The Vermont Statutes Online

Title 21: Labor

Chapter 012: Employee Leasing Companies

• § 1031. Definitions

  As used in this chapter:

  (1) “Applicant” means a person applying for a license or for a renewal of a license under this chapter.

  (2) “Commissioner” means the Commissioner of Labor or the Commissioner’s designee.

  (3) “Client company” means a person who enters into an agreement with an employee leasing company to lease any or all of its regular employees.

  (4) “Employee leasing agreement” means an agreement, executed between an employee leasing company and a client company, pursuant to which an employee leasing company provides one or more individuals to perform services for a client company on an ongoing basis.

  (5) “Employee leasing company” or “leasing company” means a person engaged in the business of providing individuals to perform ongoing services for an indefinite time period for client companies pursuant to one or more employee leasing agreements executed between the leasing company and the client company. “Employee leasing company” does not include labor organizations.

  (6) “Financial responsibility” means the current and expected future condition of financial solvency sufficient to support a reasonable expectation that an employee leasing company can successfully conduct its business without jeopardizing the interests of the employees leased to the client company or the public.

  (7) “Licensee” means an employee leasing company licensed under this chapter.

  (8) “Temporary help company” means a person who hires its own employees and provides them to another business entity as temporary full- or part-time personnel to provide services for a finite period of time in special or unusual situations such as employee absences, temporary skill shortages, seasonal workloads, and special work assignments and projects. (Added 1995, No. 173 (Adj. Sess.), § 1; amended 2005, No. 103 (Adj. Sess.), § 3, eff. April 5, 2006; 2017, No. 74, § 44.)

• § 1032. Commissioner; duties; rules

  The Commissioner shall administer this chapter and, in consultation with the Commissioner of Financial Regulation, adopt rules to carry out the provisions of this chapter. (Added 1995, No. 173 (Adj. Sess.), § 1; amended 1995, No. 180 (Adj. Sess.), § 38(a); 2013, No. 34, § 13.)

• § 1033. Licensure; requirements; application; fees

  (a) No person shall engage in the business of employee leasing in Vermont unless the person is granted a license by the Commissioner under this chapter. Only qualified applicants as determined by the Commissioner shall be licensed.

  (b) An applicant may file an application for licensure with the Commissioner on a form required by the Commissioner accompanied by a one-time, nonrefundable application fee of $100.00 and a licensing fee of $1,000.00. The applicant shall also file the following, satisfactory to the Commissioner:

  (1) A list of all the controlling persons of the applicant and an affidavit from each attesting to his or her good moral character and management competence.

  (2) Documentation that the applicant maintains a place of business in this State and that the applicant is licensed, if required, in the applicant’s state of domicile.

  (3) Certification that the applicant does not conduct a temporary help business through the same entity as the employee leasing business.

  (4) An agreement to:

  (A) maintain separate records for each client company;

  (B) file reports as required by law for each of its client companies; and

  (C) pay unemployment contributions and workers’ compensation premiums based on the experience rating of each client company, provided that, for workers’ compensation premiums, the client company has sufficient workers’ compensation premium volume to be experience rated, otherwise the workers’ compensation premiums shall be paid the rate approved for an employer that cannot be experience rated.

  (5) An acknowledgment of the applicant’s joint and several liability with its client companies for protections required by or damages due under laws designed to protect the health, safety, or welfare of an individual leased to a client company.

  (6) Evidence of financial responsibility in accordance with subsection 1035(a) of this title.

  (7) Evidence that the applicant has deposited securities or posted a bond, in a manner and amount approved by the Commissioner to secure the performance of the applicant’s obligations pursuant to subdivision (5) of this subsection. The amount of securities or bond shall be at least the minimum net worth required by subsection 1035(a) of this title. An employee leasing company shall not require a client company to contribute in any manner to payment of the securities or bond required under this subdivision. The Commissioner may waive the bonding or security requirement if the applicant demonstrates that it is accredited by a national accrediting entity that has been approved by the Commissioner.

  (8) An agreement that the Commissioner may liquidate any securities or bond provided pursuant to subdivision (7) of this subsection upon default by the applicant in the payment of wages, benefits, workers’ compensation premiums or awards, or unemployment compensation premiums as required by this chapter.

