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Parties and cover-term identification
Review every item below the way a Vermont court would: there is no general non-compete statute in force, so each covenant lives or dies on a common-law reasonableness test the employer has the burden of satisfying — and the legislature is actively advancing bills that would supersede that framework if enacted. For the question-by-question legal analysis behind these items, see the Vermont non-compete practice note.
Who the parties are sets the review track: a covenant between an employer and a departing employee gets the cautious employment-side scrutiny, while a covenant between a buyer and the seller of a business earns more deference. Vermont treats a non-compete in a business sale as its own bargained-for term, so confirm which relationship the signing entities actually create before reaching anything else.
Every covenant clock needs a defined start, and date discipline carries extra weight while the General Assembly is actively considering non-compete legislation: if a pending bill becomes law, the execution date is what will place an agreement on one side or the other of any new regime. An undated covenant leaves that question open at the worst possible time.
The role decides whether a categorical bar applies before reasonableness ever comes up: a restriction on a lawyer's right to practice after the relationship ends is barred by the professional-conduct rules, and a barbering or cosmetology school cannot require a covenant as a condition of training for licensure. Outside those classes, the title frames which interests the worker could plausibly threaten.
Check that the governing state is stated. Restrictive-covenant law varies sharply across jurisdictions, and the governing-law selection decides which body of doctrine the rest of this checklist runs against.
Sources for this section
Case law
A.1 Miller v. FlegenheimerMiller supports the rule that a non-compete is a distinct, bargained-for term in a Vermont stock sale rather than an automatic incident, and that leaving it open can defeat contract formation.
whether or not the contract includes a form of non compete or non solicitation agreement, the price to be paid for the shares (as opposed to the Non-Compete Agreement), and the structure of the claw-back provision.
See Miller v. Flegenheimer, 2016 VT 125, ¶ 21, 203 Vt. 620, 161 A.3d 524.
Primary law
A.2 Vt. H.205 (2025-2026) — Bill StatusH.205, recommitted March 13, 2026, is the umbrella legislative vehicle for Vermont's pending non-compete and stay-or-pay prohibition; the bill text is titled 'An act relating to agreements not to compete'.
An act relating to agreements not to compete
See H.205, 2025-2026 Gen. Assemb., Reg. Sess. (Vt. 2026) (recommitted Mar. 13, 2026).
Primary law
A.3 Vermont Rule of Professional Conduct 5.6PDFVermont Rule of Professional Conduct 5.6(a) supports the attorney-specific bar on firm and employment agreements restricting lawyer practice after termination.
agreement that restricts the right of a lawyer to practice after termination of the relationship,
See Vt. R. Prof. Conduct 5.6(a).
Primary law
A.4 26 V.S.A. § 281(c)26 V.S.A. § 281(c) supports the categorical prohibition on barber- and cosmetology-school non-competes imposed as a condition of training for licensure.
A school of barbering or cosmetology shall not require, as a condition of training for licensure, that a person enter into a covenant not to compete with the training organization or an affiliate.
See 26 V.S.A. § 281(c).
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Definitions
Keep the definition tied to genuinely confidential material. Vermont applies its reasonableness scrutiny to restrictive covenants generally, so a confidentiality definition broad enough to operate as a practical work ban inherits the same public-policy, employer-necessity, and employee-rights review as a non-compete.
A separate trade-secret definition keeps the agreement aligned with the statutory fallback: Vermont's trade secrets act lets a court enjoin actual or threatened misappropriation whether or not any covenant survives, so material that genuinely qualifies should be defined on its own track rather than blended into ordinary confidential information.
One defined Restricted Period keeps every duration auditable. Vermont has no fixed cap — a five-year restraint passed where it matched the employer's single-county market and ended cleanly — so the period needs a factual story connecting its length to the interest it protects, not a number copied from a form.
Pin the geography to where the worker actually operated. The Vermont Supreme Court reversed enforcement of a covenant where the trial court never determined what place the agreement covered — a territory the contract itself leaves vague invites exactly that failure.
Customer relationships are a protectable interest in Vermont in their own right — broader than trade-secret law — but the definition still has to bound the class to relationships the worker actually held during a stated look-back window, or the restraint outruns the interest that justifies it.
Keep the no-poach class to colleagues the departing worker actually dealt with during the look-back window. A class that sweeps in the whole workforce reads as a restraint on the labor market rather than protection of anything the employer owns, and it loads the hardship side of the reasonableness balance.
Name the interests concretely, because the employer will have to prove them: the burden of establishing the reasonable necessity of the covenant sits with the employer, and Vermont accepts customer relationships and employee-specific goodwill alongside trade secrets and confidential information. A recital that protects nothing identifiable is a naked restraint waiting to be found one.
