House General & Housing hears testimony on H.334, weighing noncompete and stay-or-pay limits

On Friday, April 18, the House General & Housing Committee heard testimony on H.334, an act "relating to limiting employer restrictions on individuals separating from employment," with particular attention to noncompete clauses and "stay-or-pay" provisions.

Austin Davis, director of government affairs for the Lake Champlain Regional Chamber, told the committee that while the subject is "important and complicated," he favored caution before adopting a broad statutory change. "I actually think, you know, more eyes on this this bill is probably better than, less," Davis said, arguing that Vermont already has "a rich body of case law" governing noncompetes and that courts have tools to keep agreements reasonable.

Davis said noncompete agreements serve several employer interests beyond protecting trade secrets, including guarding against use of undue influence and protecting investment in employee training. He told legislators that investors often expect noncompetes for early-stage startups, and warned that an immediate ban or overly broad restrictions could "cut the legs out from beneath some of our Vermont small businesses and startups." He urged the committee to "codify existing case law" and to consider phased or tailored approaches rather than an outright prohibition.

Megan Sullivan, vice president of government affairs for…