Vermont Termination Laws

October 2nd 2024

When it comes to Vermont termination laws, knowing the rules makes a big difference for both employers and employees. Vermont’s employment termination laws aim to keep the process fair and aligned with legal standards. This guide breaks down the key things to consider, including rights, protections, and what employers can and can’t do when letting someone go in Vermont.

This Guide Covers

Legal Considerations for Termination in Vermont
At-Will Employment in Vermont?
Lawful Termination in Vermont
Legal Protections During Termination in Vermont
Terminated Employee Benefits in Vermont
Layoffs in Vermont
Resignations in Vermont
Legal Cases Related to Wrongful Termination in Vermont

Legal Considerations for Termination in Vermont

When terminating an employee in Vermont, employers need to be mindful of several legal factors to stay compliant with both state and federal laws. Here are the main points to consider:

  • Discrimination Laws: Employers cannot fire employees based on race, color, sex, religion, disability, national origin, sexual orientation, gender identity, ancestry, or age. The Vermont Fair Employment Practices Act prohibits such discriminatory practices. Terminations must rely on valid, non-discriminatory grounds.
  • Retaliation Protection: Terminating employees for exercising legal rights, such as filing a complaint or reporting safety issues is illegal. Both state and federal laws prohibit retaliation against employees who engage in these protected activities.
  • Final Paycheck: Terminated employees in Vermont shall be paid within 72 hours of discharge. This payment should include all hours worked, accrued vacation or PTO, and other earned wages.
  • Notice Requirements: Vermont law does not mandate advance notice for termination, but employers must adhere to contractual obligations or internal policies. Also, federal laws like the Worker Adjustment and Retraining Notification (WARN) Act require notice for mass layoffs or plant closures.
  • Severance Agreements: Vermont law does not require employers to provide severance pay. However, if there is an employment contract or company policy that includes severance, employers must fulfill these terms. These agreements often have confidentiality clauses, non-disparagement conditions, and a release of claims.
  • Recordkeeping: Employers should thoroughly document the termination process, including performance issues, disciplinary records, and termination communications. Proper documentation and recordkeeping are essential for legal compliance and serve as evidence if disputes arise.

At-Will Employment in Vermont

What is At-Will Employment?

Vermont follows the concept of at-will employment, which allows either the employer or the employee to end the employment relationship at any time without needing a specific reason or advance notice. Under this arrangement, an employee can leave whenever they choose, and an employer can terminate employment without a detailed explanation—as long as the reason isn’t illegal, such as discrimination or retaliation.

While at-will employment provides flexibility for both sides, there are important exceptions. These exceptions exist to protect employees from wrongful terminations, and it’s important for both parties to understand their rights.

What are the Exceptions to At-Will Employment in Vermont?

Although at-will employment offers broad flexibility, Vermont has several key exceptions that prevent employers from wrongful or unlawful termination practices.

  • Discriminatory Termination: Employers in Vermont cannot fire an employee based on discrimination against protected characteristics such as race, color, religion, sex, national origin, disability, gender identity, sexual orientation, or age.
  • Implied Contract: Even in the absence of a formal written contract, an implied contract may exist if there are specified terms and conditions in the employee handbook, company policies, or even verbal agreements made by employers.
  • Public Policy Violation: Vermont law prohibits firing someone for reasons that break societal norms or state and federal laws. Examples include dismissing an employee for serving on a jury, voting, refusing to commit illegal acts, or filing a workers’ compensation claim. Also, firing employees who report violations related to the employment of undocumented workers can be considered wrongful termination, as it contradicts federal policy goals.

Employment Under Contract in Vermont

Not all jobs in Vermont are at-will. It’s important to understand the difference between working under an employment contract and being at-will. With at-will employment, either the employer or employee can end the job at any time for most reasons. On the other hand, an employment contract sets specific terms for how and when employment can end, offering more stability.

Most jobs in Vermont are considered at-will unless there is an employment contract in place. A contract can outline a specific employment period or conditions for termination, like misconduct or ongoing poor performance. Employment contracts are enforceable in Vermont, especially when written, as they provide clear expectations and can be used as evidence if there is ever a dispute.

