{ "type": "practice-guide", "canonical": "https://openagreements.org/practice-guides/non-compete/us/vermont", "links": [ { "rel": "self", "href": "https://openagreements.org/practice-guides/non-compete/us/vermont.json", "type": "application/json" }, { "rel": "alternate", "href": "https://openagreements.org/practice-guides/non-compete/us/vermont", "type": "text/html" }, { "rel": "alternate", "href": "https://openagreements.org/practice-guides/non-compete/us/vermont/markdown", "type": "text/markdown" }, { "rel": "alternate", "href": "https://openagreements.org/practice-guides/non-compete/us/vermont/json", "type": "application/json" } ], "data": { "topic": "non-compete", "state": "vermont", "frontmatter": { "title": "Non-Competes in Vermont", "description": "A question-by-question summary of Vermont's common-law reasonableness test for restrictive covenants, the leading Vermont Supreme Court cases, and the pending 2025-2026 legislative overhaul (H.205, H.334, H.583).", "state": "Vermont", "lastReviewed": "2026-06-01", "license": "CC BY 4.0", "authors": [ "steven-obiajulu" ], "summary": { "enforceability": "reasonable", "bottomLine": "Vermont has no general non-compete statute and enforces covenants under a common-law reasonableness test, though a 2025-2026 legislative overhaul (H.205, H.583) could sharply curtail them if enacted.", "keyLaw": "common law (Vt. Elec. Supply Co. v. Andrus, 132 Vt. 195 (1974); Restatement (Second) of Contracts § 188)", "exceptions": "Barber/cosmetology training covenants void (26 V.S.A. § 281(c)); attorneys (R. Prof. Conduct 5.6); sale-of-business more leeway; pending H.583 health-care ban not in force", "courtNarrowing": "unsettled", "appliesToContractors": "unclear", "extendedForBreach": "No equitable rewriting of the time term (Roy's Orthopedic)", "maxLength": "No statutory limit", "noticeRequirement": "None", "incomeThreshold": "None — pending H.205 not law", "saleOfBusiness": "Sale covenants get breathing room versus employment covenants", "customerNonSolicit": "Reasonableness test applies; protecting customer relationships and goodwill is a recognized legitimate interest (no Vermont case squarely on point in our review)", "employeeNonSolicit": "Judged under the same reasonableness test as a non-compete; no Vermont case squarely on an employee anti-raiding covenant in our review" }, "about": [ "Vermont non-compete agreements", "Vermont restrictive covenants", "Vermont employee non-competes", "Vermont physician non-competes", "Vermont sale-of-business non-competes", "Vt. H.205", "Vt. H.583" ], "translations": [ { "language": "中文", "status": "planned" }, { "language": "Español", "status": "planned" }, { "language": "Português", "status": "planned" }, { "language": "Deutsch", "status": "planned" } ], "relatedForm": { "slug": "openagreements-restrictive-covenant-vermont" } }, "questions": [ { "slug": "employee-non-compete-enforceability", "label": "Are employee non-competes enforceable in Vermont?", "heading": "Are employee non-compete agreements enforceable in Vermont?", "answerText": "Sometimes, under a common-law reasonableness test, but the framework is in active flux as the 2025-2026 legislature advances a sweeping prohibition.", "sources": [ { "id": "andrus-reasonableness-test", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Vermont Electric Supply Co. v. Andrus", "citation": "Vt. Elec. Supply Co. v. Andrus, 132 Vt. 195, 315 A.2d 456 (1974).", "url": "https://www.courtlistener.com/opinion/1972913/vermont-electric-supply-company-inc-v-andrus/", "deepLink": "https://www.courtlistener.com/opinion/1972913/vermont-electric-supply-company-inc-v-andrus/#:~:text=enforcement%20will%20be%20ordered%20unless,it%20is%20to%20be%20performed.", "proposition": "Andrus supports the foundational Vermont common-law test for enforceability of post-employment restrictive covenants.", "verbatimQuote": "enforcement will be ordered unless the agreement is found to be contrary to public policy, unnecessary for protection of the employer, or unnecessarily restrictive of the rights of the employee, with due regard being given to the subject matter of the contract and the circumstances and conditions under which it is to be performed.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-andrus-reasonableness-test" }, { "id": "barnes-restatement-framing", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Systems & Software, Inc. v. Barnes", "citation": "Sys. & Software, Inc. v. Barnes, 2005 VT 95, 178 Vt. 389, 886 A.2d 762.", "url": "https://www.courtlistener.com/opinion/2264199/systems-and-software-inc-v-barnes/", "deepLink": "https://www.courtlistener.com/opinion/2264199/systems-and-software-inc-v-barnes/#:~:text=We%20have%20stated%20that%20%E2%80%9Cwe,commercial%20activity%20of%20their%20choice.", "proposition": "Barnes supports Vermont's modern reasonableness framework and the 'proceed with caution' posture toward covenants against competitive employment.", "verbatimQuote": "We have stated that “we will proceed with caution” when asked to enforce covenants against competitive employment because such restraints run counter to public policy favoring the right of individuals to engage in the commercial activity of their choice.