Vermont Non-Compete Agreement

Introduction

Key Things to Know

1. 1

   The defining feature of Vermont non-compete law is that there is no statute at all. Enforceability turns entirely on a common-law reasonableness doctrine the Vermont Supreme Court built through cases such as Vt. Elec. Supply Co. v. Andrus, not on any code section a legislature passed.

2. 2

   Under the Andrus standard, courts in Vermont enforce a covenant unless it is contrary to public policy, unnecessary for the protection of the employer, or unnecessarily restrictive of the rights of the employee. Those three failure points, not a fixed rulebook, decide whether a clause survives.

3. 3

   No wage or income line exists in Vermont. The pending 2026 bill, H.205, would add one while largely banning non-competes, yet until it passes you should treat none of its proposed figures as binding and should never borrow another state's salary cutoff.

4. 4

   Vermont fixes neither a maximum number of months nor a maximum radius. A judge weighs duration, geographic area, and restricted activities together, and Vermont courts have let a longer term stand only where its geographic reach stayed narrow, so trade one dimension for another rather than stretching both.

5. 5

   On consideration, Summits 7, Inc. v. Kelly holds that continued employment can suffice for a covenant signed during an at-will relationship, meaning a separate raise or bonus is not strictly required, though offering one still shores up the agreement.

6. 6

   Reformation is the wild card in Vermont. Faced with an overbroad restraint, a Vermont court might narrow it to what is reasonable or might throw it out entirely, so never rely on a judge to rescue an overreaching clause.

7. 7

   Because Vermont keeps non-competes on a short leash, many employers lean on a nondisclosure or nonsolicitation agreement plus the Vermont Trade Secrets Act (9 V.S.A. Section 4601 et seq.), which guards trade secrets without dictating where a former worker may go.

Vermont Requirements for Non-Compete Agreement

• No Statute; Governed by Andrus Reasonableness

  Vermont has enacted no non-compete statute. A covenant is judged only against the Vermont Supreme Court's common-law reasonableness doctrine from Vt. Elec. Supply Co. v. Andrus: it is enforced unless it is contrary to public policy, unnecessary for the protection of the employer, or unnecessarily restrictive of the rights of the employee. A restraint that reaches past the legitimate business interest it guards will not stand in Vermont.

• No Wage Threshold in Force

  No current Vermont law makes a covenant valid or void based on what the employee earns. H.205, the 2026 bill, would add a threshold while largely prohibiting non-competes, but it is not enacted and is not law today. Treat none of its proposed figures as binding, and never import another state's fixed salary number, when the worker sits in Vermont.

• Duration and Geography Judged Together

  Vermont fixes no maximum months and no maximum miles. A court weighs the time, the geographic area, and the restricted activities as one package against the legitimate business interest, whether trade secrets, confidential information, or customer goodwill. Vermont courts have upheld a longer term only where the geographic reach stayed narrow, so trade one dimension for another rather than stretching both.

• Must Guard a Legitimate Interest

  A Vermont non-compete has to protect a legitimate business interest, not block ordinary competition. Under Andrus a court asks whether the restraint runs no wider than needed to guard trade secrets, confidential information, or customer goodwill, and whether it stays fair to the employee and the public. Anchor the clause to a real interest and define the restricted activity narrowly.

• Continued Employment Can Suffice

  A covenant needs consideration to bind, but Vermont's bar is low. Summits 7, Inc. v. Kelly holds that continued employment alone can support a non-compete entered into during an at-will relationship, so a separate new benefit is not always required. Even so, giving a current employee something concrete for signing a fresh restriction strengthens the agreement in Vermont.

• Blue-Pencil Reform Is Unsettled

  Vermont has never settled whether a court will narrow an overbroad covenant or void it entirely. One line of authority strikes an unreasonable restraint whole; another lets a court pare it down to what is reasonable. Because the outcome is unpredictable, scope the duration, geography, and restricted activities to the legitimate interest from the start rather than banking on a judge to rescue the clause.

• No Statutory Occupation Carve-Outs

  Unlike some states, Vermont has passed no statutory ban for physicians, low-wage workers, or any other occupation. Every occupation-specific limit runs through the same common-law reasonableness and public-policy analysis. The pending 2026 bill, H.205, would change that by prohibiting most non-competes, but it is not yet law, so today every Vermont covenant is measured by the general Andrus test.

• Protect Trade Secrets Another Way

  Because Vermont keeps non-competes on a short leash, many employers guard information with a nondisclosure or nonsolicitation agreement plus the Vermont Trade Secrets Act (9 V.S.A. Section 4601 et seq.). These tools let a business protect trade secrets and customer data without policing where a former worker can go, which clears Vermont's reasonableness hurdle more easily than a broad non-compete.