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What Is a Vermont Non-Compete Agreement?

A Vermont non-compete agreement is a form of employment contract relying on restrictive covenants that employers use to protect their trade secrets, customer relationships, and other legitimate interests by limiting their employees’ actions once the employment relationship terminates. Employers do this by having their new hires, independent contractors, and key personnel sign a non-competition agreement that promises that once the individual's employment ends or is terminated, they will not endanger their former employer's business interests by the disclosure of trade secrets or working for competitors within a certain geographic area for a certain amount of time.

A non-compete agreement may stand on its own as a contract, but it must provide sufficient consideration. It generally is used along with a non-solicitation agreement and a non-disclosure agreement (also known as a confidentiality agreement). A business should seek legal advice from a law firm that practices employment law to ensure that they have an enforceable agreement. This is beneficial in the event that the employer must file a lawsuit against the former employee in Vermont courts.

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Sample Vermont Non-Compete Agreement

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Applicable State Laws - None

Currently, Vermont non-compete agreements protect proprietary, confidential information, goodwill, relationships with customers, and investments made in special training. However, last year in 2019, lawmakers tried to pass a non-compete law to ban their use. In early 2020, lawmakers again tried to limit their use as supported by the Committee on Commerce and Economic Development. They recommend codifying case law and setting a wage threshold to protect low-wage employees from being injured by non-competes.

Although Vermont doesn’t have specific laws on non-compete agreements, employers are encouraged to be reasonable when drafting a non-compete agreement. Currently, they must not violate public policy. They should not cause undue hardship for former employees.

Protect your Vermont business by also using a Vermont non-disclosure agreement form. Download a Vermont agreement form! 

How to Write a Vermont Non-Compete Agreement

To write a Vermont non-compete agreement, include the following clauses:

  • Purpose. This clause explains the purpose of the non-compete agreement: to protect the legitimate interests of the employer. It also identifies the parties and their roles while also providing the effective date of the contract.
  • Non-compete. This clause explains the restrictions the employee is obligated to follow by signing the agreement. It includes the time restriction, geographic scope, general and specific business activities, working for general and specific competitors, and non-solicitation of employees, customers, and clients.
  • Time period. This clause explains when the time restriction begins: either when the employment relationship begins or when it is terminated.
  • Purchase option. This clause explains whether the employer will allow the employee the option of buying out the contract. If so, the purchase amount is listed in this clause.
  • Jurisdiction. This clause states that Vermont laws will be used to govern the agreement.
  • Confidential information. This clause states that the definition of "confidential information" as used in the non-compete agreement means any and all technical and non-technical information provided by the employer that includes, and is not limited to, products, inventions, plans, methods, processes, developmental or experimental products, intellectual property, software, databases, customer lists, vendor or supplier lists, marketing information, reports, business information, financial information, or other information related to the employer or any of the clients, customers, or consultants that is disclosed or may be disclosed to the employee under the terms of the agreement.
  • Permitted disclosure. This clause explains when confidential information may be disclosed without it being a violation of the non-compete agreement. This generally occurs when information becomes public through no fault of the signing employee, when the signing employee discovers the information on their own without a breach of another person, and when specific information is released to the public after written consent from the employer.
  • Confidentiality. This clause states that the employee understands the information they may access is confidential. They agree they will not directly or indirectly disclose it to another party without receiving written consent from the employer. This clause also states that the employee also agrees they will not use the information for any purpose except for the business unless they first receive the employer’s written consent.
  • Consultants and employees bound. This clause states that consultants and employees are bound to keep the information under the strictest of confidence. It also states that consultants and employees are on a need-to-know basis.
  • Return of materials. This clause states that when the employment relationship is terminated or requested by the employer, the employee must promptly return the documents and other tangible materials that represent the confidential information of the business and any copies that exist. The clause also states that the employer will notify the employee of any unauthorized loss of confidential information.
  • Remedies. This clause explains the legal remedies the employer is entitled to pursue if the employee violates the terms of the agreement. Examples include the recovery of court costs and reasonable attorney fees, the award by a Vermont court of a temporary restraining order or preliminary injunction against the unauthorized use, as well as any other legal remedies available under Vermont law or as a matter of equity.
  • Choice of law. This clause states that the parties agree that Vermont law will govern the non-compete agreement.
  • Entire agreement. This final clause states that the entire agreement may only be amended in writing and only if the parties sign it.

Both the employer and employee should sign and print their name. The signatures should be dated. Each party should keep a copy of the finalized non-compete agreement for their records.  

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