice the value of the unpaid or improperly paid wages, recoverable in a civil action, plus costs and reasonable attorney's fees. The Vermont Department of Labor may also investigate wage-payment complaints under 21 V.S.A. § 342a, and the employer is subject to a fine of up to $5,000 under 21 V.S.A. § 345.

Source: 21 V.S.A. § 342 Source: 21 V.S.A. § 343 Source: 21 V.S.A. § 344 Source: 21 V.S.A. § 345

Vermont's Earned Sick Time Act, codified at 21 V.S.A. §§ 481–486, requires employers to provide eligible employees with earned sick leave. The law took effect January 1, 2017, for employers with more than five employees, and January 1, 2018, for employers with five or fewer employees, under Act 69 of the 2016 General Assembly (Adj. Sess.).

Accrual rate

Under 21 V.S.A. § 482(a), an employee accrues earned sick time at a rate of not less than one hour of earned sick time for every 52 hours worked. Accrual applies to all hours worked, including overtime hours. A full-time employee working 2,080 hours per year accrues exactly 40 hours of earned sick time annually under this formula.

Employers have two compliance pathways under 21 V.S.A. § 484(a): they may track accrual as employees work (the 1-per-52 formula), or they may front-load the full 40 hours at the beginning of each annual period and permit the employee to use it at any time during that period. Employers who front-load are not required to carry over unused time to the next annual period under § 484(a)(2).

Annual accrual and usage cap

Employers may limit the amount of earned sick time accrued to a maximum of 40 hours in a 12-month period under 21 V.S.A. § 482(c)(1). Separately, employers may limit the amount an employee may use to no more than 40 hours in a 12-month period under 21 V.S.A. § 483(c). These are independent caps. Even though unused earned sick time carries over to the next annual period under § 483(d)(1), the employer may enforce the 40-hour usage cap per period, meaning an employee cannot use more than 40 hours of earned sick time during any single 12-month annual period regardless of the total accrued balance.

Employer size threshold — paid vs. unpaid sick time

All Vermont employers with at least one employee must provide earned sick leave to employees who meet the statutory definition (averaging no less than 18 hours per week during a year under 21 V.S.A. § 481(5)). However, whether the leave is paid or unpaid depends on employer size. The staggered effective dates enacted by Act 69 of the 2016 General Assembly establish the distinction: employers with more than five employees became subject to the Act's requirements—including the compensation requirement under 21 V.S.A. § 482(d)(1)—on January 1, 2017, meaning they must provide paid earned sick time. Employers with five or fewer employees became subject to the Act on January 1, 2018. Vermont Department of Labor guidance and the Vermont Earned Sick Time FAQ state that employers with six or more employees must provide paid sick time, while employers with one to five employees must provide unpaid sick time on the same accrual schedule, though the statute itself does not explicitly distinguish paid vs. unpaid obligations by size in the text of §§ 481–486.

The employee count is based on the number of individuals employed for an average of no less than 18 hours per week during a year, not full-time equivalents. To determine whether an employee has worked an average of 18 hours per week, employers divide the number of hours worked by the employee in the last completed calendar year by 52, under Vermont Department of Labor Rule 45.0000, Section 3(7).

Even when the leave is unpaid (for employers with 1–5 employees), the job-protection and anti-retaliation provisions of the Act apply. Under 21 V.S.A. § 485a (incorporated by reference in the Vermont Department of Labor enforcement framework), an employer may not discharge, discipline, threaten, or otherwise retaliate against an employee for using earned sick time or cooperating in an investigation. Under 21 V.S.A. § 483(g), the employer may not require the employee to find a replacement as a precondition of using leave.

One-year waiting period for newly hired employees

Under 21 V.S.A. § 482(b), employers may require a waiting period for newly hired employees of up to one year. During this waiting period, the employee accrues earned sick time pursuant to the 1-per-52 formula but is not permitted to use the accrued time until after completing the waiting period. This means a new hire begins accruing sick time on the first day of work, but the employer may prohibit use of that accrued time for up to 12 months. Once the waiting period ends, the employee may use the accrued balance.

The waiting period is optional; employers may permit immediate use if they choose. The one-year waiting period applies only to newly hired employees. Existing employees as of the Act's effective date (January 1, 2017, or January 1, 2018, for small employers) were permitted a one-time waiting period under Act 69, Section 8(b), but that transition provision expired December 31, 2017 (or December 31, 2018, for small employers).

Employee eligibility and primary place of work

The Act applies to employees whose primary place of work is in Vermont, regardless of the employer's principal location, under Vermont Department of Labor Rule 45.0000, Section 4(a). If the employee's primary place of work is in Vermont, all hours the employee works—including hours worked outside Vermont—count toward the accrual of earned sick time under Section 4(b). An employee who is permanently transferred to another state no longer accrues earned sick time under Vermont law but may use any sick time already accrued under Section 4(c).

To qualify as an "employee" under 21 V.S.A. § 481(5), the individual must work for an average of no less than 18 hours per week during a year. The statute excludes federal employees; certain state employees exempt or excluded from the state classified service under 3 V.S.A. § 311; per diem or intermittent employees of health care facilities as defined in 18 V.S.A. § 9432(8) or facilities as defined in 33 V.S.A. § 7102(2); certain substitute educators; and certain other categories enumerated in § 481(5).