Describe the genuinely competing activity in concrete terms tied to what the employer actually does. Vermont measures a restraint against the Restatement test — unreasonable if greater than needed to protect the legitimate interest, or if the need is outweighed by hardship and public injury — and an open-ended definition forces that analysis to assume the widest reading.
Where ownership or investment in competitors is restricted, look for a passive-holdings carve-out below a stated threshold. A clause that technically forbids index funds and ordinary public shares restrains the worker far past any interest the employer can prove, and it hands the other side an easy overbreadth argument.
Optional drafting mechanics — many agreements inline the threshold language instead of defining a capitalized term. If the term appears, check that its percentage agrees with the operative carve-out it serves.
Pin the term to initiating contact, and check whether passively receiving an inquiry counts as a breach. The looser the definition, the heavier the restraint weighs on the employee's side of the reasonableness balance — and the harder it is to defend as protection rather than punishment.
This trigger starts the restricted-period clock, and in Vermont the clock is unforgiving: the covenant's term is a matter of contract, and a court will not move the start date or stretch the term once it has run. The definition cannot be ambiguous about which event happened and when.
Sources for this section
Case law
B.1 Vermont Electric Supply Co. v. AndrusAndrus supports applying Vermont reasonableness scrutiny to restrictive covenants that burden employee rights.
enforcement will be ordered unless the agreement is found to be contrary to public policy, unnecessary for protection of the employer, or unnecessarily restrictive of the rights of the employee, with due regard being given to the subject matter of the contract and the circumstances and conditions under which it is to be performed.
See Vt. Elec. Supply Co. v. Andrus, 132 Vt. 195, 315 A.2d 456 (1974).
Primary law
B.2 9 V.S.A. § 4602 — Injunctive relief9 V.S.A. § 4602 supports the availability of injunctive relief for actual or threatened misappropriation of a trade secret independent of any contractual covenant.
A court may enjoin actual or threatened misappropriation of a trade secret.
See 9 V.S.A. § 4602(a).
Case law
B.3 Vermont Electric Supply Co. v. AndrusAndrus supports the conclusion that a five-year, single-county restraint can be reasonable when tied to the employer's actual market and the employee's developed customer relationships.
The area involved was Rutland County, and the defendants had elected to establish their business outside of that county already. After five years,' all restrictions were at an end.
See Vt. Elec. Supply Co. v. Andrus, 132 Vt. 195, 199, 315 A.2d 456, 458 (1974).
Case law
B.4 Roy's Orthopedic, Inc. v. Lavigne (first appeal)Roy's Orthopedic (1982) supports the rule that enforcement fails where the trial court does not make findings on the actual geographic territory covered by the covenant.
the trial court concluded that the restrictive covenant not to compete was reasonably limited to time and place without having made a finding as to what “place” was covered by the agreement.
See Roy's Orthopedic, Inc. v. Lavigne, 142 Vt. 347, 454 A.2d 1242 (1982).
Case law
B.5 Systems & Software, Inc. v. BarnesBarnes supports the rule that Vermont protectable interests are not limited to trade secrets or confidential customer information; customer relationships and employee-specific goodwill can also justify a restraint.
noncompetition agreements may protect legitimate employer interests such as customer relationships and employee-specific goodwill that are “significantly broader” than proprietary information such as trade secrets and confidential customer information.
See Sys. & Software, Inc. v. Barnes, 2005 VT 95, ¶ 5, 178 Vt. 389, 886 A.2d 762.
Case law
B.6 Summits 7, Inc. v. KellySummits 7 supports the rule that the employer bears the burden of proving the reasonable necessity of the restrictive covenant.
[t]he employer has the burden of proving the reasonable necessity of the restrictive covenant.
See Summits 7, Inc. v. Kelly, 2005 VT 97, ¶ 14, 178 Vt. 396, 886 A.2d 365.
Case law
B.7 Systems & Software, Inc. v. BarnesBarnes supports the Restatement (Second) of Contracts § 188 framing that a covenant is unreasonable if the restraint exceeds what is needed or if the employer's need is outweighed by hardship and public injury.
Like many other courts, this Court has adopted a position with respect to enforcement of noncompetition agreements similar to that set forth in § 188(1) of the Restatement (Second) of Contracts (1981) , which provides that a restrictive covenant “is unreasonably in restraint of trade if (a) the restraint is greater than is needed to protect the promisee’s legitimate interest, or (b) the promisee’s need is outweighed by the hardship to the promisor and the likely injury to the public.”
See Sys. & Software, Inc. v. Barnes, 2005 VT 95, ¶ 4, 178 Vt. 389, 886 A.2d 762 (quoting Restatement (Second) of Contracts § 188(1) (1981)).
