Vermont Overtime Laws

September 15th 2024

Vermont Labor Laws govern the rights and obligations of both employees and employers. Under the overtime provisions of labor laws, employees must be provided with fair compensation for hours worked beyond the standard workweek. By understanding Vermont’s overtime laws, both employers and employees can ensure compliance and protect their rights. 

This article will provide information to successfully navigate Vermont’s overtime regulations, whether you’re an employer aiming for compliance or an employee defending your rights.

This article covers:

Vermont Overtime Rates

In Vermont, the standard working week, as established by the Fair Labor Standards Act (FLSA), consists of 40 hours within seven days. Overtime refers to any hours worked beyond the 40-hour threshold for full-time employees. During overtime hours, employees are entitled to compensation at a rate of 1.5 times their regular pay.

Since the regular minimum wage in Vermont is $13.67 per hour, this means Vermont’s overtime minimum rate is $20.51 per hour. 

Overtime Entitlement in Vermont

Overtime hours are calculated based on a single workweek, and it is not allowed for an employer to average the hours worked by an employee over multiple weeks, regardless of the employer’s pay schedule.

Vermont has specific overtime compensation laws that apply to employers with two or more employees. It’s important to note that Vermont law doesn’t require overtime pay for working more than 8 hours in a day or for work on weekends or holidays.

In Vermont, only certain employees are entitled to overtime. One crucial exemption to that is that benefit hours, such as paid holidays or sick days, are not counted towards overtime calculations. For instance, if an employee worked 36 hours in a workweek and received an additional 8 hours for a paid holiday or sick day, totaling 44 hours spent for the week, they wouldn’t be entitled to four hours of overtime pay.

Furthermore, Vermont exempts certain types of employers from the overtime requirement. An employee’s overall eligibility for overtime pay is based on what their job duties are and what type of business they are in.

Read more about Overtime Exceptions and Exemptions in Vermont.

Compensatory Time in Vermont

In Vermont, only state employees are eligible to receive compensatory time, also known as “comp time”. Comp time is usually provided instead of cash compensation for overtime hours worked. To use comp time, employees need to request it from their supervisor in advance. The decision to grant or deny the request depends on the department’s operational needs. If the request is approved, management will try their best to schedule the time off within a reasonable timeframe. It is encouraged for employees to use their comp time as they earn it.

When an employee leaves their position in the State service, any unused comp time will be paid out in a lump sum with their final paycheck. The payment will be based on the employee’s current base rate of pay.

Employees can carry over any unused comp time earned during accrual year “A” until the end of accrual year “B,” but not beyond that. However, if the employee is unable to use up their accrual year “A” comp time before the end of accrual year “B” due to circumstances beyond their control, they will be paid in cash at the prevailing base hourly rate.

Overtime for Employees with Multiple Jobs in Vermont

In Vermont, when an employee is involved in multiple jobs with different pay rates during a single workweek, the calculation of overtime pay is based on the average rate of all combined positions. The total earnings are added up and then divided by the total number of hours worked across all jobs. This average rate is used to determine the overtime pay for the employee.

Overtime for Employees Receiving Bonuses in Vermont

In Vermont state, when calculating overtime pay for employees, bonuses must be taken into account. These bonuses, given as remuneration for their work, are included in determining the employee’s regular hourly rate. 

However, certain types of payments are not considered when calculating overtime pay. These include gifts, rewards for services, discretionary or special occasion bonuses, reimbursement for expenses, employer benefit contributions, and payments received for giving up holidays or vacations. These types of payments are not factored into the regular rate of pay to calculate overtime compensation.

Overtime Exceptions and Exemptions in Vermont

Vermont’s overtime compensation law applies to employers with two or more employees unless they fall under specific exemptions outlined in the law. These exemptions include employees who:

  • work in retail or service establishments.
  • work in amusement or recreational establishments (with certain limitations).
  • work in hotels, motels, or restaurants.
  • work in hospitals, public health centers, nursing homes, maternity homes, therapeutic community residences, and residential care homes (with certain restrictions).
  • work in transportation businesses where federal overtime requirements under the Fair Labor Standards Act (FLSA) do not apply.
  • work for a political subdivision of the state.

Properly Classifying Workers for Overtime Rights in Vermont 

In Vermont, the “ABC Test” is used to determine whether a worker should be classified as an employee who may be eligible for overtime pay. All three parts of the test must be met for the worker to be considered a non-employee, or “independent contractor”.

The ABC Test:

  • The worker has the freedom from control or direction over how their services are performed, both as stated in their contract and reality.
  • The service provided is either not a usual part of the employer’s business or is performed outside of the employer’s usual places of business.
  • The worker is typically involved in an independently established trade, occupation, profession, or business.

The Vermont Supreme Court has clarified that even if the employer has the “right” to direct and control the worker, it is sufficient for establishing direction and control, regardless of whether such control is exercised.

It is important to note that an independent contractor is not entitled to overtime pay.

Statute of Limitations for Overtime Pay in Vermont

The statute of limitations to file a claim for overtime pay in Vermont is two years, but if the employer’s violation is found to be willful and knowing, the time limit extends to three years. This means that if your employer intentionally and knowingly failed to provide proper compensation for overtime hours worked, you have an extended timeframe to file a claim.

It is important to note that workers in Vermont are safeguarded by the FLSA which provides explicit protection against employer retaliation for filing overtime complaints. Employers are prohibited from threatening, suspending, or terminating employees in response to their overtime complaints. 