New employer exemption

Under 21 V.S.A. § 486 and Vermont Department of Labor Rule 45.0000, Section 15(a), new employers are exempt from the Act for a period of one year after the employer hires its first employee. During that first year, the new employer has no obligation to accrue or provide earned sick time. After the one-year exemption expires, the employer must begin complying with the Act's requirements.

Source: 21 V.S.A. § 481 Source: 21 V.S.A. § 482 Source: 21 V.S.A. § 483 Source: 21 V.S.A. § 484 Source: 21 V.S.A. § 486 Source: VT Dept. of Labor, Earned Sick Time Rules (Rule 45.0000)

Vermont law enumerates five specific categories of purposes for which an employee may use earned sick time accrued under 21 V.S.A. § 482. Under 21 V.S.A. § 483(a), an employee may use earned sick time for any of the following reasons:

1. Employee's own illness, injury, or health condition

The employee may use earned sick time for the employee's own illness, injury, or health condition, including the need for medical diagnosis, care, treatment, or preventive medical care.

2. Employee's own pregnancy-related health matters

The employee may use earned sick time for the employee's own pregnancy or health condition related to pregnancy.

3. Care for a sick or injured family member

The employee may use earned sick time to care for a sick or injured parent, grandparent, spouse, child, brother, sister, parent-in-law, grandchild, or foster child. This includes helping that individual obtain diagnostic, preventive, routine, or therapeutic health treatment. Employees may also use sick time to accompany the employee's parent, grandparent, spouse, or parent-in-law to an appointment related to that individual's long-term care.

4. Assistance for family member who is a victim of domestic violence, sexual assault, or stalking

The employee may use earned sick time to arrange for social or legal services or to obtain medical care or counseling for the employee or for the employee's parent, grandparent, spouse, child, brother, sister, parent-in-law, grandchild, or foster child, who is a victim of domestic violence, sexual assault, or stalking. The employee may also use earned sick time for relocation purposes as the result of domestic violence, sexual assault, or stalking.

5. Specific health-related needs arising from the employee being a victim of domestic violence, sexual assault, or stalking

The employee may use earned sick time to arrange for the employee's own social or legal services, to obtain medical care, or to obtain counseling arising from domestic violence, sexual assault, or stalking of which the employee is a victim.

Covered family members

For purposes of subdivisions (3) and (4) above, "family member" is defined to include parent, grandparent, spouse, child (including foster child, stepchild, legal ward, or a child for whom the employee has assumed parental responsibilities), brother, sister, parent-in-law, and grandchild. This definition is narrower than the family-member definition under Vermont's Parental and Family Leave Act (21 V.S.A. § 472), which covers additional relationships.

Employer may not restrict uses

An employer may not limit the purposes for which an employee uses earned sick time to a subset of the five statutory categories. If an employee's use falls within any of subdivisions (a)(1)–(5), the employer must permit the use, subject to the employer's permissible caps on usage (40 hours per 12-month period under 21 V.S.A. § 483(c)) and any applicable waiting period for newly hired employees (up to one year under 21 V.S.A. § 482(b)).

Notice and documentation

Employers may require employees to provide advance notice of the need for earned sick time for foreseeable uses (such as scheduled medical appointments) and notice "as soon as practicable" for unforeseeable uses (such as sudden illness). For absences of three or more consecutive days, employers may require reasonable documentation—such as a note from a healthcare provider—but may not require disclosure of specific health information under Vermont Department of Labor Rule 45.0000, Section 9.

No replacement-finding requirement

Under 21 V.S.A. § 483(g), an employer may not require an employee to find a replacement for absences, including absences for professional diagnostic, preventive, routine, or therapeutic health care.

Increments of use

If an employee's absence is shorter than a normal workday, the employee must use earned sick time in the smallest time increments that the employer's payroll system uses to account for other absences or that the employer's paid time off policy permits, under 21 V.S.A. § 483(b). Nothing in the statute requires an employer to permit an employee to use earned sick time in increments shorter than one hour.

Interaction with Vermont Parental and Family Leave Act

An employee may choose to use earned sick time to receive pay when taking leave under the Vermont Parental and Family Leave Act (21 V.S.A. §§ 470–476) that would otherwise be unpaid, under Vermont Department of Labor Rule 45.0000, Section 2(b). The two forms of leave may run concurrently.

Source: 21 V.S.A. § 483 Source: VT Dept. of Labor, Earned Sick Time Rules (Rule 45.0000)

Vermont law requires that unused earned sick time carry over from one annual period to the next, subject to two statutory exceptions and an important usage limitation. Under 21 V.S.A. § 483(d)(1), earned sick time that remains unused at the end of an annual period shall be carried over to the next annual period and the employee shall continue to accrue earned sick time at the statutory rate (one hour per 52 hours worked under section 482). This carryover is mandatory unless the employer qualifies for one of the two exceptions below.