Case law
B.8 Roy's Orthopedic, Inc. v. Lavigne (second appeal)Roy's Orthopedic (1985) supports the rule that Vermont courts will not equitably rewrite a noncompetition agreement by extending or shifting its time term.
The term of the noncompetition agreement was a matter of contract between the parties. This Court will construe contracts but it will not make them for the parties.
See Roy's Orthopedic, Inc. v. Lavigne, 145 Vt. 324, 487 A.2d 173 (1985).
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Timing and execution acknowledgements
Vermont does not demand a raise, bonus, or promotion for a covenant signed mid-employment: continued employment alone is sufficient consideration for a covenant entered during an at-will relationship. So read the timing recital for what it still does — it documents when the covenant was signed and what changed — and remember that consideration solves nothing else: overbreadth in scope, geography, or duration survives intact, and the employer keeps the burden of proving the covenant's reasonable necessity.
No Vermont statute demands it, but the reasonableness balance weighs how harshly the restraint lands on the worker — and a documented opportunity to take the agreement to counsel before signing is cheap evidence the process was fair rather than coercive.
Sources for this section
Case law
C.1 Summits 7, Inc. v. KellySummits 7 supports the rule that continued at-will employment alone is sufficient consideration to support a non-compete entered into during the employment relationship.
we agree with the superior court, the majority of other courts, and the recent Restatement draft that continued employment alone is sufficient consideration to support a covenant not to compete entered into during an at-will employment relationship.
See Summits 7, Inc. v. Kelly, 2005 VT 97, ¶ 18, 178 Vt. 396, 886 A.2d 365.
Case law
C.2 Summits 7, Inc. v. KellySummits 7 supports the drafting caution that adequate consideration does not relieve the employer of the burden to prove reasonable necessity.
[t]he employer has the burden of proving the reasonable necessity of the restrictive covenant.
See Summits 7, Inc. v. Kelly, 2005 VT 97, ¶ 14, 178 Vt. 396, 886 A.2d 365.
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Confidentiality and trade-secret treatment
Trade-secret obligations should run as long as secrecy does. Federal law keys protection to continued secrecy, and Vermont's trade secrets act says the same thing from the remedy side: an injunction ends when the trade secret ceases to exist, not on a calendar date. A fixed expiry on trade-secret protection gives away the one interest in the agreement that lawfully lasts.
Give ordinary confidential information its own finite term. A perpetual lid on non-secret material operates as an indirect restraint on the worker's ability to use what they know, and under the Restatement framing a restraint greater than the interest needs is unreasonable on its face — the two-track structure keeps the perpetual obligation where the law actually supports it.
Sources for this section
Primary law
D.1 Defend Trade Secrets Act — definition of a trade secret, 18 U.S.C. § 1839Federal law keys trade-secret status to continued secrecy, which is why contractual trade-secret protection should run as long as secrecy does rather than to a fixed date.
the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information
See 18 U.S.C. § 1839(3)(B) (2018).
Primary law
D.2 9 V.S.A. § 4602 — Injunctive relief9 V.S.A. § 4602 keys the duration of trade-secret relief to the life of the secret, supporting contractual protection that lasts as long as secrecy does.
A court may enjoin actual or threatened misappropriation of a trade secret. Upon application to the court, an injunction shall be terminated when the trade secret has ceased to exist, but the injunction may be continued for an additional reasonable period of time in order to eliminate commercial advantage that otherwise would be derived from the misappropriation.
See 9 V.S.A. § 4602(a).
Case law
D.3 Systems & Software, Inc. v. BarnesBarnes supports the Restatement framing for treating overbroad work-restriction clauses as unreasonable restraints.
Like many other courts, this Court has adopted a position with respect to enforcement of noncompetition agreements similar to that set forth in § 188(1) of the Restatement (Second) of Contracts (1981) , which provides that a restrictive covenant “is unreasonably in restraint of trade if (a) the restraint is greater than is needed to protect the promisee’s legitimate interest, or (b) the promisee’s need is outweighed by the hardship to the promisor and the likely injury to the public.”
See Sys. & Software, Inc. v. Barnes, 2005 VT 95, ¶ 4, 178 Vt. 389, 886 A.2d 762 (quoting Restatement (Second) of Contracts § 188(1) (1981)).
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Permitted disclosures and protected conduct
Federal law, fully applicable in Vermont: omit the immunity notice and the employer forfeits exemplary damages and attorney fees in a later trade-secret suit against the worker. That forfeiture stings here, because statutory trade-secret remedies are the main fallback when a covenant fails the reasonableness test.
Confidentiality and non-disparagement language has to leave wages, hours, and working conditions discussable. Federal labor law protects that speech regardless of the governing state, and the Board has been striking overbroad clauses in employee agreements.
