> **This is a fill-in template, not legal advice.** Replace every `[bracketed field]` > with your own value. `[[Defined Terms]]` (double brackets) are glossary markers, not blanks. > Token-only (programmatic-fill) version: ./template.md # Employee Restrictive Covenant Agreement ## Cover Terms The terms below are incorporated into and form part of this agreement. Employer : [Legal name of the employer] Employee : [Full legal name of the employee] Employee Title / Position : [Employee job title or position (optional)] Effective Date : [Effective date of this agreement] Governing Law : Vermont Confidentiality Trade Secrets Duration : Perpetual Other Confidential Information Duration : 24 months Employee Non-Solicitation Duration : 24 months Customer Non-Solicitation Duration : 12 months Non-Competition Duration : 12 months Restricted Territory : the geographic area in which Employee provided services Competitive Business : [Description of the business activities that constitute competition with the employer.] Specified Competitors : [Optional named list of specific competitors. Narrowing the restriction to named competitors strengthens enforceability.] No Business with Covered Customers Duration : 12 months Non-Investment Duration : 12 months Non-Disparagement Duration : 24 months ## Standard Terms ### Defined Terms [[Competitive Business]] means the business activities described in Cover Terms under Competitive Business. [[Confidential Information]] means non-public information relating to Employer's business, including trade secrets, customer lists, pricing, business processes, technical data, and strategic plans, but excluding information that becomes public through no fault of Employee. [[Covered Customers]] means customers, vendors, referral sources, and business partners with whom Employee had material contact or for whom Employee had responsibility during the 12 months before termination of employment. [[Covered Employees]] means employees with whom Employee worked or whom Employee managed during the 12 months before termination of employment. [[Passive Public Holdings]] means ownership of securities of a publicly traded company representing less than five percent of any class of such company's securities, and interests in diversified mutual funds, index funds, and exchange-traded funds that may hold securities of a Competitive Business. [[Protected Interests]] means Employer's Confidential Information and Trade Secrets and Employer's goodwill in its customer, vendor, referral-source, and business-partner relationships. [[Restricted Period]] means the duration specified in Cover Terms for each covenant, beginning on the date Employee's employment with Employer ends for any reason. [[Restricted Territory]] means the geographic area described in Cover Terms under Restricted Territory. [[Solicit]] means to directly or indirectly contact, approach, induce, encourage, or provide Confidential Information to any person or entity for the purpose of diverting business away from Employer, but does not include responding to general advertisements or unsolicited inquiries not initiated by Employee. [[Trade Secrets]] means information that qualifies as a trade secret under applicable law. ### Recitals and Protectable Interests Employer and Employee acknowledge that each restrictive covenant in this agreement protects one or more of Employer's Protected Interests. Employer would not provide Employee with access to these Protected Interests absent the protections in this agreement. Each covenant is limited to the time, territory, and scope stated in this agreement. ### Timing, Consideration, and Employee Acknowledgements This agreement is supported by Employee's continued employment or, if signed at the outset of employment, Employer's offer of employment. Employee acknowledges having had the opportunity to consult with independent legal counsel before signing this agreement. Employee acknowledges that the restrictions in this agreement are reasonable and necessary to protect Employer's Protected Interests. This agreement is effective as of the Effective Date listed in Cover Terms. ### Confidential Information and Trade Secret Protection Employee must treat all Confidential Information as strictly confidential. Employee must not use or disclose Confidential Information except as required to perform authorized job duties or with Employer's prior written consent. Employee's obligations regarding trade secrets continue in perpetuity, for as long as the information remains a trade secret. Employee's obligations regarding other Confidential Information continue for the period specified in Cover Terms. This confidentiality obligation is intended to operate alongside, and independent of, any restrictive covenant, and does not restrict Employee's use of the general knowledge, skill, and experience Employee acquired during employment. ### Permitted Disclosures and Protected Conduct Nothing in this agreement prohibits Employee from: (a) reporting possible violations of law to any government agency, including the Securities and Exchange Commission, the Equal Employment Opportunity Commission, the Occupational Safety and Health Administration, or any other federal, state, or local agency; (b) making disclosures protected under whistleblower provisions of any law; (c) discussing wages, hours, or other terms and conditions of employment as protected by applicable law, including Section 7 of the National Labor Relations Act (29 U.S.C. § 157); (d) testifying truthfully in legal proceedings; or (e) filing a sealed complaint in court using Confidential Information without liability. Pursuant to the Defend Trade Secrets Act (18 U.S.C. § 1833(b)), Employee may not be held criminally or civilly liable for disclosing a trade secret in confidence to a government official or attorney solely for the purpose of reporting or investigating a suspected violation of law, or in a sealed court filing. ### Return, Deletion, and Certification of Company Property Upon termination of employment, Employee must promptly return to Employer all documents, devices, files, credentials, and other materials containing or relating to Confidential Information. Where permitted, Employee must permanently delete electronic copies of Confidential Information from personal devices and accounts. Employee must certify compliance with this section in writing upon Employer's request. ### Non-Solicitation of Employees During the Restricted Period, Employee must not Solicit, recruit, hire, or attempt to hire any Covered Employee. This restriction does not prohibit Employee from providing a professional reference upon request or from