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-barnes-restatement-framing" }, { "id": "barnes-reasonableness-public-policy", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Systems & Software, Inc. v. Barnes", "citation": "Sys. & Software, Inc. v. Barnes, 2005 VT 95, ¶ 4, 178 Vt. 389, 886 A.2d 762 (quoting Restatement (Second) of Contracts § 188(1) (1981)).", "url": "https://www.courtlistener.com/opinion/2264199/systems-and-software-inc-v-barnes/", "deepLink": "https://www.courtlistener.com/opinion/2264199/systems-and-software-inc-v-barnes/#:~:text=Like%20many%20other%20courts%2C%20this,likely%20injury%20to%20the%20public.%E2%80%9D", "proposition": "Barnes supports the Restatement (Second) of Contracts § 188 framing that a covenant is unreasonable if the restraint exceeds what is needed or if the employer's need is outweighed by hardship and public injury.", "verbatimQuote": "Like many other courts, this Court has adopted a position with respect to enforcement of noncompetition agreements similar to that set forth in § 188(1) of the Restatement (Second) of Contracts (1981) , which provides that a restrictive covenant “is unreasonably in restraint of trade if (a) the restraint is greater than is needed to protect the promisee’s legitimate interest, or (b) the promisee’s need is outweighed by the hardship to the promisor and the likely injury to the public.”", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-barnes-reasonableness-public-policy" } ] }, { "slug": "reasonableness-test", "label": "What counts as a reasonable non-compete restriction in Vermont?", "heading": "What does Vermont consider a reasonable restriction?", "answerText": "A restraint is reasonable only if it protects a legitimate employer interest, is no broader than needed, and does not outweigh the employee's hardship and the public's interest in free commerce.", "sources": [ { "id": "barnes-legitimate-interest-not-only-trade-secrets", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Systems & Software, Inc. v. Barnes", "citation": "Sys. & Software, Inc. v. Barnes, 2005 VT 95, ¶ 5, 178 Vt. 389, 886 A.2d 762.", "url": "https://www.courtlistener.com/opinion/2264199/systems-and-software-inc-v-barnes/", "deepLink": "https://www.courtlistener.com/opinion/2264199/systems-and-software-inc-v-barnes/#:~:text=noncompetition%20agreements%20may%20protect%20legitimate,secrets%20and%20confidential%20customer%20information.", "proposition": "Barnes supports the rule that Vermont protectable interests are not limited to trade secrets or confidential customer information; customer relationships and employee-specific goodwill can also justify a restraint.", "verbatimQuote": "noncompetition agreements may protect legitimate employer interests such as customer relationships and employee-specific goodwill that are “significantly broader” than proprietary information such as trade secrets and confidential customer information.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-barnes-legitimate-interest-not-only-trade-secrets" }, { "id": "barnes-inside-knowledge", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Systems & Software, Inc. v. Barnes", "citation": "Sys. & Software, Inc. v. Barnes, 2005 VT 95, ¶ 6, 178 Vt. 389, 886 A.2d 762.", "url": "https://www.courtlistener.com/opinion/2264199/systems-and-software-inc-v-barnes/", "deepLink": "https://www.courtlistener.com/opinion/2264199/systems-and-software-inc-v-barnes/#:~:text=The%20trial%20court%20found%20that%20during,use%20to%20compete%20against%20plaintiff.", "proposition": "Barnes supports the proposition that competitive 'inside knowledge' of an employer's product strengths and weaknesses, in a small market, can constitute a legitimate protectable interest in Vermont.", "verbatimQuote": "The trial court found that during his employment with plaintiff, defendant had acquired inside knowledge about the strengths and weaknesses of plaintiff’s products — knowledge that he could use to compete against plaintiff.", "pullQuoteLocator": "The trial court found that during|use to compete against plaintiff.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-barnes-inside-knowledge" }, { "id": "summits7-employer-burden", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Summits 7, Inc. v. Kelly", "citation": "Summits 7, Inc. v. Kelly, 2005 VT 97, ¶ 14, 178 Vt. 396, 886 A.2d 365.", "url": "https://www.courtlistener.com/opinion/8209851/summits-7-inc-v-kelly/", "deepLink": "https://www.courtlistener.com/opinion/8209851/summits-7-inc-v-kelly/#:~:text=%5Bt%5Dhe%20employer%20has%20the%20burden,necessity%20of%20the%20restrictive%20covenant.", "proposition": "Summits 7 supports the rule that the employer bears the burden of proving the reasonable necessity of the restrictive covenant.", "verbatimQuote": "[t]he employer has the burden of proving the reasonable necessity of the restrictive covenant.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-summits7-employer-burden" }, { "id": "andrus-five-year-county", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Vermont Electric Supply Co. v. Andrus", "citation": "Vt. Elec. Supply Co. v. Andrus, 132 Vt. 195, 199, 315 A.2d 456, 458 (1974).", "url": "https://www.courtlistener.com/opinion/1972913/vermont-electric-supply-company-inc-v-andrus/", "deepLink": "https://www.courtlistener.com/opinion/1972913/vermont-electric-supply-company-inc-v-andrus/#:~:text=The%20area%20involved%20was%20Rutland,restrictions%20were%20at%20an%20end.", "proposition": "Andrus supports the conclusion that a five-year, single-county restraint can be reasonable when tied to the employer's actual market and the employee's developed customer relationships.", "verbatimQuote": "The area involved was Rutland County, and the defendants had elected to establish their business outside of that county already. After five years,' all restrictions were at an end.