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H 205

An act relating to agreements not to compete

2025-2026 Regular Session Introduced by Dave Bosch and 9 co-sponsors

The bill would curb enforceability of noncompete agreements in Vermont, promoting worker mobility and requiring alternative protections like non-solicits or NDAs.

Rep. Marcotte of Coventry moved to recommit the bill to the Committee on Commerce and Economic Development, which was agreed to
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Bill Summary · H 205

Bill summary: H 205 (Session 2025-2026) – An act relating to agreements not to compete

Purpose and intent

  • The bill addresses noncompete agreements, aiming to regulate or limit the use of agreements that restrict an employee or business from engaging in similar work or starting a competing business after leaving a job or partnership.
  • It seeks to provide clearer standards and protections for workers and businesses in Vermont, balancing employer interests with employee mobility and fair competition.

Key provisions and changes (as indicated by the bill’s movement through committee and floor actions)

  • The bill has progressed through the Vermont House with involvement from the Commerce and Economic Development Committee, including reporting and amendments.
  • Notable procedural milestones:
    • First reading and referral to the Committee on Commerce and Economic Development (February 12, 2025).
    • Committee action: “Favorable with Amendment” reported (February 24, 2026).
    • Third Reading and action: Certain action scheduled, with postponements and recommits occurring in March 2026.
    • Final floor actions included a recommendation to recommit to the Committee on Commerce and Economic Development (March 13, 2026).
  • The exact text of the provisions is not provided in the summary, but the following typical elements commonly addressed in noncompete legislation may be expected:
    • Definitions of noncompete agreements and covered workers or activities.
    • Restrictions on the enforceability of noncompetes, including permissible scope (time duration, geographic reach, and restricted activities).
    • Provisions about compensation, severance, or consideration required for entering into a noncompete.
    • Protections for certain categories of workers (e.g., low-wage workers, interns, independent contractors).
    • Standards for reasonableness, necessity, and public policy.
    • Possible safe harbors for certain industries or transactions (e.g., sale of a business).
    • Remedies, enforcement mechanisms, and potential penalties for violations.
    • Procedures for challenge or modification of noncompete clauses in court or through mediation/arbitration.

Note: The exact text is not included in the provided material. The above reflects common elements in state-level noncompete reform bills and the bill’s title indicates the general focus on agreements not to compete.

Who would be affected

  • Employees and workers who are subject to noncompete agreements as a condition of employment, promotion, or continued employment.
  • Employers and businesses that use noncompete clauses in employment contracts, consulting agreements, or partnerships.
  • Potentially other workers or independent contractors who might be affected if the bill extends its scope beyond traditional employees.
  • Legal professionals, human resources departments, and the judiciary, which would interpret and enforce any new standards or restrictions.

Procedural and timeline aspects

  • Initial referral: February 12, 2025.
  • Committee action: Favorable with Amendment (February 24, 2026) and subsequent report to the full House.
  • Floor actions included third reading and postponements, with a recommit motion on March 13, 2026.
  • The bill’s path shows iterative consideration and potential amendments in committee before a final vote.
  • The action history indicates ongoing dialogue and possible changes to language or scope before final passage.

Practical implications

  • If enacted, the bill could limit the use or enforceability of noncompete agreements in Vermont, potentially increasing employee mobility and reducing barriers to switching employers in many sectors.
  • Employers might need to revise or replace noncompete provisions with alternative protective measures (e.g., non-solicitation or non-disclosure agreements) that comply with the new standards.
  • Small businesses and startups could experience changes in hiring practices, particularly in roles traditionally constrained by noncompetes.

If you’d like, I can tailor this summary to include specific language from the final enacted version (once the text is available) and highlight the exact changes relative to current Vermont law.

Compiled from official sources — confirm details with the bill’s official record.

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