Lifetime Citizen Portal Access — AI Briefings, Alerts & Unlimited Follows
Committee hears proposal to bar noncompetes for nonexempt workers; members debate wage gate
Loading...
Summary
The House Committee on General and Housing reviewed draft language to add a narrow noncompete ban to S.230, prohibiting agreements not to compete for nonexempt employees and preserving collective-bargaining carve-outs; lawmakers and counsel debated whether to tie the ban to FLSA exempt/nonexempt tests or use a fixed wage threshold.
Sophie, legislative counsel at the Office of Legislative Counsel, told the House Committee on General and Housing on April 14 that a proposed addition to S.230 would insert a new section in the Fair Employment Practices Act to prohibit agreements not to compete with nonexempt employees, calling them "presumptively coercive" unless the term was part of a collective bargaining agreement.
The proposal, counsel said, would make noncompete clauses unenforceable for hourly and other "nonexempt" roles as defined by the Fair Labor Standards Act and would attach FEPA remedies and existing penalty provisions for violations. Sophie noted that the draft preserves carve-outs commonly used in noncompete law — for example, sales of a business, trade-secret protections, and nondisclosure or nonsolicitation provisions.
Rep. Abby Duke, sponsor of the broader H.205 effort from which this draft borrows, described the multi-year process that shaped H.205 and the working-group consensus behind its two-part approach: a salary threshold plus a duties test. Duke said H.205 aimed to protect low-wage and otherwise vulnerable employees from overbroad noncompetes while preserving legitimate business protections for high-wage employees or narrowly defined roles.
"We worked really hard to balance competing interests," Duke said, recounting the bill's drafting and the floor amendment that ultimately led to recommittal. She told the committee that teacher-contract statutory language — which currently restricts movement between public school positions — became the central sticking point because the statute was not mirrored in collective bargaining agreements.
Members pressed counsel and witnesses on technical issues. Several lawmakers warned that tying the ban to the FLSA exempt/nonexempt test could be unstable: the federal salary threshold and administration-level rulemaking have changed in recent years, which can cause employees to shift classification without a change in duties. One committee member warned that an FLSA-based gate "can get messy" and suggested a simple wage-based threshold (for example, the overtime salary number at which overtime rules kick in) as a cleaner, single test.
Austin Davis, director at the Lake Champlain Chamber, urged the committee to balance protections for employees and employers, noting startup and trade-secret concerns where a narrowly tailored, judicially reviewable restriction may be appropriate. Several members also asked whether the draft needed a formal statutory definition of "agreement not to compete" or whether courts’ existing case law would suffice.
No formal action or vote was taken. The committee scheduled follow-up briefings and more witnesses — including labor and employer representatives — and agreed to consult counsel about drafting options such as a wage threshold, a sunset for problematic statutory language, or alternative formulations to avoid reopening contentious sections of the prior bill.
The committee recessed the noncompete conversation for additional staff work and witness testimony expected the next day.