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-andrus-five-year-county" }, { "id": "roys-82-no-findings-on-place", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Roy's Orthopedic, Inc. v. Lavigne (first appeal)", "citation": "Roy's Orthopedic, Inc. v. Lavigne, 142 Vt. 347, 454 A.2d 1242 (1982).", "url": "https://www.courtlistener.com/opinion/2367186/roys-orthopedic-inc-v-lavigne/", "deepLink": "https://www.courtlistener.com/opinion/2367186/roys-orthopedic-inc-v-lavigne/#:~:text=the%20trial%20court%20concluded%20that%20the,was%20covered%20by%20the%20agreement.", "proposition": "Roy's Orthopedic (1982) supports the rule that enforcement fails where the trial court does not make findings on the actual geographic territory covered by the covenant.", "verbatimQuote": "the trial court concluded that the restrictive covenant not to compete was reasonably limited to time and place without having made a finding as to what “place” was covered by the agreement.", "pullQuoteLocator": "the trial court concluded that the|was covered by the agreement.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-roys-82-no-findings-on-place" } ] }, { "slug": "mid-employment-consideration", "label": "Is continued employment sufficient consideration for a Vermont non-compete?", "heading": "Is continued employment sufficient consideration for a non-compete signed mid-employment?", "answerText": "Yes. In Summits 7, Inc. v. Kelly, the Vermont Supreme Court held that continued at-will employment alone is sufficient consideration to support a non-compete entered into during the employment relationship.", "sources": [ { "id": "summits7-continued-employment-sufficient", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Summits 7, Inc. v. Kelly", "citation": "Summits 7, Inc. v. Kelly, 2005 VT 97, ¶ 18, 178 Vt. 396, 886 A.2d 365.", "url": "https://www.courtlistener.com/opinion/8209851/summits-7-inc-v-kelly/", "deepLink": "https://www.courtlistener.com/opinion/8209851/summits-7-inc-v-kelly/#:~:text=we%20agree%20with%20the%20superior%20court%2C,during%20an%20at%2Dwill%20employment%20relationship.", "proposition": "Summits 7 supports the rule that continued at-will employment alone is sufficient consideration to support a non-compete entered into during the employment relationship.", "verbatimQuote": "we agree with the superior court, the majority of other courts, and the recent Restatement draft that continued employment alone is sufficient consideration to support a covenant not to compete entered into during an at-will employment relationship.", "pullQuoteLocator": "we agree with the superior court,|during an at-will employment relationship.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-summits7-continued-employment-sufficient" }, { "id": "summits7-employer-burden-drafting", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Summits 7, Inc. v. Kelly", "citation": "Summits 7, Inc. v. Kelly, 2005 VT 97, ¶ 14, 178 Vt. 396, 886 A.2d 365.", "url": "https://www.courtlistener.com/opinion/8209851/summits-7-inc-v-kelly/", "deepLink": "https://www.courtlistener.com/opinion/8209851/summits-7-inc-v-kelly/#:~:text=%5Bt%5Dhe%20employer%20has%20the%20burden,necessity%20of%20the%20restrictive%20covenant.", "proposition": "Summits 7 supports the drafting caution that adequate consideration does not relieve the employer of the burden to prove reasonable necessity.", "verbatimQuote": "[t]he employer has the burden of proving the reasonable necessity of the restrictive covenant.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-summits7-employer-burden-drafting" }, { "id": "andrus-reasonableness-test-drafting", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Vermont Electric Supply Co. v. Andrus", "citation": "Vt. Elec. Supply Co. v. Andrus, 132 Vt. 195, 315 A.2d 456 (1974).", "url": "https://www.courtlistener.com/opinion/1972913/vermont-electric-supply-company-inc-v-andrus/", "deepLink": "https://www.courtlistener.com/opinion/1972913/vermont-electric-supply-company-inc-v-andrus/#:~:text=enforcement%20will%20be%20ordered%20unless,it%20is%20to%20be%20performed.", "proposition": "Andrus supports the drafting caution that consideration questions are independent from reasonableness questions; the employer must still satisfy the public-policy, employer-necessity, and employee-rights prongs.", "verbatimQuote": "enforcement will be ordered unless the agreement is found to be contrary to public policy, unnecessary for protection of the employer, or unnecessarily restrictive of the rights of the employee, with due regard being given to the subject matter of the contract and the circumstances and conditions under which it is to be performed.