Construction Claim Rules in Vermont

Statutory interest rate

12% / year, fixed

Vermont's general statutory legal rate is a flat 12% per year, applied by Vermont courts as prejudgment interest on contract and construction claims. Vermont's Prompt Payment Act uses this same 12% rate for overdue construction payments (more than 21 days late) unless the contract validly specifies a different rate; the Vermont Supreme Court has rejected a contractual rate as high as 24%/year as unenforceable absent clear contract language authorizing it. Postjudgment interest on a judgment lien is also fixed at 12%.

Compounding: Simple; no compounding provision in the cited statutes.

Citation: 9 V.S.A. § 41a(a); 9 V.S.A. §§ 4001–4009 (Prompt Payment Act); 12 V.S.A. § 2903(b)

Source: https://legislature.vermont.gov/statutes/section/09/004/00041a

Accrual: breach of contract claim

As of right once the claim is liquidated or readily ascertainable; otherwise left to the court's discretion

Vermont awards prejudgment interest as of right when the principal sum recovered is liquidated or capable of ready ascertainment; for other forms of damage, an award instead lies in the court's discretion. There is no single fixed accrual date required by statute; in one construction-payment dispute the trial court used the date suit was filed rather than the date of breach, a choice upheld as within the court's discretion.

Citation: Fletcher Hill, Inc. v. Crosbie, 2005 VT 1

Source: https://law.justia.com/cases/vermont/supreme-court/2005/2002-348op.html

Vermont's rule leaves real room for a court to pick breach date, demand date, or filing date depending on the facts; don't assume date-of-breach accrual without checking how the claim was actually litigated.

Accrual: property damage / tort claim

Same liquidated/ascertainable-vs-discretionary test as contract claims; no separate rule for property damage

The Vermont Supreme Court applies the same standard across claim types: interest is available as of right once damages are liquidated or readily ascertainable and otherwise lies in the court's discretion. A tort claim was cited as an example alongside contract disputes, with no separate property damage test.

Citation: Vermont Supreme Court entry order construing V.R.C.P. 54(a) (2024)

Source: https://www.vtcourts.gov/sites/default/files/documents/op24-042.pdf

The entry order behind this rule is on the Vermont judiciary's site. Its official case name is not settled here, though the rule quoted comes from the court's own PDF.

Actual Cash Value rule

Broad evidence rule

The Vermont Supreme Court held that where a policy leaves 'actual cash value' undefined, the fact-finder may consider any evidence which logically aids in forming a correct estimate of value; both market value and replacement cost are permissible standards, consistent with Vermont's insurance bulletin guidance.

Citation: Eagle Square Mfg. Co. v. Vermont Mut. Fire Ins. Co., 212 A.2d 636 (Vt. 1965)

Source: https://law.justia.com/cases/vermont/supreme-court/1965/1998.html

ACV statute or regulation

Vermont's insurance regulator is reported to treat depreciating labor cost as an unfair claim settlement practice; the bulletin itself has not been read in its original form.

The Vermont Department of Financial Regulation is reported to have taken the position, applying 8 V.S.A. Section 4724(9) together with the general unfair-practices prohibition in 8 V.S.A. Section 4723 and the state's Fair Claims Practices Regulation (Reg. I-79-2), that depreciating labor costs when calculating actual cash value for a property loss is an unfair claim settlement practice. The stated reasoning is that labor, unlike physical materials, does not deteriorate or lose value over time and therefore cannot be subject to physical depreciation.

Citation: 8 V.S.A. Section 4724(9); 8 V.S.A. Section 4723; Vt. Dep't of Fin. Regulation, Reg. I-79-2 (Fair Claims Practices)

Source: https://dfr.vermont.gov/sites/finreg/files/regbul/dfr-regulation-insurance-i-1979-02-revised-fair-claims.pdf

Published sources attribute this position to § 4724(9)(F) specifically, but the current text of that subsection deals with explaining claim denials, which may reflect renumbering. The rule itself, that Vermont treats depreciating labor as an unfair practice, is supported by several independent sources. Treat the subsection letter with caution.

Recoverable depreciation holdback

No Vermont-specific statute or regulation found governing the deadline or process for paying out withheld depreciation after repairs are completed.

The Fair Claims Practices Regulation (Reg. I-79-2) sets general prompt-payment and fair-dealing standards, but no provision specific to recoverable-depreciation payout timing was located in it or in Title 8 of the Vermont Statutes as reviewed.

Citation: Reg. I-79-2 (Fair Claims Practices)

Source: https://dfr.vermont.gov/sites/finreg/files/regbul/dfr-regulation-insurance-i-1979-02-revised-fair-claims.pdf

“No damages for delay” clause enforceability

No Vermont state or federal court has considered the validity of no-damages-for-delay clauses.

