Vermont H 334: An act relating to temporary State employees

Bill Text

BILL AS INTRODUCED H.334
2025 Page 1 of 6

VT LEG #380217 v.1
H.334 1
Introduced by Representatives Logan of Burlington, Bos-Lun of Westminster, 2
Casey of Montpelier, Cina of Burlington, Cordes of Bristol, 3
Headrick of Burlington, Hooper of Burlington, McCann of 4
Montpelier, McGill of Bridport, Priestley of Bradford, and 5
Tomlinson of Winooski 6
Referred to Committee on 7
Date: 8
Subject: Labor; employment practices; agreements not to compete; stay-or-pay 9
provisions 10
Statement of purpose of bill as introduced: This bill proposes to restrict the 11
use of noncompete agreements that prohibit individuals from competing with 12
their former employers. This bill also proposes to restrict the use of “stay-or-13
pay” provisions that require employees to repay certain costs to an employer 14
when separating from employment. 15
An act relating to limiting employer restrictions on individuals separating 16
from employment 17

BILL AS INTRODUCED H.334
2025 Page 2 of 6

VT LEG #380217 v.1
It is hereby enacted by the General Assembly of the State of Vermont: 1
Sec. 1. 21 V.S.A. § 495q is added to read: 2
§ 495q. AGREEMENTS NOT TO COMPETE; PROHIBITION; 3
EXCEPTIONS; NOTICE; EMPLOYEE RIGHTS 4
(a) Definitions. As used in this section: 5
(1)(A) “Agreement not to compete” means an agreement between an 6
employer and an employee that restricts the employee, after separating from 7
employment, from performing: 8
(i) work for another employer for a specified period of time; 9
(ii) work in a specified geographical area; or 10
(iii) work for another employer in a capacity similar to the 11
employee’s work for the employee’s former employer that is party to the 12
agreement. 13
(B) An agreement not to compete does not include: 14
(i) an agreement that prohibits the disclosure of trade secrets as 15
defined in 9 V.S.A. § 4601 or a nondisclosure agreement that protects 16
confidential business information that does not constitute a trade secret; or 17
(ii) a nonsolicitation agreement between an employer and an 18
employee, provided that the limitations set forth in the agreement are 19
reasonable in time, geographical area, and the scope of activity to be 20
restrained. 21

BILL AS INTRODUCED H.334
2025 Page 3 of 6

VT LEG #380217 v.1
(2) “Nonsolicitation agreement” means an agreement between an 1
employer and employee pursuant to which the employee agrees not to: 2
(A) solicit or recruit the employer’s employees; or 3
(B) solicit or transact business with customers or clients of the 4
employer who were customers or clients while the employee was employed by 5
the employer. 6
(b) Prohibition. Any agreement not to compete, including an agreement 7
not to compete contained within a contract, is void and unenforceable. 8
(c) Exceptions. Nothing in this section shall be construed to prohibit an 9
individual from entering into an agreement not to compete in relation to: 10
(1) the sale of all or substantially all of the individual’s ownership 11
interest in: 12
(A) a business or its operating assets; or 13
(B) a subsidiary or division of a business or the operating assets of a 14
subsidiary or division of a business; 15
(2) the dissolution of a partnership in which the individual is a partner or 16
the dissociation of the individual from a partnership; or 17
(3) the dissolution of a limited liability company in which the individual 18
is a member or the termination of an individual’s interest in a limited liability 19
company. 20

BILL AS INTRODUCED H.334
2025 Page 4 of 6

VT LEG #380217 v.1
(d) Notice. For existing agreements not to compete that violate subsection 1
(b) of this section, the employer must notify each employee who is party to the 2
agreement that the agreement not to compete is void and legally unenforceable. 3
Notice shall be in the form of a written individualized communication 4
addressed to the employee or former employee and shall be delivered to the 5
last known address and email address of the employee or former employee. 6
(e) Employee rights. The provisions against retaliation in subdivision 7
495(a)(8) of this title and the penalty and enforcement provisions of section 8
495b of this title shall apply to this section. 9
Sec. 2. 21 V.S.A. § 495r is added to read: 10
§ 495r. STAY-OR-PAY PROVISIONS; RESTRICTIONS; EXCEPTIONS; 11
NOTICE; EMPLOYEE RIGHTS 12
(a) As used in this section, “stay-or-pay provision” means an agreement 13
between an employer and an employee that requires the employee to pay the 14
employer upon the employee’s separation from employment. Stay-or-pay 15
provisions take a variety of forms, including training repayment provisions, 16
educational repayment contracts, quit fees, damages clauses, sign-on bonuses 17
or other types of cash payments tied to a mandatory stay period, and other 18

BILL AS INTRODUCED H.334
2025 Page 5 of 6

VT LEG #380217 v.1
contracts under which an employee must pay an employer in the event that the 1
employee voluntarily or involuntarily separates from employme