Vermont Non-Compete Laws (2026): Are Non-Competes Enforceable?

Vermont has no statute banning or limiting non-competes for most workers. Courts decide enforceability under the reasonableness test the Vermont Supreme Court applied in Summits 7, Inc. v. Kelly, 2005 VT 97: a covenant is enforced unless it is contrary to public policy, unnecessary to protect the employer, or unnecessarily restrictive of the employee's rights.

The exception is health care. Under 21 V.S.A. 495q, added by Act 177 of 2026, a restriction on a health care provider's right to practice after the relationship ends is void in contracts and agreements entered into on or after July 1, 2026. For how other states compare, see our non-compete laws by state guide.

Information last verified on 2026-10-08. This article has not been reviewed by a licensed lawyer.

Jurisdiction scope: This article covers Vermont law on employee non-compete agreements: the common-law reasonableness test of Summits 7, Inc. v. Kelly and the 2026 health care provider statute, 21 V.S.A. 495q (2026 Acts and Resolves No. 177, Sec. 8e), with a short note on the federal FTC rule. It does not cover trade-secret claims (see Vermont trade secret laws) or severance pay (see Vermont severance pay laws).

Are non-competes enforceable in Vermont?

For most workers, yes, if a court finds the covenant reasonable. The Vermont Supreme Court stated the standard in Summits 7, Inc. v. Kelly, 178 Vt. 396, 886 A.2d 365, 2005 VT 97:

"a restrictive covenant in an employment context will be enforced 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" Summits 7, Inc. v. Kelly, 2005 VT 97

On who must prove what, the court recalled that its 1974 Andrus decision put the burden on the employee, then noted that other courts make the employer prove the covenant is reasonably necessary and said that approach "makes some sense." It did not decide the question.

Our research found no Vermont statute setting a duration cap, geographic cap, notice period, right to consult a lawyer or garden-leave pay for general employee non-competes. That negative rests on a bill-index search and a limited statute search, not a full-text review of every Vermont title, so treat it with care.

Signing a non-compete after you start

Vermont does not require a raise or bonus to support a covenant signed mid-job. Summits 7 held:

"continued employment alone is sufficient consideration to support a covenant not to compete entered into during an at-will employment relationship" Summits 7, Inc. v. Kelly, 2005 VT 97

The court declined to treat the employee's raises and promotions as the consideration, because they were not connected to the covenant. The opinion drew a dissent that would have found the consideration illusory; the majority held otherwise.

Fired versus quit

Vermont has no rule we found that voids a non-compete when an employer fires someone without cause. In Summits 7, the agreement was enforceable only if the employee was fired for cause or left voluntarily. The court said that term was not a tangible benefit to the employee beyond continued employment, so it did not count as separate consideration. For when an employer can end the job in the first place, see Vermont at-will employment laws.

What a court does with an overbroad covenant

Vermont courts can enforce part of a covenant. Summits 7 said: "Most modern courts agree that a trial court can enforce restrictive covenants to the extent that they are reasonable." The court affirmed an injunction limited to the competing employer "or any other direct competitor," without sending the case back to draw an exact geographic boundary.

Health care providers (from July 1, 2026)

The only Vermont statute aimed directly at non-competes is 21 V.S.A. 495q, added by Section 8e of Act 177 of 2026 (S.313). It applies to a contract that creates or sets the terms of a partnership, employment or other professional relationship with a health care provider. A provision in such a contract "shall be void and unenforceable" if it:

• restricts the provider's right to provide health care services "in any geographical area for any period of time" after the relationship ends;
• limits a departing provider's ability to notify patients of the change of employment;
• bars disparaging statements about another party or a named third-party beneficiary;
• is inconsistent with Vermont law; or
• requires litigation arising from the contract's performance in Vermont to be conducted in another state.

The notice a provider may give can say that the provider is continuing to practice, give new professional contact information, and tell patients of their right to choose a health care provider.

Who is covered. A "health care provider" is a person licensed, certified or authorized by law to provide professional health care service in Vermont to an individual during that individual's medical care, treatment or confinement.

Which agreements. The section states: "This section shall apply to contracts and agreements entered into on or after July 1, 2026." An agreement signed before that date is judged under the common-law test above.

One exception. Under 495q(c), the practice-restriction rule does not apply to a restriction that keeps a provider who contracts with a third-party company for nonclinical business support services from opening a business in a specific territory supported by a different third-party company providing nonclinical services.

The section contains no express exception for the sale of a practice. Whether it reaches a covenant given on the sale of a practice is a question the text does not answer.

The online Vermont Statutes did not yet show the text of 495q when we checked on 2026-10-08, so the enacted Act is the official source for now.

Penalties and enforcement for health care providers

Section 495q(e) bars an employer from discharging or retaliating against an employee who exercises or tries to exercise rights under the section. It applies the retaliation provision of 21 V.S.A. 495(a)(8) and the penalty and enforcement provisions of 21 V.S.A. 495b.

Under 495b, "The Attorney General or a State's Attorney may enforce the provisions of this subchapter by restraining prohibited acts, seeking civil penalties, obtaining assurances of discontinuance, and conducting civil investigations." A person aggrieved by a violation may also sue in Superior Court "seeking compensatory and punitive damages or equitable relief," including reinstatement, costs and reasonable attorney's fees.