No statutory cap on total accrued hours — but annual usage may be capped at 40 hours

Vermont law does not impose a cap on the total number of hours an employee may bank through year-to-year carryover. Section 483(d)(1) requires carryover of all unused hours. An employee who accrues 40 hours in year one, uses 10 hours, and carries over 30 hours to year two will continue accruing in year two (up to an additional 40 hours under the accrual cap in 21 V.S.A. § 482(c)(1)), for a cumulative banked balance that can exceed 40 hours. That balance carries forward each year under the general carryover rule.

However, 21 V.S.A. § 483(d)(1) states that "nothing in this subdivision shall be construed to permit an employee to use more earned sick time during an annual period than any limit on the use of earned sick time that is established by the employee's employer pursuant to subsection (c) of this section." Under subsection (c), employers may limit the amount an employee may use in any 12-month period to no more than 40 hours (effective after December 31, 2018; the cap was 24 hours from January 1, 2017, to December 31, 2018). This means an employee with a banked balance of 70 hours may be restricted by the employer to using only 40 hours in any given 12-month period, even though the full 70-hour balance remains accrued and carries forward.

The statute authorizes employers to impose this 40-hour annual usage cap but does not require it. Employers may permit employees to use the full banked balance if they choose.

Exception 1: Employer pays out unused sick time at year-end

Under 21 V.S.A. § 483(d)(2), if an employer, at the employer's discretion, pays an employee for unused earned sick time at the end of an annual period, then the amount for which the employee was compensated does not carry over to the next annual period. This payout is optional; the statute does not require employers to pay out unused sick time at year-end or at separation (21 V.S.A. § 483(e) provides that upon separation from employment, an employee is not entitled to payment for unused sick time unless the employer agrees). But if the employer chooses to pay out unused hours at the end of an annual period, those hours do not carry forward and the employee begins the next annual period with a zero balance.

Exception 2: Employer front-loads the full annual amount

Under 21 V.S.A. § 484(a)(2), an employer satisfies the Act's requirements if the employer offers a paid time off policy or collective bargaining agreement that provides the employee with at least the full amount of paid time off required under sections 482 and 483 at the beginning of each annual period, and the employee may use it at any time during the annual period for the reasons set forth in section 483(a) (the five statutory permitted uses). If the employer front-loads the full amount, "the paid time off shall not carry over from one annual period to the next as provided in subdivision 483(d)(1) of this subchapter."

This exception applies only if (1) the employer provides the full annual amount at the beginning of the period, and (2) the employee may use it at any time during the period for the statutory purposes. The statute does not define "full amount" or "beginning of each annual period" in further detail; employers who provide a pro-rated amount for mid-year hires or partial grants should confirm compliance with the Vermont Department of Labor.

Carryover and the one-year waiting period for newly hired employees

Employers may impose a waiting period for newly hired employees of up to one year under 21 V.S.A. § 482(b). During the waiting period, the employee accrues sick time at the 1-per-52 rate but may not use it until the waiting period ends. Unused sick time accrued during the waiting period is subject to the carryover requirement under section 483(d)(1). If the waiting period ends mid-way through the employer's annual period (for example, a hire on July 1 with a one-year waiting period ending June 30 of the following year, in an employer with a January 1–December 31 annual period), the employee's accrued balance carries over to the next annual period.

The statute does not address whether an employer who front-loads under section 484(a)(2) may impose a waiting period on newly hired employees in the year the sick time is front-loaded. Section 484(a)(2) requires that the employee "may use it at any time during the annual period," which appears inconsistent with a waiting period that prohibits use. Employers who front-load and wish to impose waiting periods for new hires should consult the Vermont Department of Labor or structure the plan to provide a partial or pro-rated grant in the hire year and the full front-load in subsequent years.

Rehire within 12 months — discharge vs. voluntary separation

Under 21 V.S.A. § 483(f)(1), an employee who is discharged by the employer and subsequently rehired within 12 months is not required to complete a new waiting period and may immediately resume accruing and using earned sick time. However, the employee is not entitled to retain any earned sick time that accrued before the discharge unless the employer agrees. This means the rehired employee starts with a zero balance (no carryover from the prior employment period) but may immediately accrue and use new sick time without a waiting period.

Under subsection (f)(2), an employee who voluntarily separates and is rehired within 12 months is not entitled to accrue and use earned sick time without a waiting period unless the employer agrees. The employer may impose a new waiting period of up to one year under section 482(b). The statute does not address whether the voluntarily separated and rehired employee retains the prior accrued balance; the statute is silent, and employers should confirm their obligations with the Department of Labor if this situation arises.

No payout required on separation

Under 21 V.S.A. § 483(e), upon separation from employment, an employee is not entitled to payment for unused earned sick time unless the employer agrees. Carryover applies only to employees who remain employed across annual periods.

Source: 21 V.S.A. § 483(d) Source: 21 V.S.A. § 483(c) Source: 21 V.S.A. § 483(e) Source: 21 V.S.A. § 483(f) Source: 21 V.S.A. § 484(a) Source: 21 V.S.A. § 482(b) Source: 21 V.S.A. § 482(c)