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Committee reviews revised noncompete bill, preserves broad ban for health‑care providers
Summary
The committee reviewed draft 3.2 of H.205, which tightens noncompete rules, adds a broad prohibition for health‑care providers, and clarifies permitted non‑solicitation and stay‑or‑pay provisions. Medical and business groups voiced support for the health‑care carveout and raised concerns about fiduciary and loan language.
The House Commerce & Economic Development Committee turned to H.205 (draft 3.2) on Feb. 11, reviewing changes to noncompete and stay‑or‑pay provisions and discussing a broad exemption for health‑care providers.
Sophie Sedatny of the Office of Legislative Council said the revised draft removes some narrow executive/startup definitions and sets a single, narrower exception for individually negotiated agreements with exempt employees who meet strict criteria. Those criteria include a requirement that the employee earn at least 250% of the state minimum wage (now about $75,000) and that any noncompete be strictly necessary to protect a specific documented business interest and be reasonable in time, geography and scope.
The bill preserves permissive non‑solicitation language that would let employees with a direct fiduciary relationship notify clients of their departure (but not solicit them). It also clarifies stay‑or‑pay provisions, enumerating factors that make a repayment obligation lawful and limiting repayment to voluntary separations or terminations for cause.
Notably, the draft contains a broad prohibition on noncompetes for health‑care providers and a clause preventing employers from using another state’s law or venue provision to undermine Vermont’s protections — language counsel said was modeled on a New Mexico statute intended to protect traveling nurses and staffing firms.
Joseph Barnard of the Vermont Medical Society said the health‑care carveout balanced patient continuity, provider autonomy and recruiting goals; he urged the committee to ensure the language clearly covers partnerships and non‑employee professional relationships. Chris Dioia, president of the Vermont Bankers Association, thanked counsel for several changes but said the fiduciary definition could mischaracterize relationships in financial services, that the "specific documented business interest" and "immediate risk" test may be hard to prove, and that the "other contracts" repayment provision should be clarified so ordinary loans or wage advances are not unintentionally swept into stay‑or‑pay rules.
The committee asked counsel to consider clarifying fiduciary language and repayment examples and to continue working with stakeholders. No vote was taken; the panel recessed for 15 minutes and said it would return at 3:00 p.m. to hear additional businesses.