Confirm the carve-out for disclosure required by law, court order, or a government investigation, with notice to the employer where lawful. No confidentiality clause outranks a subpoena, and the carve-out keeps the worker from being squeezed between the contract and a legal duty.
Sources for this section
Primary law
E.1 Defend Trade Secrets Act — employer immunity-notice requirement, 18 U.S.C. § 1833(b)The DTSA requires an employer to give notice of the trade-secret whistleblower immunity in any agreement governing the use of trade secrets or other confidential information.
An employer shall provide notice of the immunity set forth in this subsection in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.
See 18 U.S.C. § 1833(b)(3)(A) (2018).
Primary law
E.2 NLRA Section 7 — protected concerted activity, 29 U.S.C. § 157Section 7 protects concerted activity including wage discussion — the statutory basis for the carve-out from confidentiality and non-disparagement restrictions.
Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection
See 29 U.S.C. § 157 (NLRA § 7).
Agency guidance
E.3 NLRB news release on McLaren Macomb, 372 NLRB No. 58 (2023)The NLRB held that offering severance terms that broadly waive Section 7 rights — including overbroad confidentiality and non-disparagement terms — violates the NLRA.
simply offering employees a severance agreement that requires them to broadly give up their rights under Section 7 of the Act violates Section 8(a)(1) of the Act.
See McLaren Macomb, 372 NLRB No. 58 (2023); NLRB Office of Public Affairs (Feb. 21, 2023).
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Property return and certification
Return-or-delete at separation, certified in writing. The certification earns its keep in Vermont because the statutory fallback turns on actual or threatened misappropriation: a documented return process both shrinks the threat and gives the employer conduct-specific proof if relief is ever needed.
Sources for this section
Primary law
F.1 9 V.S.A. § 4602 — Injunctive relief9 V.S.A. § 4602 keys injunctive relief to actual or threatened misappropriation, which a documented return-and-certification process helps prevent and prove.
A court may enjoin actual or threatened misappropriation of a trade secret.
See 9 V.S.A. § 4602(a).
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Restrictive covenants (each independently includable)
Optional and comparatively low-risk when scoped to colleagues the worker actually dealt with. One Vermont-specific wrinkle: if the agreement sits inside a franchise network, know that the Attorney General has joined multistate enforcement against franchisor no-poach provisions — hiring restraints between businesses get policed outside the common-law covenant framework entirely.
Generally the easier covenant to defend in Vermont, because customer relationships are themselves a protectable interest — but only when the clause tracks the relationships the worker actually serviced. A book-of-business clause untethered from real contact outruns the goodwill that justifies it.
Non-dealing bars serving covered customers even when they call first — a heavier restraint than a non-solicit, and one that presses on both Restatement prongs: more restraint than the interest needs, and more hardship and public injury on the other side of the scale. Treat its inclusion as a deliberate risk decision.
If this clause appears, route the review through the Vermont gates at the end of this checklist: courts proceed with caution before enforcing covenants against competitive employment, and the employer will carry the burden at every step. Then check the legislature — H.205 and H.583 are pending bills that would substantially supersede the common-law framework if enacted, so confirm their status before relying on any template.
When the employer can name its real competitors, the covenant should bind those instead of leaning on an open-ended definition. A named list is the cleanest evidence that the restraint is no greater than the protected interest needs — exactly the showing the employer must make.
Rare and deliberate. Confirm the passive-holdings carve-out is intact and the clause shares the defined Restricted Period — an investment ban with no carve-out swells the hardship side of the balance for very little protective gain.
Sources for this section
Agency guidance
G.1 Five Guys Franchisor, LLC Multistate Settlement AgreementPDFThe Five Guys multistate settlement supports the Attorney General enforcement point that Five Guys agreed to stop including no-poach provisions in future franchise agreements nationwide.
Five Guys agrees that it will no longer include No-Poach Provisions in any of its franchise agreements in the United States signed after the execution date of this Agreement.
See Settlement Agreement Between the Settling States and Five Guys Franchisor, LLC, para. 11 (2019).
Case law
G.2 Systems & Software, Inc. v. BarnesBarnes supports the rule that customer relationships and employee-specific goodwill are protectable interests that can justify a reasonably scoped restraint.
noncompetition agreements may protect legitimate employer interests such as customer relationships and employee-specific goodwill that are “significantly broader” than proprietary information such as trade secrets and confidential customer information.
See Sys. & Software, Inc. v. Barnes, 2005 VT 95, ¶ 5, 178 Vt. 389, 886 A.2d 762.
Case law
G.3 Systems & Software, Inc. v. BarnesBarnes supports the Restatement (Second) of Contracts § 188 framing that a covenant is unreasonable if the restraint exceeds what is needed or if the employer's need is outweighed by hardship and public injury.