  (c) A license under this chapter shall expire one year from the date shown on the license. At least 60 days before the expiration date of the license, a licensee shall file a renewal application accompanied by the licensing fee and documentation as required by subsection (b) of this section.

  (d) The Commissioner may deny, suspend, or revoke the license of an employee leasing company for any violation of this chapter.

  (e) Fees collected under this section shall be credited to a special fund established and managed pursuant to 32 V.S.A. chapter 7, subchapter 5 and shall be available to the Department of Labor to offset the cost of providing those services. (Added 1995, No. 173 (Adj. Sess.), § 1; amended 1997, No. 59, § 37, eff. June 30, 1997; 2005, No. 103 (Adj. Sess.), § 3, eff. April 5, 2006.)

• § 1034. Controlling person

  (a) Each controlling person of an applicant or licensee shall:

  (1) be at least 18 years of age; and

  (2) have a personal history of honesty, trustworthiness, and fairness and a reputation for fair dealings and respect for the rights of others and for the law.

  (b) For the purposes of this chapter, “controlling person” means an individual who has the authority to direct the management or policies of an employee leasing company or who is employed, appointed, or authorized by an employee leasing company to enter into contractual relationships with client companies on the employee leasing company’s behalf. (Added 1995, No. 173 (Adj. Sess.), § 1.)

• § 1035. Financial responsibility

  (a) Evidence of financial responsibility shall include an audited financial statement, prepared in accordance with generally accepted accounting principles, that demonstrates that the applicant has an adjusted net worth of at least $100,000.00 or five percent of liabilities, whichever is greater. The statement shall have been prepared within six months of the date of application by an independent certified public accountant licensed in this State.

  (b) The Commissioner may audit a licensee’s financial condition if the Commissioner determines that the licensee’s financial responsibility is in question. The Commissioner may contract for the audit and charge the licensee a fee that shall not exceed the actual cost of performing the audit.

  (c) Financial information submitted to the Commissioner by an applicant or licensee shall be confidential and shall not be available for public inspection. Nothing in this section shall be construed to restrict the Commissioner from sharing this information with the Attorney General, the Department of Financial Regulation, the Department of Labor, the Department of Taxes, the Secretary of State, or the U.S. Internal Revenue Service. (Added 1995, No. 173 (Adj. Sess.), § 1; amended 1995, No. 180 (Adj. Sess.), § 38(a); 2005, No. 103 (Adj. Sess.), § 3, eff. April 5, 2006.)

• § 1036. Employee leasing company; duties; deemed employer

  (a) A licensee shall:

  (1) register with the following within 10 days after licensure under this chapter:

  (A) the Department of Labor;

  (B) the Department of Taxes;

  (C) the Secretary of State; and

  (D) the U.S. Internal Revenue Service;

  (2) make timely payment of workers’ compensation premiums and unemployment compensation on all leased employees based on the experience rating of the client company to which the employees are leased;

  (3) file all reports as required by this chapter and applicable law;

  (4) maintain financial responsibility and management competence;

  (5) provide notification of the employment arrangement to all employees leased pursuant to an employee leasing agreement within 10 days after executing the agreement; and

  (6) keep any securities or bond in effect or retain accreditation, whichever was provided pursuant to subdivision 1033(b)(7) of this chapter during the period the license is valid.

  (b) Except as provided in sections 1037 and 1038 of this title, an employee leasing company licensed under this chapter shall be deemed to be the employer for the payment of wages and other employment benefits due to leased employees pursuant to the employee leasing agreement. An employee leasing company shall implement an employee grievance system and provide to each leased employee a manual that outlines the terms and conditions of employment. (Added 1995, No. 173 (Adj. Sess.), § 1; amended 2005, No. 103 (Adj. Sess.), § 3, eff. April 5, 2006; 2023, No. 85 (Adj. Sess.), § 156, eff. July 1, 2024.)

• § 1037. Workers’ compensation

  (a) Workers’ compensation insurance premiums shall be determined and paid based on the experience rating of the client company for which the leased employee performs services, provided the client company has sufficient workers’ compensation premium volume to be experience rated, otherwise the premiums shall be the rate approved for an employer that cannot be experience rated.

  (b) Both the employee leasing company and its client company shall be entitled to the exclusivity of remedy provisions of section 622 of this title provided that workers’ compensation coverage is in effect.

