If you’re working in Vermont—or running a business that hires workers—you’ve probably come across the terms “employee” and “independent contractor.” But those labels aren’t just paperwork. They affect everything from paychecks and taxes to health benefits and workplace protections.

In Vermont, worker classification isn’t left up to personal interpretation. The state uses what’s known as the ABC Test to draw the line between who qualifies as an employee and who doesn’t. This test plays a major role in determining legal rights, employer responsibilities, and whether someone is eligible for benefits like unemployment insurance or workers’ comp.

Let’s walk through how this test works, why it matters, and what both workers and employers need to keep in mind when questions around classification come up.

Always consult a VT employment law attorney for specific legal guidance.

Understanding the ABC Test

The ABC Test is Vermont’s go-to method for figuring out whether someone is truly an independent contractor. It’s most commonly used when dealing with unemployment insurance claims, and it comes with three specific conditions.

To lawfully classify a worker as an independent contractor in Vermont, the employer has to prove all three of the following:

A: The worker operates independently, without supervision

This means the worker controls their own schedule, methods, and workflow. They’re not told how to get the job done—just what needs doing.

B: The work is not part of the company’s regular business

The task being performed must be outside the usual scope of what the company does. For instance, a plumber hired to fix a broken pipe in an office building is not doing the same work as the company's core team.

C: The worker runs their own business

They need to be actively operating an independent trade or profession. That usually means working for multiple clients, having business cards or a website, or being registered as a business entity.

If any one part of the ABC Test isn’t met, the worker is classified as an employee—not a contractor.

Why This Classification Matters

The difference between being an employee and an independent contractor is more than just semantics. It determines whether you qualify for protections like minimum wage, overtime pay, unemployment benefits, and legal safeguards against discrimination.

If You're an Employee:

You’re entitled to state and federal labor protections. Your employer must pay a portion of your taxes, provide workers’ comp, and follow wage and hour laws.

If You're an Independent Contractor:

You’re running your own show. That means you handle your own taxes, don’t get benefits like paid time off or unemployment insurance, and have fewer legal protections if something goes wrong.

How Vermont Enforces the ABC Test

Vermont takes worker misclassification seriously. The state’s Department of Labor regularly audits employers and investigates claims of misclassification. Since 2020, the Worker Classification Task Force has taken an even closer look at how businesses label their workers.

Even if you sign a contract stating you’re an “independent contractor,” that label doesn’t matter if your actual working relationship doesn’t pass the ABC Test.

Where Misclassification Happens Most

While any business can run into misclassification issues, certain industries tend to see more of it:

• Construction: Subcontractors may be treated as independent contractors, even when they work under direct supervision.
• Transportation and delivery: Gig workers often don’t meet the ABC Test but are still classified as contractors.
• Healthcare: Home health aides and caregivers are sometimes misclassified, especially when working consistent schedules.
• Creative services: Freelancers in design, writing, and tech may be doing work that’s actually part of a company’s core function.

If a worker is following orders, working regular hours, and has no other clients, chances are good they should be considered an employee under Vermont law.

What To Do If You Think You’ve Been Misclassified

If you’re doing the work of an employee but being paid like a contractor, you might be missing out on key protections. The Vermont Department of Labor allows workers to file complaints, and if misclassification is confirmed, you could recover lost wages, benefits, or back taxes.

Employers, on the other hand, should take a proactive approach. Review your current practices, ask questions if you’re unsure, and consult legal guidance when needed. Misclassification can lead to audits, penalties, and legal disputes—none of which are easy or inexpensive to resolve.

Call Brandon J. Broderick For Legal Help

Getting your classification right can make a big difference—whether you’re trying to access benefits or protect your business. At Brandon J. Broderick, Attorney at Law, we’ve worked with both employees and employers in Vermont to help sort out complicated classification issues.

If you’re unsure where you stand or you think your rights have been violated, call us today for a free consultation.