No Vermont state or federal decision addresses the validity of no-damages-for-delay clauses, so there is no Vermont rule to apply. Vermont's prompt pay statute, 9 V.S.A. § 4003(c), may bar pay-if-paid clauses, which is a related but separate question.

Source: https://www.woodsaitken.com/sites/default/files/Survey_50-State-Matrix_Pay-If-Paid_No-Damage-for-Delay.pdf

Construction contract filing deadline

6 years for a civil action, including an ordinary contract claim

Vermont's general limitations period for a civil action, including an action on a contract, is 6 years from accrual, unless a specific exception applies. Two deadlines sit in front of that one on most construction claims. A mechanic's lien and a payment bond claim each run on their own, far shorter clock, counted from last furnishing rather than from breach and missing either one removes the security while leaving the contract claim alive but unsecured. Check those dates first. Accrual is the other half of the question: the period runs from breach, which on a payment dispute is usually the date payment came due rather than the date the work was done.

Citation: 12 V.S.A. § 511

Source: https://legislature.vermont.gov/statutes/section/12/023/00511

State unemployment insurance (SUTA)

Effective July 1, 2026, Vermont's new employer rate is 1 percent for most employers; out-of-state (foreign) construction corporations (NAICS 236, 237, 238) are instead assigned an industry-based rate. Experience-rated range is roughly 0.4 percent to 8.4 percent; the 2026 taxable wage base is $15,400.

Vermont's Department of Labor uses a system of five rate schedules and 21 tax rate classes (0 through 20). As of July 1, 2026, the new employer rate for most employers is 1 percent and the experience-rated range across the current schedule spans approximately 0.4 percent to 8.4 percent depending on an employer's benefit ratio and the schedule in effect. The taxable wage base for calendar year 2026 is $15,400, up $600 from $14,800 in 2025, per the Department's official announcement; a further increase to $16,000 is anticipated effective January 1, 2027.

Citation: 21 V.S.A. Section 1325 et seq.

Source: https://labor.vermont.gov/unemployment-insurance/ui-employers/unemployment-tax-rates

Last checked: 2026-08-26

Out-of-state construction corporations under NAICS 236, 237 and 238 get an industry-based rate rather than the 1% new-employer rate, so an out-of-state contractor should not plan on the headline figure. A further wage base increase to $16,000 is expected on 1 January 2027.

Workers' compensation rating

Vermont is an NCCI advisory state; workers' compensation rates are based on NCCI loss costs, regulated by the Vermont Department of Financial Regulation.

Vermont participates in the NCCI system for classification codes and advisory loss costs. Insurers file rates based on NCCI loss costs, subject to review by the Vermont Department of Financial Regulation, Insurance Division. Vermont is a competitive, non-monopolistic state.

Citation: 21 V.S.A. Section 601 et seq.

Source: https://dfr.vermont.gov/insurance/workers-compensation

Prevailing wage law

Vermont requires prevailing wages on state construction contracts over $100,000 and on capital construction projects over $200,000 that are at least 50 percent state-funded.

Under 29 V.S.A. Section 161(b), Vermont requires that construction employees on covered state contracts be paid not less than the mean prevailing wage published by the Vermont Department of Labor in its occupational wage survey, plus a fringe benefit add-on of 42.5 percent of wages. Coverage applies to state construction projects exceeding $100,000 and to capital construction projects exceeding $200,000 that are at least 50 percent state-funded (including projects funded through the Cash Fund for Capital and Essential Investments).

Citation: 29 V.S.A. Section 161

Source: https://legislature.vermont.gov/statutes/section/29/005/00161

Comparative / contributory negligence rule

Modified comparative fault, recovery barred above 50% fault (51% bar)

Recovery is reduced in proportion to fault and barred once the worker is more than 50% at fault. A worker exactly 50% at fault still recovers half.

Citation: Vt. Stat. Ann. tit. 12, § 1036(a)

Source: https://legislature.vermont.gov/statutes/section/12/027/01036

Verified against: statute text of Vt. Stat. Ann. tit. 12, s 1036 at legislature.vermont.gov

Non-economic damages cap

No general cap on non-economic damages

Most states cap non-economic damages only in medical malpractice actions, which does not reach a third-party construction claim. Economic losses, medical bills, lost wages, future earning capacity, are not capped by these statutes.

OSHA plan

Full state plan, private + public sector

Vermont operates VOSHA (Vermont Occupational Safety and Health Administration), a full OSHA-approved state plan covering most private-sector workers and all state and local government workers. A state plan must be at least as effective as federal OSHA and may set stricter standards, so check the state rule before assuming the federal text applies. It also covers state and local government employees, which federal OSHA does not, so a public works injury is inside the state agency's jurisdiction. Citations are issued by the state agency and contested before the state's own review body rather than the federal commission, which changes where the file lives when you go looking for it. Reporting deadlines follow the federal rule: a work-related fatality within 8 hours, an inpatient hospitalisation, amputation or loss of an eye within 24 hours. For a construction claim the inspection file matters more than the citation: photographs, measurements, witness statements and the inspector's narrative are usually obtainable and are often the best contemporaneous record of the site.