Lawful Termination in Vermont

Legal Grounds for Termination in Vermont

Employers in Vermont must follow both federal and state laws to ensure lawful termination of employment. Valid legal grounds include:

  • Performance Issues: Employers can terminate an employee for failing to meet job performance standards, such as poor work quality, missed deadlines, or not meeting goals. To avoid disputes, they should document these issues and provide clear feedback before proceeding with termination.
  • Misconduct: Employers can fire employees for misconduct if they act in ways that deliberately disregard the company’s interests. Examples include repeated tardiness, rudeness, or insubordination. Misconduct requires a documented warning to make sure the employee is aware of the issue. Serious misconduct involves more severe violations, like theft or creating a hostile work environment.
  • Business Necessity: Employers in Vermont can terminate employees due to business necessity, such as economic downturns, restructuring, or other operational requirements that demand workforce reductions. This type of termination, commonly known as a layoff, is driven by the employer’s financial or operational needs rather than the employee’s performance.

How Do I File a Wrongful Termination Claim in Vermont?

Employees in Vermont should first determine if their termination violated legal protections, such as discrimination, retaliation, or breach of contract. To support their claim, employees should collect all relevant documentation, such as employment contracts and communications.

Individuals filing for discrimination-related wrongful termination can submit their complaint to the Vermont Human Rights Commission (HRC), which handles cases involving discrimination in state employment. For other employment issues, such as wrongful termination or workplace misconduct, complaints can be filed with the Vermont Department of Labor.

Federal claims, such as those involving discrimination, can be submitted to the Equal Employment Opportunity Commission (EEOC). Filing deadlines typically range from 180 to 300 days from the date of termination, depending on the circumstances and state laws.

Legal Protections During Termination in Vermont

State and federal laws provide protections for employees during the termination process. Key protections for Vermont employees include: 

  • Vermont Fair Employment Practices Act: The state Vermont Fair Employment Practices Act (VFEPA) prohibits employment discrimination, meaning an employer cannot terminate an employee based on race, color, religion, national origin, sex, ancestry, place of birth, age, sexual orientation, HIV status, or disability. Termination based on any of these factors is unlawful under VFEPA.
  • Vermont Wage and Hour Laws: When an employee is terminated, Vermont Wage and Hour laws require that they receive any unpaid wages promptly, including payment for accrued vacation time if applicable. Specifically, employees who are discharged must be paid within 72 hours, while those who voluntarily leave should be paid on the next regular payday (or the following Friday if no regular payday exists). These laws ensure that terminated employees receive their due compensation without delay.
  • Vermont Parental and Family Leave Act & Family and Medical Leave Act: The state Vermont Parental and Family Leave Act (VPFLA) and the federal Family and Medical Leave Act (FMLA) protect employees who take qualified family or medical leave from termination. Under both laws, employers cannot retaliate against employees for exercising their rights to take leave. Employers must also reinstate employees to the same or an equivalent position upon their return from leave.
  • Equal Pay Act of 1963: Under the Equal Pay Act, employers cannot terminate an employee for raising concerns or filing a complaint regarding wage discrimination based on sex. Retaliation against employees asserting their rights to equal pay is prohibited.
  • Title VII of the Civil Rights Act: A major federal law protecting employees from discrimination is Title VII of the Civil Rights Act of 1964. According to this law it is unlawful for employers to terminate an employee based on race, color, religion, sex, or national origin. This federal protection extends to all aspects of employment, including termination.
  • Age Discrimination in Employment Act: The Age Discrimination in Employment Act (ADEA) is a federal law that prohibits employers from terminating employees aged 40 or older based on their age. Employers must not use age as a factor in making termination decisions.
  • Americans with Disabilities Act: Also a federal law, the Americans with Disabilities Act (ADA) prohibits employers from terminating employees based on a disability if the employee can perform essential job functions with or without reasonable accommodations. Under the ADA, it is also unlawful to terminate employment due to the employer’s failure to provide reasonable accommodations.
  • Worker Adjustment and Retraining Notification Act: Another federal law that provides key protections is the Worker Adjustment and Retraining Notification (WARN) Act: This law requires employers to give employees advance notice of plant closures or mass layoffs. The purpose of the WARN Act is to provide workers with enough time to seek alternative employment or training before the job loss occurs, minimizing the impact on their livelihood.
  • Vermont Occupational Safety and Health Administration: The Vermont Occupational Safety and Health Administration (VOSHA), under the state’s Department of Labor, enforces safety standards to maintain secure workplaces, in line with the federal Occupational Safety and Health Act (OSHA). Employers cannot terminate employees for reporting safety issues or participating in a VOSHA investigation.  State and federal regulations protect workers from retaliation when they assert their right to a safe work environment.

Explore our comprehensive guide to firing employees in Vermont for further information.