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-andrus-reasonableness-test-drafting" } ] }, { "slug": "court-narrowing", "label": "Will Vermont courts blue-pencil or reform an overbroad non-compete?", "heading": "Will Vermont courts blue-pencil or reform an overbroad Vermont non-compete?", "answerText": "Genuinely mixed. The Vermont Supreme Court will not make a contract for the parties — it will not, for example, extend an expired time term — but it has also endorsed the modern rule of enforcing covenants to the extent reasonable in dicta.", "sources": [ { "id": "roys-85-no-make-contracts", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Roy's Orthopedic, Inc. v. Lavigne (second appeal)", "citation": "Roy's Orthopedic, Inc. v. Lavigne, 145 Vt. 324, 487 A.2d 173 (1985).", "url": "https://www.courtlistener.com/opinion/2359631/roys-orthopedic-inc-v-lavigne/", "deepLink": "https://www.courtlistener.com/opinion/2359631/roys-orthopedic-inc-v-lavigne/#:~:text=The%20term%20of%20the%20noncompetition,make%20them%20for%20the%20parties.", "proposition": "Roy's Orthopedic (1985) supports the rule that Vermont courts will not equitably rewrite a noncompetition agreement by extending or shifting its time term.", "verbatimQuote": "The term of the noncompetition agreement was a matter of contract between the parties. This Court will construe contracts but it will not make them for the parties.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-roys-85-no-make-contracts" }, { "id": "summits7-extent-reasonable", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Summits 7, Inc. v. Kelly", "citation": "Summits 7, Inc. v. Kelly, 2005 VT 97, ¶ 23, 178 Vt. 396, 886 A.2d 365.", "url": "https://www.courtlistener.com/opinion/8209851/summits-7-inc-v-kelly/", "deepLink": "https://www.courtlistener.com/opinion/8209851/summits-7-inc-v-kelly/#:~:text=Most%20modem%20courts%20agree%20that,extent%20that%20they%20are%20reasonable.", "proposition": "Summits 7 supports the dicta that most modern courts may enforce restrictive covenants only to the extent reasonable, even when the drafted scope is larger.", "verbatimQuote": "Most modem courts agree that a trial court can enforce restrictive covenants to the extent that they are reasonable.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-summits7-extent-reasonable" }, { "id": "deringer-vt-prediction", "authorityType": "case-law", "tier": "primary-source-backed", "title": "A.N. Deringer, Inc. v. Strough", "citation": "A.N. Deringer, Inc. v. Strough, 103 F.3d 243, 247-48 (2d Cir. 1996).", "url": "https://www.courtlistener.com/opinion/732308/an-deringer-inc-v-john-m-strough-and-fritz-companies-inc/", "deepLink": "https://www.courtlistener.com/opinion/732308/an-deringer-inc-v-john-m-strough-and-fritz-companies-inc/#:~:text=we%20conclude%20that%20Vermont%20would,the%20limit%20of%20its%20validity.", "proposition": "A.N. Deringer supports the Second Circuit's Erie prediction that the Vermont Supreme Court would permit enforcement of a defective restrictive covenant to the limit of its validity.", "verbatimQuote": "we conclude that Vermont would permit enforcement of a defective restrictive covenant to the limit of its validity.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-deringer-vt-prediction" } ] }, { "slug": "sale-of-business", "label": "How are sale-of-business non-competes treated in Vermont?", "heading": "Are sale-of-business non-competes treated differently in Vermont?", "answerText": "Yes. Sale-of-business covenants get more breathing room than ordinary employment non-competes, especially on duration and geography, when the covenant is part of an arms-length transaction.", "sources": [ { "id": "fine-foods-five-year-twenty-five-mile", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Fine Foods, Inc. v. Dahlin", "citation": "Fine Foods, Inc. v. Dahlin, 147 Vt. 599, 523 A.2d 1228 (1986).", "url": "https://www.courtlistener.com/opinion/1927334/fine-foods-inc-v-dahlin/", "deepLink": "https://www.courtlistener.com/opinion/1927334/fine-foods-inc-v-dahlin/#:~:text=In%20addition%2C%20a%20sum%20of,reasonable%20to%20time%20and%20place.", "proposition": "Fine Foods supports the conclusion that a five-year, 25-mile sale-of-business restraint with dedicated consideration is reasonable as to time and place.", "verbatimQuote": "In addition, a sum of five thousand dollars was paid for the executed covenant alone. Under the circumstances, the restrictions agreed to were reasonable to time and place.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-fine-foods-five-year-twenty-five-mile" }, { "id": "foti-fuels-five-year-sale", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Foti Fuels, Inc. v. Kurrle Corp.", "citation": "Foti Fuels, Inc. v. Kurrle Corp., 2013 VT 111, 195 Vt. 524, 90 A.3d 885.", "url": "https://www.courtlistener.com/opinion/2646010/foti-fuels-inc-and-robert-a-foti-v-kurrle-corporation-payjack-llc-and/", "deepLink": "https://www.courtlistener.com/opinion/2646010/foti-fuels-inc-and-robert-a-foti-v-kurrle-corporation-payjack-llc-and/#:~:text=The%20asset%2Dpurchase%20agreement%20contained%20a,in%20five%20equal%20annual%20installments.", "proposition": "Foti Fuels supports the use of a five-year non-compete with dedicated consideration in an asset-purchase agreement and the availability of multiple damages theories when a sale-of-business covenant is breached.", "verbatimQuote": "The asset-purchase agreement contained a five-year non-competition\nprovision for $30,000 in consideration, to be paid in five equal annual\ninstallments.