Like many other courts, this Court has adopted a position with respect to enforcement of noncompetition agreements similar to that set forth in § 188(1) of the Restatement (Second) of Contracts (1981) , which provides that a restrictive covenant “is unreasonably in restraint of trade if (a) the restraint is greater than is needed to protect the promisee’s legitimate interest, or (b) the promisee’s need is outweighed by the hardship to the promisor and the likely injury to the public.”
See Sys. & Software, Inc. v. Barnes, 2005 VT 95, ¶ 4, 178 Vt. 389, 886 A.2d 762 (quoting Restatement (Second) of Contracts § 188(1) (1981)).
Case law
G.4 Systems & Software, Inc. v. BarnesBarnes supports Vermont's modern reasonableness framework and the 'proceed with caution' posture toward covenants against competitive employment.
We have stated that “we will proceed with caution” when asked to enforce covenants against competitive employment because such restraints run counter to public policy favoring the right of individuals to engage in the commercial activity of their choice.
See Sys. & Software, Inc. v. Barnes, 2005 VT 95, 178 Vt. 389, 886 A.2d 762.
Primary law
G.5 Vt. H.205 (2025-2026) — Bill StatusH.205, recommitted March 13, 2026, is the umbrella legislative vehicle for Vermont's pending non-compete and stay-or-pay prohibition; the bill text is titled 'An act relating to agreements not to compete'.
An act relating to agreements not to compete
See H.205, 2025-2026 Gen. Assemb., Reg. Sess. (Vt. 2026) (recommitted Mar. 13, 2026).
Primary law
G.6 Vt. H.583 (2025-2026) — Bill StatusH.583 — titled 'An act relating to clinical decision making' — would categorically void noncompetition, nondisclosure, and nondisparagement agreements for licensed healthcare professionals.
An act relating to clinical decision making
See H.583, 2025-2026 Gen. Assemb., Reg. Sess. (Vt. 2026) (passed House Mar. 20, 2026; House concurred in Senate proposal of amendment, May 22, 2026).
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Non-disparagement
Standard to include with a stated term, but audit the carve-outs: truthful testimony, statements to government agencies, and protected workplace speech must sit outside the clause. Federal labor law polices overbroad versions in every state — and for agreements with licensed healthcare professionals, note that pending H.583 would void nondisparagement agreements alongside non-competes if enacted.
Sources for this section
Agency guidance
H.1 NLRB news release on McLaren Macomb, 372 NLRB No. 58 (2023)The NLRB held that severance terms broadly waiving Section 7 rights — including overbroad non-disparagement provisions — violate the NLRA.
simply offering employees a severance agreement that requires them to broadly give up their rights under Section 7 of the Act violates Section 8(a)(1) of the Act.
See McLaren Macomb, 372 NLRB No. 58 (2023); NLRB Office of Public Affairs (Feb. 21, 2023).
Primary law
H.2 Vt. H.583 (2025-2026) — Bill StatusH.583 — titled 'An act relating to clinical decision making' — would categorically void noncompetition, nondisclosure, and nondisparagement agreements for licensed healthcare professionals.
An act relating to clinical decision making
See H.583, 2025-2026 Gen. Assemb., Reg. Sess. (Vt. 2026) (passed House Mar. 20, 2026; House concurred in Senate proposal of amendment, May 22, 2026).
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Physician-specific notices and carve-outs
As of this checklist's review date, Vermont has no categorical healthcare non-compete ban in force: physician covenants run through the same reasonableness test as everyone else's, and the employer carries the same burden. The clause should say so plainly — and it should flag the tracking duty, because H.583 has passed the House and cleared a Senate amendment cycle; if enacted it would void noncompetition, nondisclosure, and nondisparagement agreements for licensed healthcare professionals, with a narrow exception for covenants ancillary to the sale of a 25%-or-greater equity interest.
Sources for this section
Case law
I.1 Vermont Electric Supply Co. v. AndrusAndrus supports the rule that the common-law reasonableness framework (legitimate interest, employee hardship, public interest) governs Vermont restrictive covenants until and unless H.205 or H.583 displaces it.
enforcement will be ordered unless the agreement is found to be contrary to public policy, unnecessary for protection of the employer, or unnecessarily restrictive of the rights of the employee, with due regard being given to the subject matter of the contract and the circumstances and conditions under which it is to be performed.
See Vt. Elec. Supply Co. v. Andrus, 132 Vt. 195, 315 A.2d 456 (1974).
Primary law
I.2 Vt. H.583 (2025-2026) — Bill StatusH.583 — titled 'An act relating to clinical decision making' — would categorically void noncompetition, nondisclosure, and nondisparagement agreements for licensed healthcare professionals.