Terminated Employee Benefits in Vermont

Terminated employees in Vermont have access to several benefits based on their employment status and the specifics of their termination:

  • Final Paycheck: Employers must provide a final paycheck to an employee who has been terminated within 72 hours of discharge. If the employee resigns, they receive their final paycheck on the next regular payday.
  • Continuation of Health Coverage: Terminated employees can continue their health insurance under either the Consolidated Omnibus Budget Reconciliation Act (COBRA) or Vermont’s Continuation of Coverage law (mini-COBRA). COBRA applies to employers with 20 or more employees, while Vermont’s mini-COBRA covers smaller employers. Eligible employees need to pay the full premium plus a 2% administrative fee.
  • Unemployment Insurance: Employees who lose their job without fault can apply for unemployment benefits through the Vermont Department of Labor, which offers temporary financial assistance. These benefits provide temporary financial support based on past earnings, requiring active job search and meeting specific eligibility criteria.
  • Severance Pay: Vermont law does not mandate severance pay. However, if an employment contract or company policy provides it, the employer must fulfill this obligation.

Layoffs in Vermont

Layoffs occur when businesses need to downsize due to financial challenges, reorganization, or eliminating specific roles. Unlike discharges, layoffs aren’t related to individual job performance but rather broader company decisions to reduce staffing.

Vermont employers must follow both federal and state requirements when conducting layoffs:

Resignations in Vermont

Resignations occur when employees decide to end their employment. Common reasons include finding a new job, personal motivations, dissatisfaction, or retirement. Vermont law does not require employees to provide notice before resigning. Still, it is standard practice to give notice as a courtesy, especially if outlined in an employment contract or company policy.

Voluntary Resignations

Voluntary resignations happen when employees independently choose to leave their positions. Vermont law recognizes that resignations can be legally binding, even without written confirmation. Employers can accept verbal resignations if the employee’s words and actions clearly indicate an intent to resign. However, the resignation is only binding if both parties agree on the conditions.

Involuntary Resignations

Involuntary resignations, often called “constructive discharge” occur when an employee is forced to resign due to intolerable work conditions. In Vermont, an involuntary resignation may be considered wrongful termination if it results from deliberately created intolerable conditions intended to force the employee out. Employers may face legal consequences if such actions are proven.

Legal Cases Related to Wrongful Termination in Vermont

1. Burlington Electric Settles Wrongful Termination Lawsuit for $200,000

The case Crowley v. Burlington Electric Department perfectly demonstrates wrongful termination and discrimination in Vermont. 

Patricia Crowley, a former executive assistant at Burlington Electric Department (BED), sued BED and its General Manager, Barbara Grimes. Patricia Crowley alleged mistreatment, including being mocked for her disability and being fired while on medical leave. She also cited discrimination, breach of contract, and violations of the Vermont Fair Employment Practices Act (VFEPA) and the common benefits clause of the Vermont Constitution. 

The case concluded through mediation, leading to Crowley receiving a $200,000 settlement. Although the city and Barbara Grimes denied any wrongdoing, they settled to resolve the matter. The lawsuit was subsequently dismissed.

Key lessons learned from the case:

  • Employers must not discriminate or harass employees based on disabilities, as this violates state and federal laws.
  • Terminating an employee on medical leave without due process violates both the Family and Medical Leave Act (FMLA) and the Vermont Fair Employment Practices Act (VFEPA), leading to legal liability.
  • Employers must ensure a safe, non-hostile work environment to avoid wrongful termination claims linked to mistreatment or lack of support for employees with health issues.

2. Rutland City Settles Constructive Discharge Lawsuit for $975,000

The case Andrew Todd v. Rutland City exemplifies constructive discharge and racial discrimination in Vermont.

Andrew Todd, a former police officer with the Rutland Police Department, brought a lawsuit against the city of Rutland, alleging racial discrimination and a hostile work environment that eventually forced him out of his job. Andrew Todd, who is African American, reported instances of racial profiling and cover-ups within the department, which led to retaliation, including racial slurs and labeling him as a troublemaker. Due to the intolerable work conditions, Todd resigned, which is considered constructive discharge.

The lawsuit concluded with Rutland City agreeing to a $975,000 settlement, one of the largest of its kind in Vermont. The settlement aimed to acknowledge the issues raised and bring about positive changes in the department.

Key lessons learned from the case:

  • Retaliating against employees who report discrimination or misconduct violates both state and federal employment laws, leading to severe legal consequences.
  • Employers must address complaints of racial discrimination adequately to prevent creating a hostile work environment that may lead to constructive discharge claims.

Learn more about Vermont Labor Laws through our detailed guide.

Important Cautionary Note

This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.

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