Citation: 29 U.S.C. § 667

Source: https://www.osha.gov/stateplans

Weight of an OSHA violation in a negligence case

OSHA violations are evidence of negligence in Vermont, not conclusive proof and the rule is not limited to employer and employee

The Vermont Supreme Court held OSHA violations are evidence, not conclusive proof, of negligence. Vermont declined to limit that evidentiary use to the employer and employee relationship the way some states do, so OSHA evidence stays relevant where the defendant is a genuine third party rather than the injured worker's own employer.

Citation: Ball v. Melsur Corp., 633 A.2d 705, 712 (Vt. 1993); Marzec-Gerrior v. D.C.P. Industries, 674 A.2d 1248, 1249 (Vt. 1995)

Source: https://law.justia.com/cases/vermont/supreme-court/1993/op92-487.html

Third-party contribution against the employer

21 V.S.A. § 622 makes workers-comp exclusive against the employer and § 624 governs third-party-recovery mechanics without creating a right of contribution against the employer; the employer's recovery is instead protected via a reimbursement/subrogation lien on the employee's third-party recovery.

21 V.S.A. § 622 makes compensation benefits the employee's exclusive remedy. § 624 governs the situation where a third party is liable: any recovery against the third party first reimburses the employer/carrier for benefits paid, with the balance going to the employee. There is no statutory mechanism for the third party to instead seek contribution FROM the employer. Nothing short of specific intent to injure removes an injury from the Act's exclusivity (Kittell v. Vermont Weatherboard, Inc., 138 Vt. 439 (1980), reaffirmed in Mead v. Western Slate, Inc., 2004 VT 11).

Citation: 21 V.S.A. § 622, § 624; Kittell v. Vermont Weatherboard, Inc., 138 Vt. 439 (1980).

Source: https://legislature.vermont.gov/statutes/section/21/009/00624

Injury-severity gate on contribution claims

Narrow specific-intent-to-injure exception. Vermont has repeatedly refused to adopt the more lenient 'substantial certainty' test used in many other states.

Kittell v. Vermont Weatherboard, Inc. held that nothing short of specific intent to injure falls outside the Act , an employer stripping safety devices from equipment was not enough on its own. The Vermont Supreme Court reaffirmed this narrow standard as recently as 2018 in a roofing-fall case, explicitly declining to adopt the substantial-certainty exception most states use. In practice exclusivity takes the direct employer off the tort table entirely, whatever the OSHA file shows. The claim runs against the other parties on the site: the general contractor, the owner, another subcontractor, an equipment manufacturer. The employer or its carrier then asserts a lien against whatever the worker recovers from those parties, so the figure the worker actually keeps is the recovery less the lien, the fee and the costs. Whether the lien is reduced for the cost of obtaining the recovery is a separate state question worth asking early, because it moves the net more than most people expect.

Citation: 21 V.S.A. ch. 9, § 622; Kittell v. Vermont Weatherboard, Inc., 138 Vt. 439, 417 A.2d 926 (1980); reaffirmed in Martel v. Connor Contracting, Inc., 2018 VT 107.

Source: https://law.justia.com/cases/vermont/supreme-court/1980/182-79-0.html

Distinctive state doctrine

Immunity for safety-committee/inspection conduct absent gross negligence; a real, litigated VOSHA-violation fact pattern in the intentional-tort context; minor-employment exception construed narrowly

Under 21 V.S.A. § 624(h) an injured employee cannot sue the workers' compensation carrier for conducting workplace inspections, or an employer and employee safety committee, except for gross negligence or willful misconduct. That specific immunity for safety inspection work is unusual. On intentional injury, a federal court applying Vermont law let a claim past a motion to dismiss where a supervisor allegedly kept requiring subordinates to take X-rays without protective equipment after the employer had been found in violation of the VOSHA statute, which shows how a safety violation feeds into Vermont's very high intentional injury threshold. On minor employment, the Vermont Supreme Court barred a minor's civil action in Bruley v. Fonda Group even though the minor had operated equipment in violation of federal child labour law, so a child labour violation alone does not open the exception. Vermont also requires employers with poor safety records to form workplace safety committees with balanced management and employee representation.

Citation: 21 V.S.A. § 624(h); Buksh v. Sarchino, No. 2:21-cv-190 (D. Vt. Aug. 17, 2022); Bruley v. Fonda Group, Inc., 157 Vt. 1 (1991)

Source: https://www.alfainternational.com/compendium/workers-compensation/vermont/