An act relating to clinical decision making
See H.583, 2025-2026 Gen. Assemb., Reg. Sess. (Vt. 2026) (passed House Mar. 20, 2026; House concurred in Senate proposal of amendment, May 22, 2026).
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No conflicting obligations
The worker's representation that no earlier agreement or order blocks the new role. On intake in Vermont, the representation is also where an incoming worker's prior covenant gets its first reasonableness look — better to run that analysis before a dispute than after.
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Notice to future employers and other third parties
A genuine drafting choice with tortious-interference sensitivity attached. Warning a new employer off a worker on the strength of a covenant that cannot survive Vermont's reasonableness review invites exactly the dispute the clause was meant to prevent — if the clause appears, condition any disclosure on a covenant the employer could actually defend.
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Tolling during breach
The agreement should say expressly whether the clock pauses during a breach, because in Vermont no one else will say it: the Supreme Court refused to extend a covenant whose term litigation delay had exhausted, holding that the term was a matter of contract and that courts construe contracts but will not make them — it would not even accept relabeling the extension as a postponed start date. No staged Vermont source tests an express tolling clause, so treat any extension mechanism as its own restraint that must earn its keep under the reasonableness test, never as boilerplate.
Sources for this section
Case law
L.1 Roy's Orthopedic, Inc. v. Lavigne (second appeal)Roy's Orthopedic (1985) supports the rule that Vermont courts will not equitably rewrite a noncompetition agreement by extending or shifting its time term.
The term of the noncompetition agreement was a matter of contract between the parties. This Court will construe contracts but it will not make them for the parties.
See Roy's Orthopedic, Inc. v. Lavigne, 145 Vt. 324, 487 A.2d 173 (1985).
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Remedies
Look for the acknowledgement that breach may cause irreparable harm and that an injunction is appropriate relief — then note the statutory backstop and its limit: Vermont's trade secrets act enjoins actual or threatened misappropriation regardless of how the covenant fares, but that standard demands conduct- or threat-specific proof. Do not read the acknowledgement as a substitute for evidence, and do not expect an injunction from the bare fact that the worker took a new job.
A commercial choice; the default American Rule applies if the agreement is silent. Check that any fee-shifting is mutual and prevailing-party based — a one-way employer clause adds hardship weight to the reasonableness balance without adding enforceability.
Sources for this section
Primary law
M.1 9 V.S.A. § 4602 — Injunctive relief9 V.S.A. § 4602 supports the availability of injunctive relief for actual or threatened trade-secret misappropriation as a statutory backstop, with a conduct-specific standard rather than a presumption from new employment.
A court may enjoin actual or threatened misappropriation of a trade secret. Upon application to the court, an injunction shall be terminated when the trade secret has ceased to exist, but the injunction may be continued for an additional reasonable period of time in order to eliminate commercial advantage that otherwise would be derived from the misappropriation.
See 9 V.S.A. § 4602(a).
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Severability and reformation
Treat any covenant that leans on a savings clause as a red flag, because Vermont narrowing is genuinely unsettled. The conservative anchor: the Supreme Court will construe contracts but will not make them for the parties, and it refused to stretch a time term on that ground. The other direction is softer — dicta that modern courts can enforce covenants to the extent reasonable, and a federal prediction that Vermont would enforce a defective covenant to the limit of its validity — but dicta and prediction are not a drafting strategy. Verify each restraint is defensible as written, with severability as a backstop rather than the plan.
Sources for this section
Case law
N.1 Roy's Orthopedic, Inc. v. Lavigne (second appeal)Roy's Orthopedic (1985) supports the rule that Vermont courts will not equitably rewrite a noncompetition agreement by extending or shifting its time term.
The term of the noncompetition agreement was a matter of contract between the parties. This Court will construe contracts but it will not make them for the parties.
See Roy's Orthopedic, Inc. v. Lavigne, 145 Vt. 324, 487 A.2d 173 (1985).
Case law
N.2 Summits 7, Inc. v. KellySummits 7 supports the dicta that most modern courts may enforce restrictive covenants only to the extent reasonable, even when the drafted scope is larger.
Most modem courts agree that a trial court can enforce restrictive covenants to the extent that they are reasonable.
See Summits 7, Inc. v. Kelly, 2005 VT 97, ¶ 23, 178 Vt. 396, 886 A.2d 365.
Case law
N.3 A.N. Deringer, Inc. v. StroughA.N. Deringer supports the Second Circuit's Erie prediction that the Vermont Supreme Court would permit enforcement of a defective restrictive covenant to the limit of its validity.
we conclude that Vermont would permit enforcement of a defective restrictive covenant to the limit of its validity.
