Vermont 2025-2026 Regular Session

Vermont House Bill H0334 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	BILL AS INTRODUCED H.334
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5	5	VT LEG #380217 v.1
6	6	H.334 1
7	7	Introduced by Representatives Logan of Burlington, Bos-Lun of Westminster, 2
8	8	Casey of Montpelier, Cina of Burlington, Cordes of Bristol, 3
9	9	Headrick of Burlington, Hooper of Burlington, McCann of 4
10	10	Montpelier, McGill of Bridport, Priestley of Bradford, and 5
11	11	Tomlinson of Winooski 6
12	12	Referred to Committee on 7
13	13	Date: 8
14	14	Subject: Labor; employment practices; agreements not to compete; stay-or-pay 9
15	15	provisions 10
16	16	Statement of purpose of bill as introduced: This bill proposes to restrict the 11
17	17	use of noncompete agreements that prohibit individuals from competing with 12
18	18	their former employers. This bill also proposes to restrict the use of “stay-or-13
19	19	pay” provisions that require employees to repay certain costs to an employer 14
20	20	when separating from employment. 15
21	21	An act relating to limiting employer restrictions on individuals separating 16
22	22	from employment 17 BILL AS INTRODUCED H.334
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26	26	VT LEG #380217 v.1
27	27	It is hereby enacted by the General Assembly of the State of Vermont: 1
28	28	Sec. 1. 21 V.S.A. § 495q is added to read: 2
29	29	§ 495q. AGREEMENTS NOT TO COMPETE; PROHIBITION; 3
30	30	EXCEPTIONS; NOTICE; EMPLOYEE RIGHTS 4
31	31	(a) Definitions. As used in this section: 5
32	32	(1)(A) “Agreement not to compete” means an agreement between an 6
33	33	employer and an employee that restricts the employee, after separating from 7
34	34	employment, from performing: 8
35	35	(i) work for another employer for a specified period of time; 9
36	36	(ii) work in a specified geographical area; or 10
37	37	(iii) work for another employer in a capacity similar to the 11
38	38	employee’s work for the employee’s former employer that is party to the 12
39	39	agreement. 13
40	40	(B) An agreement not to compete does not include: 14
41	41	(i) an agreement that prohibits the disclosure of trade secrets as 15
42	42	defined in 9 V.S.A. § 4601 or a nondisclosure agreement that protects 16
43	43	confidential business information that does not constitute a trade secret; or 17
44	44	(ii) a nonsolicitation agreement between an employer and an 18
45	45	employee, provided that the limitations set forth in the agreement are 19
46	46	reasonable in time, geographical area, and the scope of activity to be 20
47	47	restrained. 21 BILL AS INTRODUCED H.334
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51	51	VT LEG #380217 v.1
52	52	(2) “Nonsolicitation agreement” means an agreement between an 1
53	53	employer and employee pursuant to which the employee agrees not to: 2
54	54	(A) solicit or recruit the employer’s employees; or 3
55	55	(B) solicit or transact business with customers or clients of the 4
56	56	employer who were customers or clients while the employee was employed by 5
57	57	the employer. 6
58	58	(b) Prohibition. Any agreement not to compete, including an agreement 7
59	59	not to compete contained within a contract, is void and unenforceable. 8
60	60	(c) Exceptions. Nothing in this section shall be construed to prohibit an 9
61	61	individual from entering into an agreement not to compete in relation to: 10
62	62	(1) the sale of all or substantially all of the individual’s ownership 11
63	63	interest in: 12
64	64	(A) a business or its operating assets; or 13
65	65	(B) a subsidiary or division of a business or the operating assets of a 14
66	66	subsidiary or division of a business; 15
67	67	(2) the dissolution of a partnership in which the individual is a partner or 16
68	68	the dissociation of the individual from a partnership; or 17
69	69	(3) the dissolution of a limited liability company in which the individual 18
70	70	is a member or the termination of an individual’s interest in a limited liability 19
71	71	company. 20 BILL AS INTRODUCED H.334
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76	76	(d) Notice. For existing agreements not to compete that violate subsection 1
77	77	(b) of this section, the employer must notify each employee who is party to the 2
78	78	agreement that the agreement not to compete is void and legally unenforceable. 3
79	79	Notice shall be in the form of a written individualized communication 4
80	80	addressed to the employee or former employee and shall be delivered to the 5
81	81	last known address and email address of the employee or former employee. 6
82	82	(e) Employee rights. The provisions against retaliation in subdivision 7
83	83	495(a)(8) of this title and the penalty and enforcement provisions of section 8
84	84	495b of this title shall apply to this section. 9
85	85	Sec. 2. 21 V.S.A. § 495r is added to read: 10
86	86	§ 495r. STAY-OR-PAY PROVISIONS; RESTRICTIONS; EXCEPTIONS; 11
87	87	NOTICE; EMPLOYEE RIGHTS 12
88	88	(a) As used in this section, “stay-or-pay provision” means an agreement 13
89	89	between an employer and an employee that requires the employee to pay the 14
90	90	employer upon the employee’s separation from employment. Stay-or-pay 15
91	91	provisions take a variety of forms, including training repayment provisions, 16
92	92	educational repayment contracts, quit fees, damages clauses, sign-on bonuses 17
93	93	or other types of cash payments tied to a mandatory stay period, and other 18 BILL AS INTRODUCED H.334
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97	97	VT LEG #380217 v.1
98	98	contracts under which an employee must pay an employer in the event that the 1
99	99	employee voluntarily or involuntarily separates from employment. 2
100	100	(b) It shall be an unlawful employment practice for an employer to require 3
101	101	an employee to pay the employer, pursuant to a stay-or-pay provision, 4
102	102	following an employee’s separation from employment. 5
103	103	(c) Notwithstanding subsection (b) of this section, a stay-or-pay provision 6
104	104	shall not be an unlawful employment practice if: 7
105	105	(1) the employee voluntarily agrees to the provision in exchange for a 8
106	106	benefit; 9
107	107	(2) the repayment amount is reasonable and does not exceed the cost to 10
108	108	the employer of the benefit received by the employee; 11
109	109	(3) the repayment amount is specific and provided to the employee 12
110	110	before the employee agrees to the provision; 13
111	111	(4) the length of the stay period associated with the provision is 14
112	112	reasonable based upon a number of factors, including: 15
113	113	(A) the cost of the benefit bestowed; 16
114	114	(B) the value of the benefit to the employee; and 17
115	115	(C) whether the repayment amount decreases over the course of the 18
116	116	stay period; and 19
117	117	(5) the provision does not require repayment if the employee is 20
118	118	terminated without cause. 21 BILL AS INTRODUCED H.334
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123	123	(d) For existing stay-or-pay provisions that violate subsection (b) of this 1
124	124	section, the employer must notify each employee who is subject to the 2
125	125	provision that it is void and legally unenforceable. Notice shall be in the form 3
126	126	of a written individualized communication addressed to the employee or 4
127	127	former employee and shall be delivered to the last known address and email 5
128	128	address of the employee or former employee. 6
129	129	(e) An employer shall not retaliate against an employee who exercises or 7
130	130	attempts to exercise the rights provided under this section, including opting not 8
131	131	to enter into a stay-or-pay provision. The provisions against retaliation in 9
132	132	subdivision 495(a)(8) of this title and the penalty and enforcement provisions 10
133	133	of section 495b of this title shall apply to this section. 11
134	134	Sec. 3. EFFECTIVE DATE 12
135	135	This act shall take effect on passage. 13