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-foti-fuels-five-year-sale" }, { "id": "miller-non-compete-not-essential", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Miller v. Flegenheimer", "citation": "Miller v. Flegenheimer, 2016 VT 125, ¶ 21, 203 Vt. 620, 161 A.3d 524.", "url": "https://www.courtlistener.com/opinion/4328779/kenneth-w-miller-ii-v-eric-flegenheimer/", "deepLink": "https://www.courtlistener.com/opinion/4328779/kenneth-w-miller-ii-v-eric-flegenheimer/#:~:text=whether%20or%20not%20the%20contract,structure%20of%20the%20claw%2Dback%20provision.", "proposition": "Miller supports the rule that a non-compete is a distinct, bargained-for term in a Vermont stock sale rather than an automatic incident, and that leaving it open can defeat contract formation.", "verbatimQuote": "whether or not the contract includes a form of non compete or non solicitation agreement, the\n\nprice to be paid for the shares (as opposed to the Non-Compete Agreement), and the structure of\n\nthe claw-back provision.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-miller-non-compete-not-essential" } ] }, { "slug": "profession-specific", "label": "What profession-specific limits apply to Vermont non-competes?", "heading": "What profession-specific or context-specific limits apply to Vermont non-competes?", "answerText": "Three categories matter: barber/cosmetology training, attorney practice, and franchisor no-poach enforcement. Healthcare may soon join the list if H.583 passes.", "sources": [ { "id": "vt-26-281c-cosmetology-ban", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "26 V.S.A. § 281(c)", "citation": "26 V.S.A. § 281(c).", "url": "https://legislature.vermont.gov/statutes/fullchapter/26/006", "proposition": "26 V.S.A. § 281(c) supports the categorical prohibition on barber- and cosmetology-school non-competes imposed as a condition of training for licensure.", "verbatimQuote": "A school of barbering or cosmetology shall not require, as a condition of training for licensure, that a person enter into a covenant not to compete with the training organization or an affiliate.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-vt-26-281c-cosmetology-ban" }, { "id": "vt-rpc-56-lawyer-practice-restrictions", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Vermont Rule of Professional Conduct 5.6", "citation": "Vt. R. Prof. Conduct 5.6(b).", "url": "https://www.vermontjudiciary.org/sites/default/files/documents/VermontRulesofProfessionalConduct.pdf", "proposition": "Vermont Rule of Professional Conduct 5.6 supports attorney-specific limits on practice restrictions.", "verbatimQuote": "(b) an agreement in which a restriction on the lawyer’s right to practice is part of the settlement of a client controversy.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-vt-rpc-56-lawyer-practice-restrictions" }, { "id": "vt-rpc-56-firm-practice-restrictions", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Vermont Rule of Professional Conduct 5.6", "citation": "Vt. R. Prof. Conduct 5.6(a).", "url": "https://www.vermontjudiciary.org/sites/default/files/documents/VermontRulesofProfessionalConduct.pdf", "proposition": "Vermont Rule of Professional Conduct 5.6(a) supports the attorney-specific bar on firm and employment agreements restricting lawyer practice after termination.", "verbatimQuote": "agreement that restricts the right of a lawyer to practice after termination of the relationship,", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-vt-rpc-56-firm-practice-restrictions" }, { "id": "five-guys-ag-no-poach-settlement", "authorityType": "agency-guidance", "tier": "official-source-backed", "title": "Five Guys Franchisor, LLC Multistate Settlement Agreement", "citation": "Settlement Agreement Between the Settling States and Five Guys Franchisor, LLC, para. 11 (2019).", "url": "https://www.iowaattorneygeneral.gov/media/cms/Five_Guys_Agreement_Executed_34804FD309F89.pdf", "proposition": "The Five Guys multistate settlement supports the Attorney General enforcement point that Five Guys agreed to stop including no-poach provisions in future franchise agreements nationwide.", "verbatimQuote": "Five Guys agrees that it will no longer include No-Poach Provisions in any of its franchise agreements in the United States signed after the execution date of this Agreement.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-five-guys-ag-no-poach-settlement" }, { "id": "andrus-reasonableness-test-physician", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Vermont Electric Supply Co. v. Andrus", "citation": "Vt. Elec. Supply Co. v. Andrus, 132 Vt. 195, 315 A.2d 456 (1974).", "url": "https://www.courtlistener.com/opinion/1972913/vermont-electric-supply-company-inc-v-andrus/", "deepLink": "https://www.courtlistener.com/opinion/1972913/vermont-electric-supply-company-inc-v-andrus/#:~:text=enforcement%20will%20be%20ordered%20unless,it%20is%20to%20be%20performed.", "proposition": "Andrus supports the rule that a Vermont healthcare-professional covenant is measured under the same common-law reasonableness test — public policy, employer necessity, and employee hardship — as any other restrictive covenant.", "verbatimQuote": "enforcement will be ordered unless the agreement is found to be contrary to public policy, unnecessary for protection of the employer, or unnecessarily restrictive of the rights of the employee, with due regard being given to the subject matter of the contract and the circumstances and conditions under which it is to be performed.