Legal Cases Relating to Overtime Compensation in Vermont

Below, we present law cases relating to fair overtime compensation for employees in Vermont: 

1. Bank Deducts Overtime Pay from Employee’s Commission Resulting in Lawsuit

In this case, employee Christie Mitchell appealed a summary judgment order in favor of NBT Bank, N.A., concerning the bank’s policy of deducting her overtime compensation from her commissions. The bank’s policy ensured that Mitchell was never paid more than her gross commissions, regardless of the number of hours she worked in a week. 

Mitchell, a mortgage loan originator, was paid on a commission-only basis by the bank. She received a bi-weekly draw against her future commissions. At the end of each 4 weeks, the bank calculated her “regular rate” for weeks with overtime hours. They deducted her draw wages and additional overtime premiums from her gross commission, paying her the remaining amount. If her gross commission didn’t exceed her draw and additional overtime premium, the negative balance carried over to the next period. Mitchell raised concerns about this payment method but took legal action after leaving the bank, alleging violations of the FLSA and Vermont’s wage law.

The superior court granted summary judgment in favor of the bank, noting that the issue at hand was whether the FLSA required the bank to pay Mitchell overtime wages in addition to her gross commissions. The court concluded that there was no categorical prohibition in the FLSA or its regulations against deducting overtime wages from gross commissions. The court performed calculations based on relevant regulations to demonstrate that the bank’s methodology complied with the FLSA.

On appeal, Mitchell reiterated her argument that the FLSA required the bank to pay her overtime wages on top of her gross commissions. She claimed that the bank’s practice of deducting overtime wages from commissions violated the FLSA. However, since the FLSA does not mandate such a requirement, the court affirmed the summary judgment in favor of the bank.

Key lessons from this case:
  • A draw refers to an advance or prepayment given to an employee against future earnings or commissions.
  • Deducting overtime wages from gross commissions is not prohibited by the FLSA as long as the minimum wage and overtime premiums are met.
  • The FLSA does not specifically require employers to pay gross commissions in addition to overtime wages.

2. Waste Disposal Drivers Claims Employer Engaged in Illegal Pay Practices

In the case of Rodney v. Casella Waste Systems, Inc., Joseph Rodney filed a lawsuit against Casella Waste Systems (Casella) on behalf of himself and other similarly situated individuals. Rodney claimed that Casella, a waste disposal company operating in several states, engaged in illegal pay practices.

Rodney alleged that waste disposal drivers at Casella were scheduled to work 45-60 hours. However, Casella allegedly failed to compensate them for all the hours worked, including overtime. Rodney specifically points to practices such as automatic deduction of meal breaks, failure to pay for pre-trip and post-trip vehicle inspections, and exclusion of non-discretionary bonuses from the calculation of regular rates of pay.

The court emphasized the need for specific factual allegations related to each named employee involved in the lawsuit rather than generalized claims about all waste disposal drivers. The court finds that Rodney’s allegations were too generalized and failed to sufficiently allege specific workweeks in which the employees worked over 40 hours and were not compensated for overtime.

Consequently, the court granted Casella’s motion to dismiss the FLSA claim. As a result, the court declined to exercise supplemental jurisdiction over the Vermont state law claims. However, the court granted Rodney leave to amend his complaint within 20 days as long as it complied with the Federal Rules of Civil Procedure and the court’s Local Rules.

Key lessons from this case:
  • Generalized allegations regarding all employees and their usual work schedules are insufficient to state an FLSA claim.
  • Automatic deductions for meal breaks are not necessarily unlawful, but if employees consistently work through their breaks, they should be compensated for the time worked.
  • If the FLSA claim is dismissed, the court may decline to exercise supplemental jurisdiction over related state law claims, and those claims may be dismissed as well.

3. State Employee Seeks Overtime Pay Despite Being Exempted Under State Laws

In the case of Flint v. Department of Labor, Paul Flint appealed a judgment on the pleadings that denied his suit against the Department of Labor for unpaid overtime pay. Flint argued that he was entitled to overtime pay under a state statute and the Vermont Constitution.

Flint worked at the Department and claimed to have worked 704 hours of overtime during his time there. He filed a lawsuit after his termination and asserted that he was not paid overtime rates for hours worked beyond 40 hours per week. Initially, he brought claims under a state statute and the federal FLSA, but later withdrew the FLSA claim due to sovereign immunity. The court granted the Department’s motion for judgment on the pleadings, concluding that the state statute did not provide Flint with a statutory right to the overtime pay he sought, and the Vermont Constitution did not grant a private right of action for unpaid overtime.

The court stated that the plain language of the state statute made it clear that state employees, including Flint, were exempt from its provisions. Although Flint argued that the Legislature intended to establish wage and hour protections for state employees, the court found no evidence of such intent.

The court explained that the Constitution ensured access to the judicial process but did not create substantive rights. It emphasized that the employee needed to demonstrate a pre-existing property interest in his employment rights to claim a violation of due process. As the state statute explicitly excluded state employees from its protections, the employee did not have a state law right to overtime pay, and therefore, his claim under the Vermont Constitution failed.

The court affirmed the judgment on the pleadings.

Key lessons from this case:

  • Sovereign immunity can limit legal remedies available to employees.
  • The court emphasized the importance of interpreting statutes based on their plain language to determine overtime eligibility for employees.
  • The case highlighted the significance of understanding exceptions and exemptions within labor laws.

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.