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Can I require employees to sign non-compete agreements in Vermont? What are the requirements?

Non-Compete Agreements in Vermont

Non-compete agreements are generally disfavored in Vermont, and there are strict requirements for their enforceability. According to [1.1]" >3 VTST 499a, non-compete agreements are enforceable in Vermont only if they meet the following requirements:

  1. The agreement must be supported by consideration, such as a job offer or a promotion.
  2. The agreement must be necessary to protect the employer’s legitimate business interests, such as trade secrets or customer goodwill.
  3. The agreement must be reasonable in duration, geographic scope, and the type of activity restricted.
  4. The agreement must not impose an undue hardship on the employee.

Application of Vermont Business Corporation Act

Title 11A of the Vermont Business Corporation Act applies to professional corporations, both domestic and foreign, to the extent not inconsistent with the provisions of this chapter [2.1]" >11 VTST 816.

Membership; Employees’ Rights

An employee organization entering into an agreement shall not discriminate against a person seeking or holding membership therein on account of race, color, creed, religion, age, disability, sex, sexual orientation, gender identity, or national origin; penalize a member for exercising a right guaranteed by the Constitution or laws of the United States or the State of Vermont; or cause or attempt to cause the discharge from employment of employees who refuse membership therein because of religious beliefs [3.1]" >3 VTST 963.

Conclusion

Non-compete agreements are generally disfavored in Vermont, and there are strict requirements for their enforceability. Employers should ensure that any non-compete agreements they use meet these requirements. Additionally, employee organizations entering into an agreement shall not discriminate against a person seeking or holding membership therein on account of certain protected characteristics, penalize a member for exercising a right guaranteed by the Constitution or laws of the United States or the State of Vermont, or cause or attempt to cause the discharge from employment of employees who refuse membership therein because of religious beliefs.

Source(s):
Jurisdiction

Vermont