Committee reviews H.205 to void many franchise and employee noncompete agreements, with $100,000 carve‑out

The Vermont House Committee on Commerce and Economic Development on April 17 reviewed H.205, a bill that would render many noncompete agreements in franchise contracts and employer-employee contracts void and require written notice to affected parties, while exempting employees paid $100,000 or more annually.

Legislative counsel Rick Segal told the committee the bill has two sections: one that creates a new chapter in Title 9 addressing franchise agreements and one in Title 21 addressing employer-employee noncompete agreements. "Any agreement not to compete, including an agreement not to compete contained within a contract or franchise agreement, is void and unenforceable," Segal said as he summarized the draft language.

The franchise portion would define an "agreement not to compete" to mean a contract provision that (1) restricts the franchisee from operating in a geographic area, (2) restricts the franchisee for a specified period after separation, or (3) otherwise significantly limits the…