See A.N. Deringer, Inc. v. Strough, 103 F.3d 243, 247-48 (2d Cir. 1996).
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Survival
Per-covenant survival keeps each clock independently checkable — perpetual for trade secrets, finite elsewhere. The audit matters because Vermont takes expiry literally: in the leading single-county case the restraint simply ended after five years, and no doctrine revives a covenant whose stated term has run. A bundled survival clause is exactly where a sloppy duration hides.
Sources for this section
Case law
O.1 Vermont Electric Supply Co. v. AndrusAndrus illustrates that a Vermont covenant's restrictions end cleanly at the stated term, supporting per-covenant survival audit.
The area involved was Rutland County, and the defendants had elected to establish their business outside of that county already. After five years,' all restrictions were at an end.
See Vt. Elec. Supply Co. v. Andrus, 132 Vt. 195, 199, 315 A.2d 456, 458 (1974).
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Assignment and successors
Confirm employer-side assignability to successors and that the worker cannot assign. Vermont's transaction cases treat a covenant as a distinct, negotiated term rather than an automatic incident of a deal, so in any sale the covenant's transfer should be papered explicitly — and the successor inherits the reasonableness analysis, re-measured against the enforcing business's actual market.
Sources for this section
Case law
P.1 Miller v. FlegenheimerMiller supports treating a non-compete or non-solicitation covenant as a distinct, negotiated sale term rather than an automatic incident of a stock transaction.
whether or not the contract includes a form of non compete or non solicitation agreement, the price to be paid for the shares (as opposed to the Non-Compete Agreement), and the structure of the claw-back provision.
See Miller v. Flegenheimer, 2016 VT 125, ¶ 21, 203 Vt. 620, 161 A.3d 524.
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Governing law, venue, dispute process
Confirm the agreement specifies governing law, venue, and a dispute-resolution process. Restrictive-covenant disputes are jurisdiction-sensitive, and a clear selection binds that risk; the staged Vermont sources state no covenant-specific choice-of-law rule, so review the selection under ordinary conflicts principles.
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Entire agreement, amendment, waiver, e-signatures
Boilerplate with a Vermont formation lesson behind it: a stock-sale agreement failed in part because the parties left material terms open, including whether the deal would carry a non-compete at all. The entire-agreement clause is where the reviewer confirms every covenant term is actually closed — duration, geography, consideration — rather than deferred to a side understanding.
Sources for this section
Case law
R.1 Miller v. FlegenheimerMiller supports the rule that leaving the non-compete term open, among other material terms, can defeat contract formation in a Vermont stock sale.
whether or not the contract includes a form of non compete or non solicitation agreement, the price to be paid for the shares (as opposed to the Non-Compete Agreement), and the structure of the claw-back provision.
See Miller v. Flegenheimer, 2016 VT 125, ¶ 21, 203 Vt. 620, 161 A.3d 524.
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Vermont gates (the reasonableness test and the profession-specific bars)
The four items below exist only on this Vermont page: the common-law reasonableness gate every covenant must pass, the two categorical profession bars, and the more deferential review a genuine sale-of-business covenant earns.
Run every restraint through the questions a Vermont court will ask: is it consistent with public policy, necessary for the employer's protection, and no more restrictive of the worker than that protection requires? The Restatement framing makes the failure modes concrete — a restraint greater than the interest needs, or an employer need outweighed by hardship and public injury, is unreasonable. The interest can be customer relationships or employee-specific goodwill, not only trade secrets, but the employer has to prove its necessity, and the time and place have to be found as facts: enforcement has been reversed where no one established what place the covenant even covered.
If the worker is training for a barbering or cosmetology license, check who demanded the covenant: a school of barbering or cosmetology cannot require a covenant not to compete — with the school or an affiliate — as a condition of training for licensure. It is Vermont's only generally applicable statute voiding a category of restrictive covenant outright, and it turns on the training relationship, not the document's label.
If the worker is a lawyer, the professional-conduct rules displace the reasonableness analysis: partnership, shareholder, operating, and employment agreements cannot restrict the right to practice after the relationship ends, except for agreements concerning retirement benefits — and a settlement of a client controversy cannot carry a practice restriction either. Audit the substance, not the heading; a covenant that operates as a practice restriction sits inside the bar whatever it is called.
When the covenant rides a business sale, review it against the deal rather than the employment default: Vermont enforced a five-year, twenty-five-mile covenant delivered at closing where money was separately allocated to the covenant itself and the restrictions were reasonable as to time and place, and it treats a sale covenant with dedicated consideration as a bargained-for transaction asset in its own right. Confirm the covenant has its own consideration, matches the geography and life of the purchased goodwill, and is closed as an explicit deal term — leaving it open has helped sink an entire transaction.