  (c) A workers’ compensation insurer shall notify the Commissioner and the client company not later than 30 days prior to any lapse or cancellation of workers’ compensation coverage. (Added 1995, No. 173 (Adj. Sess.), § 1; amended 2023, No. 85 (Adj. Sess.), § 157, eff. July 1, 2024.)

• § 1038. Department of Labor

  (a) The Department of Labor shall charge unemployment compensation benefits against the experience rating record of the client company in accordance with the provisions of section 1325 of this title. Quarterly unemployment reports shall be filed and unemployment contributions shall be paid based on the client company’s experience rating and under the client company’s State employer account number. The Commissioner may require an employee leasing company to make weekly contribution payments. The Department shall notify both the client company and the employee leasing company of:

  (1) Benefits charged against the experience rating of the client company.

  (2) The contribution rate of the client company based on its status and experience as an employer.

  (b) An employee leasing company shall register with the Department of Labor on a form required by the Commissioner of Labor and shall file the following with the Commissioner:

  (1) A copy of each employee leasing agreement within 10 days after the agreement is executed and notice within 10 days after an agreement is terminated.

  (2) Payroll records for each client company.

  (3) On or before December 31 of each year, a list of each client company, including the client company’s name, address, State employer account number, and federal employer identification number. (Added 1995, No. 173 (Adj. Sess.), § 1; amended 2005, No. 103 (Adj. Sess.), § 3, eff. April 5, 2006.)

• § 1039. Employee benefits

  (a) An employee leasing company that offers employee benefit and welfare plans shall offer comparable benefits to each client company, but is not required to provide comparable benefits to leased employees of different client companies.

  (b) An employee leasing company that provides health insurance benefits to its leased employees shall provide those benefits only pursuant to one of the following:

  (1) An insurance policy issued under 8 V.S.A. chapter 107 by an insurer or entity authorized to do business by the Commissioner of Financial Regulation.

  (2) A plan that has been qualified as a single employer plan under the provisions of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq., as amended.

  (c) An employee leasing company and the client company shall be jointly and severally liable for protection or damages provided under laws designed to protect the health, safety, and welfare of an employee. (Added 1995, No. 173 (Adj. Sess.), § 1; amended 1995, No. 180 (Adj. Sess.), § 38(a); 2023, No. 85 (Adj. Sess.), § 158, eff. July 1, 2024.)

• § 1040. Collective bargaining; interference prohibited

  (a) For purposes of the collective bargaining process, including the right to organize employee units based upon specific work sites, an employee leasing company shall be bound by law and liable for any violations of a collective bargaining agreement covering any of its leased employees. An employee leasing company shall not reassign leased employees or take any other action for the purpose of interfering with the terms and conditions of any collective bargaining agreement or organizational activity.

  (b) Nothing in this chapter shall be construed to relieve a client company of its obligations under any applicable law or to reduce or diminish any rights of leased employees to organize or collectively bargain. (Added 1995, No. 173 (Adj. Sess.), § 1.)

• § 1041. Prohibitions; penalty

  Any person who conducts the business of employee leasing or holds themselves out as an employee leasing company without being licensed under this chapter shall be fined not more than $15,000.00. (Added 1995, No. 173 (Adj. Sess.), § 1.)

• § 1042. Unprofessional conduct

  Unprofessional conduct includes:

  (1) Failure to maintain financial responsibility and management competence.

  (2) Occupational advertising that is intended or tends to deceive the public.

  (3) Failure to comply with substantial provisions of State or federal law governing the conduct of an employee leasing company.

  (4) Conviction of a crime related to the conduct of the business of employee leasing by a controlling person of a licensee. (Added 1995, No. 173 (Adj. Sess.), § 1.)

• § 1043. Enforcement; appeals

  (a) The Commissioner may revoke, suspend, restrict, or place on probation the license of any employee leasing company, after a hearing, for a violation of any provision of this chapter or for a violation of any law relating to the conduct of the business of employee leasing. The Commissioner may charge the licensee the actual cost of any investigation undertaken at the direction of the Commissioner in response to any complaint filed against the licensee.

  (b) A person may appeal an action taken by the Commissioner under this section to the Superior Court. (Added 1995, No. 173 (Adj. Sess.), § 1.)