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-andrus-reasonableness-test-physician" }, { "id": "summits7-employer-burden-physician", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Summits 7, Inc. v. Kelly", "citation": "Summits 7, Inc. v. Kelly, 2005 VT 97, ¶ 14, 178 Vt. 396, 886 A.2d 365.", "url": "https://www.courtlistener.com/opinion/8209851/summits-7-inc-v-kelly/", "deepLink": "https://www.courtlistener.com/opinion/8209851/summits-7-inc-v-kelly/#:~:text=%5Bt%5Dhe%20employer%20has%20the%20burden,necessity%20of%20the%20restrictive%20covenant.", "proposition": "Summits 7 supports the rule that the employer bears the burden of proving the reasonable necessity of a restrictive covenant, including a covenant restraining a healthcare professional.", "verbatimQuote": "[t]he employer has the burden of proving the reasonable necessity of the restrictive covenant.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-summits7-employer-burden-physician" }, { "id": "vt-h583-status-page-physician", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Vt. H.583 (2025-2026) — Bill Status", "citation": "H.583, 2025-2026 Gen. Assemb., Reg. Sess. (Vt. 2026) (passed House Mar. 20, 2026; House concurred in Senate proposal of amendment, May 22, 2026).", "url": "https://legislature.vermont.gov/bill/status/2026/H.583", "proposition": "H.583 — titled 'An act relating to clinical decision making' — would categorically void noncompetition, nondisclosure, and nondisparagement agreements for licensed healthcare professionals if enacted.", "verbatimQuote": "An act relating to clinical decision making", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-vt-h583-status-page-physician" } ] }, { "slug": "pending-legislation", "label": "What pending Vermont legislation matters for non-competes?", "heading": "What pending Vermont legislation matters for restrictive covenants?", "answerText": "Two bills are alive in the 2025-2026 session and would substantially supersede the common-law framework: H.205 (general non-compete and stay-or-pay prohibition, absorbing former H.334) and H.583 (healthcare-professional non-compete ban).", "sources": [ { "id": "vt-h205-status-page", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Vt. H.205 (2025-2026) — Bill Status", "citation": "H.205, 2025-2026 Gen. Assemb., Reg. Sess. (Vt. 2026) (recommitted Mar. 13, 2026).", "url": "https://legislature.vermont.gov/bill/status/2026/H.205", "proposition": "H.205, recommitted March 13, 2026, is the umbrella legislative vehicle for Vermont's pending non-compete and stay-or-pay prohibition; the bill text is titled 'An act relating to agreements not to compete'.", "verbatimQuote": "An act relating to agreements not to compete", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-vt-h205-status-page" }, { "id": "vt-h334-introduced-pdf", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Vt. H.334 (2025-2026) — As Introduced", "citation": "H.334, 2025-2026 Gen. Assemb., Reg. Sess. (Vt. 2025) (as introduced).", "url": "https://legislature.vermont.gov/Documents/2026/Docs/BILLS/H-0334/H-0334%20As%20Introduced.pdf", "proposition": "H.334 as introduced was framed as a bill 'limiting employer restrictions on individuals separating from employment' — the original stay-or-pay framework later absorbed into the H.205 strike-all.", "verbatimQuote": "An act relating to limiting employer restrictions on individuals separating", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-vt-h334-introduced-pdf" }, { "id": "vt-h583-status-page", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Vt. H.583 (2025-2026) — Bill Status", "citation": "H.583, 2025-2026 Gen. Assemb., Reg. Sess. (Vt. 2026) (passed House Mar. 20, 2026; House concurred in Senate proposal of amendment, May 22, 2026).", "url": "https://legislature.vermont.gov/bill/status/2026/H.583", "proposition": "H.583 — titled 'An act relating to clinical decision making' — would categorically void noncompetition, nondisclosure, and nondisparagement agreements for licensed healthcare professionals.", "verbatimQuote": "An act relating to clinical decision making", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-vt-h583-status-page" }, { "id": "andrus-reasonableness-test-pending", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Vermont Electric Supply Co. v. Andrus", "citation": "Vt. Elec. Supply Co. v. Andrus, 132 Vt. 195, 315 A.2d 456 (1974).", "url": "https://www.courtlistener.com/opinion/1972913/vermont-electric-supply-company-inc-v-andrus/", "deepLink": "https://www.courtlistener.com/opinion/1972913/vermont-electric-supply-company-inc-v-andrus/#:~:text=enforcement%20will%20be%20ordered%20unless,it%20is%20to%20be%20performed.", "proposition": "Andrus supports the rule that the common-law reasonableness framework (legitimate interest, employee hardship, public interest) governs Vermont restrictive covenants until and unless H.205 or H.583 displaces it.", "verbatimQuote": "enforcement will be ordered unless the agreement is found to be contrary to public policy, unnecessary for protection of the employer, or unnecessarily restrictive of the rights of the employee, with due regard being given to the subject matter of the contract and the circumstances and conditions under which it is to be performed.