Vermont Non-Compete Agreement
Vermont has no non-compete statute. Enforceability runs through the Vermont Supreme Court's common-law reasonableness test, with no wage threshold in force. Attorney review available.
Introduction
Vermont stands out for having no non-compete statute at all. No Vermont law bans these covenants, caps their length, draws a geographic line, or sets a salary cutoff. A single thread of Vermont Supreme Court decisions decides them instead, anchored by Vt. Elec. Supply Co. v. Andrus back in 1974. Under that common-law reasonableness doctrine, a covenant not to compete holds up unless it is contrary to public policy, unnecessary for the protection of the employer, or unnecessarily restrictive of the rights of the employee. When a dispute reaches a Vermont judge, the restraint's duration, geographic reach, and subject matter are each weighed against the employer's legitimate business interest, the hardship the clause puts on the worker, and any harm to the public. Consideration follows the same case-law path: in Summits 7, Inc. v. Kelly the Vermont Supreme Court accepted that continued employment can be enough to support a covenant signed during an at-will job, so a fresh raise or bonus is not always required. One open question should shape how you draft. Vermont has never settled whether its courts will narrow, or blue-pencil, an overbroad clause down to size or simply refuse to enforce it, which makes a tightly written restriction the safer bet. A 2026 bill, H.205, would upend much of this by prohibiting most non-competes and adding a wage threshold, but it remains pending and is not law today. This page lays out how Vermont actually treats these agreements and pairs it with a template scoped to what the state permits. Read it as a state-law overview, not a guarantee that a particular clause will survive.
Key Things to Know
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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.
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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.
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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.
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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.
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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.
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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.
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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.
Key decisions before you file
Before you file a Non-Compete Agreement in Vermont, a few decisions shape the document: which option to choose and what each one means. The Non-Compete Agreement guide walks through them.
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Vermont Requirements for Non-Compete Agreement
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 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.
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.
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.
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.
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.
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.
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.
Frequently Asked Questions
Yes, within limits. Because Vermont has no non-compete statute, the question runs through the Vermont Supreme Court's common-law reasonableness doctrine from Vt. Elec. Supply Co. v. Andrus. A covenant holds up unless it is contrary to public policy, unnecessary for the protection of the employer, or unnecessarily restrictive of the rights of the employee. A clause that reaches past the legitimate business interest it guards, or that saddles the worker with undue hardship, will not be enforced in Vermont, while a tightly scoped one can be.
No Vermont statute names a ceiling in months. Length is judged only against reasonableness, and a Vermont court weighs it alongside the geographic area and the restricted activities rather than in isolation. Vermont courts have allowed a longer term to stand where the geographic reach was narrow, so the smart move is to tie the restriction to specific trade secrets, confidential information, or customer goodwill and to trade a wider scope for a shorter clock.
No. Nothing in current Vermont law makes a covenant valid or void based on what the employee earns. H.205, the 2026 bill, would introduce a wage threshold and largely ban non-competes, and drafts have floated figures such as three times the minimum wage or an annual salary near $100,000, but that bill is not enacted and carries no force in Vermont yet. Do not lean on any of those numbers, and do not transplant another state's dollar cutoff, when the worker is in Vermont.
Some consideration is required, but Vermont sets a low bar through case law. In Summits 7, Inc. v. Kelly the Vermont Supreme Court held that continued employment alone can support a covenant entered into during an at-will relationship, so an employer need not always hand over a new raise or bonus. Even so, giving a current employee something concrete for signing a fresh restriction makes the agreement sturdier and harder to challenge in Vermont.
Maybe, and that uncertainty is the point. Vermont has no statute on reformation and its case law pulls both ways: one line of authority says a Vermont court will strike an unreasonable covenant whole, another suggests a judge may pare it back to what is reasonable and enforce the rest. Since you cannot predict which path a court takes, scope the duration, geography, and restricted activities to the legitimate business interest from the outset rather than banking on a rescue.
Reasonableness in Vermont is a case-by-case judgment drawn from Andrus. A court asks whether the restraint runs no wider than needed to guard a legitimate interest such as trade secrets, confidential information, or customer goodwill, and whether it stays fair to both the employee and the public. A covenant that is contrary to public policy, unnecessary for the protection of the employer, or unnecessarily restrictive of the employee's rights fails. Narrow timing, a limited territory, and a clearly named restricted activity each push it toward enforceable.
They reach for a confidentiality or nondisclosure agreement backed by the Vermont Trade Secrets Act, 9 V.S.A. Section 4601 et seq., which lets a business sue over misappropriated trade secrets. That route shields confidential information and customer data without policing where a former employee may work, so it clears Vermont's reasonableness hurdle more easily than a broad non-compete. Plenty of Vermont employers pair a slim non-compete with these tools instead of leaning on the covenant alone.
No. The Federal Trade Commission's 2024 rule aimed to ban most non-competes across the country, but a federal court set it aside before its effective date, so it never took hold and its status stays unsettled. Whatever becomes of it, non-competes in Vermont answer to the state's own common-law reasonableness test: a covenant binds only so far as it is reasonable, no wider than a legitimate business interest demands, and free of undue hardship on the employee or harm to the public.