Whether a worker is an “employee” or an “independent contractor” is critical when it comes to such important issues as pension eligibility, workers' compensation coverage, wage and hour law, and many other matters. In some situations, federal law will govern, but the question is most often resolved by looking to state law. Vermont law has several separate definitions defining who is an employee. It is not enough to assume, for example, that if someone is an independent contractor for federal tax purposes, he or she would be an independent contractor for purposes of unemployment insurance or workers’ compensation insurance. According to the Vermont Department of Labor, employers that are uncertain about whether they have hired an independent contractor can contact the Department for clarification without risk of penalty.
Independent contractors are specifically excluded from coverage under Vermont's occupational health and safety regulations (VT Stat. Tit. 18 Sec. 1416 and VT Stat. Tit. 21 Sec. 203).