Hire Employees

Hiring the first employee for your business is a big step and with it come some new complexities. A business with employees must follow labor regulations and remit payroll taxes at the local, state, and federal levels.

Hiring Resources

  • Vermont JobLink is a resource provided by the Vermont Department of Labor that allows business owners to register as employer and search resumes by geographic area.
  • JobsInVT is a third-party site that allows Vermont employers to search resumes and post jobs.

Tax and Reporting Requirements

As an employer, you are required to obtain an Employer Identification Number (EIN), withhold taxes, verify employee eligibility before hiring and register them with the state after they start working.

Employer Identification Number (EIN)

Prior to hiring your first employee, you need obtain an EIN by registering your business with the Internal Revenue Service (IRS). The EIN is required for reporting taxes and other information to the IRS and state agencies.

You may apply for an EIN from the IRS either online, by fax, or by mail. To register online, use the IRS EIN Assistant. For fax or mail, see the IRS instructions for steps to apply.

Set Up a Payroll Withholding

The IRS requires that businesses keep at least four years of employment tax records. Additionally, well-kept records also help you monitor your business, prepare financial statements, correctly categorize receipts, track deductible expenses, and prepare your tax filings with supporting evidence.

Federal Income Tax Withholding

All employees must furnish their employer with a signed W-4 withholding exemption form so that the correct amounts can be withheld from their paychecks. On the form, employees will indicated how many allowances they are claiming for tax purposes. If an employee's allowances change, they should submit a new W-4 at the start of the next tax year. For further information, consult the IRS Employer's Tax Guide or visit irs.gov.

Verify Employee Eligibility

You are required by federal law to verify that all an employees are eligible to work in the United States. Employers must complete Form I-9, employment eligibility verification within 3 days of hire to confirm the employee citizenship or eligibility to work in the U.S. To verify citizenship, employers may only ask for the documentation listed on the I-9 form.

Employers must retain Form I-9 on file for each of their employees for three years after the date of hire or one year after employment is terminated, whichever is later.

Employers can register with E-Verify to electronically verify the employment eligibility of newly hired employees using information from an employees completed Form I-9.

Report New Hires to Vermont Department of Labor

New hire reporting is mandatory in Vermont, and can be done online.

Reports of a new hire must be filed within 10 days of the first day work is performed, or was previously employed by the employer, but has been separated from such prior employment for at least 60 consecutive days. For further information, see New Hire Reporting Requirements (PDF).

File Payroll Taxes

Employers must file annual reports of wages paid to and taxes withheld for each employee on a federal wage and tax statement. File this report using Form W-2, wage and tax statement. It must be completed for each employee.

By the last day of February, employers must report wages and taxes for employees for the previous calendar year by sending Copy A of their employees W-2 forms to the Social Security Administration. Employers should also provide copies of W-2 forms to employees by January 31 of the year following the reporting period. For further information, visit ssa.gov/employer.

Labor Requirements

Employers in Vermont are required to treat their workers fairly, provide benefits, maintain a safe workplace, and contribute to unemployment insurance. These regulations are in place to protect workers and potential hires.

Off Limits Questions

for both written and in person employment applications, it is unlawful to inquire about an applicant's age, sexual orientation, marital status, religious affiliation or race. Further, questions pertaining to physical, emotional or mental handicaps can only be asked of applicants who will need special accommodations for performing a specific job. For further information, visit the US Department of Labor and the Equal Employment Opportunity Commission.

Employee Benefits

If you have established employee benefit programs like health insurance or a 401(k) plan for a business, you will need formal a enrollment procedure so that employees can enroll, name their dependents, and select options.

Correctly Classify Employees

It is important to understand and adhere to the labor laws for different types of workers: employees, independent contractors, and volunteers. Sometimes employers improperly classify employees as independent contractors which have different rules on payroll taxes, minimum wage, overtime, and other labor laws. Make sure you follow the Vermont Department of Labor Guidelines.

Workers' Compensation Insurance

If your business has employees, you are required to carry workers' compensation insurance to protect any employees who might suffer on-the-job injuries. Vermont employers are required by law to have workers' compensation insurance, even if they only have one employee. If your employees are hurt or get sick because of work, you are required to pay for workers' compensation benefits. Workers' compensation insurance provides six basic benefits: medical care, temporary disability benefits, permanent disability benefits, supplemental job displacement benefits or vocational rehabilitation, and death benefits. For further information, see the Worker's Compensation Insurance Fact Sheet issued by the Vermont Department of Labor.

You may obtain workers' compensation insurance through a broker or directly with an insurance carrier. For further information consult the Vermont Business Owner's Guide to Workers' Compensation Insurance.

Unemployment Insurance (UI)

Once your business hires employees, you must pay Vermont unemployment insurance taxes by registering with the Vermont Department of Labor. When taxes are due, your payments will be added to Vermont's unemployment compensation fund, which provides short-term relief to workers who lose their jobs. For further information, see UI Tax Rates.

Maintain a Safe Workplace

Employers must comply with the requirements mandated by the Occupational Safety and Health Act (OSHA), which includes providing a workplace free of hazards, training employees to perform their jobs safely, alerting government administrators about serious workplace accidents, and maintaining detailed safety records.

Post Required Notices

Employers are required by law to display certain posters in the workplace that inform employees of both their rights and employer responsibilities. The Vermont Department of labor maintains a complete list of all mandatory posters.