hiring a person who responds to a general advertisement not directed specifically at Employer's employees. This covenant reaches only Covered Employees during the Restricted Period and is no broader than necessary to protect Employer's workforce stability and goodwill. ### Non-Solicitation of Customers, Vendors, Referral Sources, and Business Partners During the Restricted Period, Employee must not Solicit the business of any Covered Customer. This covenant reaches only Covered Customers with whom Employee had material contact and is no broader than necessary to protect Employer's goodwill in its customer relationships. ### No Business with Covered Customers During the Restricted Period, Employee must not accept, service, or do business with any Covered Customer with whom Employee had material contact, regardless of who initiates contact. ### Non-Competition During the Restricted Period, Employee must not engage in, be employed by, consult for, or have an active ownership interest in any Competitive Business within the Restricted Territory. If Specified Competitors are listed in Cover Terms, Competitive Business is limited to those competitors. Passive Public Holdings are permitted. ### Non-Investment During the Restricted Period, Employee must not acquire or hold any active ownership interest in, serve as a director, officer, manager, or advisor to, or have material economic participation in any Competitive Business. Passive Public Holdings are permitted. ### Non-Disparagement During the Restricted Period specified in Cover Terms for Non-Disparagement, Employee must not make statements that are intended to or reasonably likely to disparage Employer, its officers, directors, employees, products, or services. This section does not restrict Employee from making truthful statements in legal proceedings, providing truthful testimony, making disclosures to government agencies, or exercising rights protected by law, including rights protected under Section 7 of the National Labor Relations Act. ### Physician and Health Care Practitioner Covenants No covenant in this agreement restricts a licensed healthcare professional from practicing beyond the Restricted Period or outside the Restricted Territory stated in Cover Terms. ### No Conflicting Obligations Employee represents that performing duties for Employer and complying with this agreement does not conflict with any prior agreement, court order, or legal obligation binding on Employee. Employee must promptly disclose to Employer any potential conflict that arises during employment. ### Notice to Future Employers and Other Third Parties Employer may disclose the existence and terms of this agreement to any prospective employer or business associate of Employee if Employer has a reasonable belief that Employee may breach this agreement. Employee consents to this disclosure. ### Tolling During Breach If Employee breaches any restrictive covenant in this agreement, the Restricted Period for that covenant is extended by one day for each day the breach continues. The extension may not exceed the number of days during which the breach continued. ### Remedies Employee acknowledges that a breach of this agreement may cause Employer irreparable harm for which money damages would be inadequate. Employer may seek injunctive or other equitable relief in addition to any other remedies available at law, including any remedy available under applicable trade-secret law for actual or threatened misappropriation of a trade secret. ### Enforceability and Severability If any provision of this agreement is found to be unenforceable, the remaining provisions remain in full force and effect. ### Survival and Expiration of Each Covenant Each restrictive covenant in this agreement survives the termination of Employee's employment for the Restricted Period specified in Cover Terms. Obligations under the Confidential Information and Trade Secret Protection section survive for the Trade Secrets Duration specified in Cover Terms to the extent they relate to trade secrets, and for the Other Confidential Information Duration specified in Cover Terms for other Confidential Information. All other provisions survive to the extent necessary to enforce rights that arose during employment. Each covenant's duration is stated in Cover Terms, and no covenant is intended to revive after its stated term has run. ### Assignment and Successors Employee may not assign this agreement or any rights or obligations under it. Employer may assign this agreement to any affiliate, successor, or acquirer of all or substantially all of Employer's business or assets. Employer may assign this agreement to a successor in connection with a sale of its business. This agreement is binding on and inures to the benefit of the parties and their respective heirs, successors, and permitted assigns. ### Governing Law, Venue, and Dispute Process This agreement is governed by the law listed in Cover Terms. This agreement does not impose a covenant not to compete as a condition of a barbering or cosmetology school's training for licensure, and it does not restrict a lawyer's right to practice after termination of the relationship except as to benefits upon retirement, nor make any restriction on a lawyer's right to practice part of the settlement of a client controversy. Disputes will be resolved in the courts of the Governing Law state, subject to non-waivable rights under applicable law. ### Entire Agreement, Amendment, Waiver, and Electronic Signatures This agreement constitutes the entire agreement between the parties regarding its subject matter and supersedes all prior agreements, understandings, and negotiations on this subject. This agreement may be amended only in writing signed by both parties. A party's failure to enforce any provision does not waive that party's right to enforce it later. This agreement may be executed in counterparts, including by electronic signature, each of which is an original. ## Signatures By signing this agreement, each party acknowledges and agrees to the restrictive covenant obligations above. Employee confirms having read and understood each provision, including the Cover Terms. Employer: [Legal name of the employer] Signature: _______________ Signatory Name: [Full name of the authorized signatory signing for the employer] Title: [Title of the authorized signatory signing for the employer] Date: _______________ **Employee** Signature: _______________ Print Name: [Full legal name of the employee] Date: _______________ ## Drafting notes Drafting and enforceability considerations for this template, from the related practice guide: [Non-Competes in