Sources for this section
Case law
S.1 Vermont Electric Supply Co. v. AndrusAndrus supports the foundational Vermont common-law test for enforceability of post-employment restrictive covenants.
enforcement will be ordered unless the agreement is found to be contrary to public policy, unnecessary for protection of the employer, or unnecessarily restrictive of the rights of the employee, with due regard being given to the subject matter of the contract and the circumstances and conditions under which it is to be performed.
See Vt. Elec. Supply Co. v. Andrus, 132 Vt. 195, 315 A.2d 456 (1974).
Case law
S.2 Systems & Software, Inc. v. BarnesBarnes supports the Restatement (Second) of Contracts § 188 framing that a covenant is unreasonable if the restraint exceeds what is needed or if the employer's need is outweighed by hardship and public injury.
Like many other courts, this Court has adopted a position with respect to enforcement of noncompetition agreements similar to that set forth in § 188(1) of the Restatement (Second) of Contracts (1981) , which provides that a restrictive covenant “is unreasonably in restraint of trade if (a) the restraint is greater than is needed to protect the promisee’s legitimate interest, or (b) the promisee’s need is outweighed by the hardship to the promisor and the likely injury to the public.”
See Sys. & Software, Inc. v. Barnes, 2005 VT 95, ¶ 4, 178 Vt. 389, 886 A.2d 762 (quoting Restatement (Second) of Contracts § 188(1) (1981)).
Case law
S.3 Summits 7, Inc. v. KellySummits 7 supports the rule that the employer bears the burden of proving the reasonable necessity of the restrictive covenant.
[t]he employer has the burden of proving the reasonable necessity of the restrictive covenant.
See Summits 7, Inc. v. Kelly, 2005 VT 97, ¶ 14, 178 Vt. 396, 886 A.2d 365.
Case law
S.4 Roy's Orthopedic, Inc. v. Lavigne (first appeal)Roy's Orthopedic (1982) supports the rule that enforcement fails where the trial court does not make findings on the actual geographic territory covered by the covenant.
the trial court concluded that the restrictive covenant not to compete was reasonably limited to time and place without having made a finding as to what “place” was covered by the agreement.
See Roy's Orthopedic, Inc. v. Lavigne, 142 Vt. 347, 454 A.2d 1242 (1982).
Primary law
S.5 26 V.S.A. § 281(c)26 V.S.A. § 281(c) supports the categorical prohibition on barber- and cosmetology-school non-competes imposed as a condition of training for licensure.
A school of barbering or cosmetology shall not require, as a condition of training for licensure, that a person enter into a covenant not to compete with the training organization or an affiliate.
See 26 V.S.A. § 281(c).
Primary law
S.6 Vermont Rule of Professional Conduct 5.6PDFVermont Rule of Professional Conduct 5.6(a) supports the attorney-specific bar on firm and employment agreements restricting lawyer practice after termination.
agreement that restricts the right of a lawyer to practice after termination of the relationship,
See Vt. R. Prof. Conduct 5.6(a).
Primary law
S.7 Vermont Rule of Professional Conduct 5.6PDFVermont Rule of Professional Conduct 5.6 supports attorney-specific limits on practice restrictions.
(b) an agreement in which a restriction on the lawyer’s right to practice is part of the settlement of a client controversy.
See Vt. R. Prof. Conduct 5.6(b).
Case law
S.8 Fine Foods, Inc. v. DahlinFine Foods supports the conclusion that a five-year, 25-mile sale-of-business restraint with dedicated consideration is reasonable as to time and place.
In addition, a sum of five thousand dollars was paid for the executed covenant alone. Under the circumstances, the restrictions agreed to were reasonable to time and place.
See Fine Foods, Inc. v. Dahlin, 147 Vt. 599, 523 A.2d 1228 (1986).
Case law
S.9 Foti Fuels, Inc. v. Kurrle Corp.Foti Fuels supports treating a sale-of-business non-compete as a bargained-for transaction asset with dedicated consideration.
The asset-purchase agreement contained a five-year non-competition provision for $30,000 in consideration, to be paid in five equal annual installments.
See Foti Fuels, Inc. v. Kurrle Corp., 2013 VT 111, 195 Vt. 524, 90 A.3d 885.
Case law
S.10 Miller v. FlegenheimerMiller supports the rule that a non-compete is a distinct, bargained-for term in a Vermont stock sale rather than an automatic incident, and that leaving it open can defeat contract formation.
whether or not the contract includes a form of non compete or non solicitation agreement, the price to be paid for the shares (as opposed to the Non-Compete Agreement), and the structure of the claw-back provision.
See Miller v. Flegenheimer, 2016 VT 125, ¶ 21, 203 Vt. 620, 161 A.3d 524.