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-andrus-reasonableness-test-pending" } ] }, { "slug": "alternatives", "label": "What alternatives do Vermont employers have to a non-compete?", "heading": "What alternatives do Vermont employers have if a non-compete isn't enforceable?", "answerText": "The strongest alternatives are statutory trade-secret protection under the Vermont Trade Secrets Act, narrowly drawn confidentiality and nondisclosure agreements, sale-of-business carve-outs, and garden-leave structures.", "sources": [ { "id": "vtsa-4602-injunctive", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "9 V.S.A. § 4602 — Injunctive relief", "citation": "9 V.S.A. § 4602(a).", "url": "https://legislature.vermont.gov/statutes/fullchapter/09/143", "proposition": "9 V.S.A. § 4602 supports the availability of injunctive relief for actual or threatened misappropriation of a trade secret as an alternative to contractual non-compete enforcement.", "verbatimQuote": "A court may enjoin actual or threatened misappropriation of a trade secret. Upon application to the court, an injunction shall be terminated when the trade secret has ceased to exist, but the injunction may be continued for an additional reasonable period of time in order to eliminate commercial advantage that otherwise would be derived from the misappropriation.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-vtsa-4602-injunctive" }, { "id": "vtsa-4603-damages", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "9 V.S.A. § 4603 — Damages", "citation": "9 V.S.A. § 4603(a)(1).", "url": "https://legislature.vermont.gov/statutes/fullchapter/09/143", "proposition": "9 V.S.A. § 4603 supports the recovery of compensatory damages, unjust enrichment, and reasonable royalty for trade-secret misappropriation under Vermont law.", "verbatimQuote": "Except to the extent that a material and prejudicial change of position prior to acquiring knowledge or reason to know of misappropriation renders a monetary recovery inequitable, a complainant is entitled to recover damages for misappropriation.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-vtsa-4603-damages" }, { "id": "vtsa-4602-injunctive-caution", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "9 V.S.A. § 4602 — Injunctive relief", "citation": "9 V.S.A. § 4602(a).", "url": "https://legislature.vermont.gov/statutes/fullchapter/09/143", "proposition": "9 V.S.A. § 4602 supports the caution that VTSA injunctive relief requires actual or threatened misappropriation, not a presumed risk from new employment alone.", "verbatimQuote": "A court may enjoin actual or threatened misappropriation of a trade secret.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-vtsa-4602-injunctive-caution" }, { "id": "alternatives-andrus-reasonableness-test", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Vermont Electric Supply Co. v. Andrus", "citation": "Vt. Elec. Supply Co. v. Andrus, 132 Vt. 195, 315 A.2d 456 (1974).", "url": "https://www.courtlistener.com/opinion/1972913/vermont-electric-supply-company-inc-v-andrus/", "deepLink": "https://www.courtlistener.com/opinion/1972913/vermont-electric-supply-company-inc-v-andrus/#:~:text=enforcement%20will%20be%20ordered%20unless,it%20is%20to%20be%20performed.", "proposition": "Andrus supports applying Vermont reasonableness scrutiny to restrictive covenants that burden employee rights.", "verbatimQuote": "enforcement will be ordered unless the agreement is found to be contrary to public policy, unnecessary for protection of the employer, or unnecessarily restrictive of the rights of the employee, with due regard being given to the subject matter of the contract and the circumstances and conditions under which it is to be performed.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-alternatives-andrus-reasonableness-test" }, { "id": "alternatives-barnes-restatement-framing", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Systems & Software, Inc. v. Barnes", "citation": "Sys. & Software, Inc. v. Barnes, 2005 VT 95, ¶ 4, 178 Vt. 389, 886 A.2d 762 (quoting Restatement (Second) of Contracts § 188(1) (1981)).", "url": "https://www.courtlistener.com/opinion/2264199/systems-and-software-inc-v-barnes/", "deepLink": "https://www.courtlistener.com/opinion/2264199/systems-and-software-inc-v-barnes/#:~:text=Like%20many%20other%20courts%2C%20this,likely%20injury%20to%20the%20public.