Vermont](/practice-guides/non-compete/us/vermont). ### the reasonableness test each covenant must survive Vermont has no general non-compete statute and no statutory safe harbor, so every covenant in the agreement stands or falls on the common-law reasonableness test, and a covenant that fails it is unenforceable rather than trimmed to fit. A restraint holds only where it protects a genuine interest — Vermont recognizes customer relationships and employee-specific goodwill, not merely trade secrets, but not an interest in avoiding ordinary competition — and the employer carries the burden of proving the covenant's reasonable necessity . Duration and territory are weighed together against the employer's actual market on the facts, with no safe-harbor number: a five-year, single-county restraint tied to a proven market was upheld, while a covenant whose territory the record leaves indeterminate fails for want of a finding as to what place it covered, so a term or radius copied from another form is measured against a market it was never sized to . A covenant's stated term is taken literally, so a restraint does not revive after its stated duration has run, and a disclosure to a departing employee's next employer built on a covenant that later fails this analysis exposes the employer to a claim of its own. ### continued employment Continued employment is enough consideration under _Summits 7_, but the covenant must still satisfy the reasonableness test on its own terms. Adequate consideration does not cure overbreadth in scope, geography, or duration, and the employer still bears the burden of proving reasonable necessity under _Summits 7_ and the _Andrus_ framework . ### tolling the restricted period during a breach A restraint whose clock runs out during a breach or the litigation over it is not extended by a Vermont court as a matter of course: the Vermont Supreme Court refused to add time to a covenant after litigation delay exhausted its term, holding that the term is a matter of contract and that a court construes contracts but will not make them for the parties, and it declined to recharacterize the extension as a postponed start date . An extension therefore reaches only as far as the agreement itself provides for it, and an express tolling clause is itself an additional restraint that must independently satisfy the same reasonableness limits as the covenant it extends — an open-ended or indefinite extension is exposed on that ground, while the partial-enforcement dicta elsewhere in Vermont law are case-bound rather than a reliable source of judicially supplied time . ### covenants that transfer with a sale of the business A covenant ancillary to the sale of a business is measured differently from an employment restraint: Vermont gives it more breathing room on duration and geography when it is supported by dedicated transaction consideration and sized to the acquired goodwill, so a five-year, twenty-five-mile covenant delivered at closing with a sum paid for the covenant alone held reasonable in time and place, and a five-year covenant with dedicated consideration is treated as a bargained-for transaction asset whose breach can be valued by the covenant itself . That leeway is earned by the deal structure, not presumed: a covenant is a distinct, negotiated sale term rather than an automatic incident of the transaction, and leaving material covenant terms open — including whether the deal carries a covenant at all — can defeat contract formation, so a covenant transferred in a sale that is not papered expressly, or consideration that is not tied to the covenant, leaves the restraint on ordinary employment-covenant footing when its scope is later tested . ### covenants restraining a licensed healthcare professional A covenant restraining a licensed healthcare professional from practicing is not categorically void in Vermont as of this review, but it is not exempt either: it runs the same common-law reasonableness test as any other covenant, with the public-interest prong weighing patient access and continuity of care, and the employer carries the burden of proving its reasonable necessity . A healthcare covenant sized to a narrow radius and a short term is the one that survives that scrutiny; a broad one is exposed on the public-interest prong. The footing is unstable: H.583 would categorically void noncompetition, nondisclosure, and nondisparagement agreements for healthcare professionals if enacted, so a covenant drafted under current law stands to be displaced on enactment . ### training covenants at a barbering or cosmetology school A covenant not to compete imposed as a condition of training for licensure at a school of barbering or cosmetology is void outright — the one generally applicable Vermont statute that voids a category of restrictive covenant, and no drafting saves it . The bar turns on the training-for-licensure relationship rather than on a job title, so a restraint the school or an affiliate extracts from a person training for licensure falls outside enforcement whatever the instrument is called. ### restrictions on a lawyer's right to practice A partnership, shareholders, operating, or employment agreement that restricts a lawyer's right to practice after the relationship ends is barred by the rules of professional conduct, except as to benefits upon retirement, and a restriction on a lawyer's right to practice may not be made part of the settlement of a client controversy . Because the rule polices the substance of the restriction rather than its label, a non-compete, a practice-area carve-up, or a client-facing restraint that operates as a practice restriction all sit inside the bar, so a covenant applied to an attorney is unenforceable on that ground however it is drafted. ### trade-secret protection and confidentiality duration Trade-secret protection and ordinary confidentiality carry different durations: a trade-secret obligation runs for as long as the information remains a trade secret, but a perpetual lid on non-secret information operates as an indirect restraint that inherits the same reasonableness scrutiny as a non-compete, so ordinary confidential information holds up only under a finite term tied to actual confidential information . The Vermont Trade Secrets Act supplies a remedy that stands independent of any covenant, but not an automatic one: a court may enjoin actual or threatened misappropriation of a trade secret and continue the injunction only for a reasonable period to eliminate the resulting commercial advantage, which calls for conduct- or threat-specific proof rather than the bare fact that a former employee has taken a new position .