For workers outside health care, no Vermont statute sets penalties for a non-compete; disputes are decided by the courts under Summits 7.

Non-solicits, NDAs and trade secrets

We found no Vermont statute on general employee non-solicitation or confidentiality agreements, and our research did not go beyond Summits 7 on how courts treat them. For health care providers, 495q voids patient-notice limits and non-disparagement clauses, as described above.

Trade-secret law is separate. It protects specific confidential information whether or not you signed a covenant; see Vermont trade secret laws.

Choice of law and forum

For health care providers, 495q voids a clause requiring Vermont disputes to be litigated in another state, for agreements entered into on or after July 1, 2026. The statute does not mention choice-of-law clauses by name. We found no similar rule for other employees.

Recent and pending changes

• S.313, Act 177 of 2026, enacted. Section 8e added 21 V.S.A. 495q. The Act is titled "An act relating to transforming Vermont's career technical education system"; the health care rule rides in that bill. The Governor signed it June 18, 2026, and the Act took effect on passage. Section 495q applies to contracts and agreements entered into on or after July 1, 2026.
• S.230 (2026), vetoed. This fair employment practices bill carried the same health care text and was vetoed by the Governor on June 18, 2026. The health care rule became law anyway through Act 177.
• H.205, an act relating to agreements not to compete, not enacted. The last action we read, on March 13, 2026, recommitted it to the House Committee on Commerce and Economic Development.
• H.334, limiting employer restrictions on individuals separating from employment, not enacted. Its status page shows only its committal to Commerce and Economic Development.

We did not verify whether the legislature acted on either bill before adjournment, or whether any non-compete bill has been prefiled for 2027.

The federal FTC rule

The FTC's nationwide non-compete rule never took effect. A federal court in Texas set it aside on August 20, 2024 (Ryan, LLC v. FTC, No. 3:24-CV-00986-E, N.D. Tex.), the FTC voted on September 5, 2025 to dismiss its appeals, and the rule was removed from the Code of Federal Regulations effective February 12, 2026. The FTC still acts case by case; on June 22, 2026 it approved a final order requiring a pest-control company to stop enforcing non-competes. See FTC non-compete ban struck down and the non-compete laws by state guide.

What this means if you signed one

If you are a health care provider in Vermont, the first question is when the agreement was entered into: on or after July 1, 2026, 495q voids a practice restriction. For everyone else, a Vermont court weighs whether the covenant is necessary to protect the employer, whether it restricts you more than needed, and whether it conflicts with public policy. A lawyer licensed in Vermont can review a specific agreement.

Related

• Non-compete laws by state
• Vermont trade secret laws
• Vermont severance pay laws
• Vermont at-will employment laws
• FTC non-compete ban struck down

Disclaimer: This article provides general legal information about Vermont non-compete law, including Summits 7, Inc. v. Kelly and 21 V.S.A. 495q and 495b, not legal advice. The information was last verified on 2026-10-08. The Vermont Attorney General or a State's Attorney may enforce 495q; for advice about a specific agreement, contact a legal aid office or a lawyer licensed in Vermont.

Last updated: 2026-10-08.

Frequently Asked Questions

Are non-competes enforceable in Vermont?

For most workers, yes, if reasonable. Under Summits 7, Inc. v. Kelly (Vt. 2005), a covenant is enforced unless it is contrary to public policy, unnecessary to protect the employer, or unnecessarily restrictive of the employee; health care provider restrictions entered into on or after July 1, 2026 are void under 21 V.S.A. 495q.

Did Vermont ban non-competes in 2026?

Only for health care providers. Act 177 of 2026 added 21 V.S.A. 495q, which voids post-employment practice restrictions in health care provider contracts and agreements entered into on or after July 1, 2026; other workers remain under the common-law test.

Who counts as a health care provider under the Vermont law?

A person licensed, certified or authorized by law to provide professional health care service in Vermont to an individual during that individual's medical care, treatment or confinement (21 V.S.A. 495q).

Can my employer make me sign a non-compete after I start in Vermont?

The Vermont Supreme Court held in Summits 7 (2005) that continued employment alone is sufficient consideration for a covenant signed during an at-will employment relationship.

Is there a salary threshold for Vermont non-competes?

No. Neither 21 V.S.A. 495q nor the Vermont common law our research read sets an income or job-classification threshold.

Can a Vermont court narrow an overbroad non-compete?

Yes. In Summits 7 the court said a trial court can enforce restrictive covenants to the extent that they are reasonable, and it affirmed a narrowed injunction.

What happens if a Vermont health care employer retaliates over a void non-compete?

21 V.S.A. 495q bars discharge or retaliation for exercising its rights and applies 21 V.S.A. 495b, which lets the Attorney General or a State's Attorney enforce and lets an aggrieved person sue in Superior Court for damages, costs and attorney's fees.

Does the FTC non-compete ban apply in Vermont?

No. A federal court set the FTC rule aside on August 20, 2024, and it was removed from the Code of Federal Regulations effective February 12, 2026. Vermont law governs.