%E2%80%9D", "proposition": "Barnes supports the Restatement framing for treating overbroad work-restriction clauses as unreasonable restraints.", "verbatimQuote": "Like many other courts, this Court has adopted a position with respect to enforcement of noncompetition agreements similar to that set forth in § 188(1) of the Restatement (Second) of Contracts (1981) , which provides that a restrictive covenant “is unreasonably in restraint of trade if (a) the restraint is greater than is needed to protect the promisee’s legitimate interest, or (b) the promisee’s need is outweighed by the hardship to the promisor and the likely injury to the public.”", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-alternatives-barnes-restatement-framing" }, { "id": "alternatives-fine-foods-sale-covenant", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Fine Foods, Inc. v. Dahlin", "citation": "Fine Foods, Inc. v. Dahlin, 147 Vt. 599, 523 A.2d 1228 (1986).", "url": "https://www.courtlistener.com/opinion/1927334/fine-foods-inc-v-dahlin/", "deepLink": "https://www.courtlistener.com/opinion/1927334/fine-foods-inc-v-dahlin/#:~:text=In%20addition%2C%20a%20sum%20of,reasonable%20to%20time%20and%20place.", "proposition": "Fine Foods supports the sale-of-business alternative because Vermont enforced a sale-closing covenant with dedicated consideration and reasonable time-and-place limits.", "verbatimQuote": "In addition, a sum of five thousand dollars was paid for the executed covenant alone. Under the circumstances, the restrictions agreed to were reasonable to time and place.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-alternatives-fine-foods-sale-covenant" }, { "id": "alternatives-foti-fuels-sale-consideration", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Foti Fuels, Inc. v. Kurrle Corp.", "citation": "Foti Fuels, Inc. v. Kurrle Corp., 2013 VT 111, 195 Vt. 524, 90 A.3d 885.", "url": "https://www.courtlistener.com/opinion/2646010/foti-fuels-inc-and-robert-a-foti-v-kurrle-corporation-payjack-llc-and/", "deepLink": "https://www.courtlistener.com/opinion/2646010/foti-fuels-inc-and-robert-a-foti-v-kurrle-corporation-payjack-llc-and/#:~:text=The%20asset%2Dpurchase%20agreement%20contained%20a,in%20five%20equal%20annual%20installments.", "proposition": "Foti Fuels supports treating a sale-of-business non-compete as a bargained-for transaction asset with dedicated consideration.", "verbatimQuote": "The asset-purchase agreement contained a five-year non-competition\nprovision for $30,000 in consideration, to be paid in five equal annual\ninstallments.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-alternatives-foti-fuels-sale-consideration" }, { "id": "alternatives-miller-sale-term-open", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Miller v. Flegenheimer", "citation": "Miller v. Flegenheimer, 2016 VT 125, ¶ 21, 203 Vt. 620, 161 A.3d 524.", "url": "https://www.courtlistener.com/opinion/4328779/kenneth-w-miller-ii-v-eric-flegenheimer/", "deepLink": "https://www.courtlistener.com/opinion/4328779/kenneth-w-miller-ii-v-eric-flegenheimer/#:~:text=whether%20or%20not%20the%20contract,structure%20of%20the%20claw%2Dback%20provision.", "proposition": "Miller supports treating a non-compete or non-solicitation covenant as a distinct, negotiated sale term rather than an automatic incident of a stock transaction.", "verbatimQuote": "whether or not the contract includes a form of non compete or non solicitation agreement, the\n\nprice to be paid for the shares (as opposed to the Non-Compete Agreement), and the structure of\n\nthe claw-back provision.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-alternatives-miller-sale-term-open" }, { "id": "alternatives-vt-h205-status-page", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Vt. H.205 (2025-2026) — Bill Status", "citation": "H.205, 2025-2026 Gen. Assemb., Reg. Sess. (Vt. 2026) (recommitted Mar. 13, 2026).", "url": "https://legislature.vermont.gov/bill/status/2026/H.205", "proposition": "H.205 supports the caution to check the active Vermont legislative vehicle before using separation-payment or stay-or-pay structures alongside non-compete alternatives.", "verbatimQuote": "An act relating to agreements not to compete", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-alternatives-vt-h205-status-page" } ] }, { "slug": "non-solicitation", "label": "How are customer and employee non-solicits treated?", "heading": "Are customer and employee non-solicits enforceable in Vermont?", "answerText": "Vermont reviews a non-solicitation covenant under the same common-law reasonableness test it applies to non-competes, and it recognizes customer relationships and goodwill as legitimate interests a covenant may protect. No Vermont decision in our review squarely decides a stand-alone customer or employee non-solicit, so this rests on the general framework.", "sources": [ { "id": "nonsolicit-barnes-interest", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Systems & Software, Inc. v. Barnes", "citation": "Sys. & Software, Inc. v. Barnes, 2005 VT 95, ¶ 5, 178 Vt. 389, 886 A.2d 762.", "url": "https://www.courtlistener.com/opinion/2264199/systems-and-software-inc-v-barnes/", "deepLink": "https://www.courtlistener.com/opinion/2264199/systems-and-software-inc-v-barnes/#:~:text=noncompetition%20agreements%20may%20protect%20legitimate,secrets%20and%20confidential%20customer%20information.", "proposition": "Barnes recognizes that Vermont protectable interests extend beyond trade secrets to customer relationships and employee-specific goodwill — the customer-side interests a non-solicit would protect under Vermont's single reasonableness test.", "verbatimQuote": "noncompetition agreements may protect legitimate employer interests such as customer relationships and employee-specific goodwill that are “significantly broader” than proprietary information such as trade secrets and confidential customer information.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/vermont#src-nonsolicit-barnes-interest" } ] } ] } }