Senate committee pulls S.230 back for more study after split testimony on non-competes

Senate Economic Development, Housing & General Affairs members voted to pull S.230 back into committee for further review after extended testimony about a House‑added non‑compete provision.

The chamber’s government‑affairs director Austin Davis told the panel the bill, as amended by the House, would be workable but advised adding a narrow salary threshold to allow certain high‑paid non‑exempt employees to be subject to non‑compete clauses. “A non‑exempt employee with a salary above a certain amount can be eligible as well for a non‑competition agreement,” Davis said, arguing the change would protect small Vermont businesses that rely on limited competitive advantages.

Legal witness David Harlo, a labor and employment partner, urged caution with S.230’s reliance on the Fair Labor Standards Act exempt/non‑exempt test. Harlo said Vermont courts have long applied a reasonableness standard case by case and warned that a blanket bar on non‑exempt employees could leave employers without a tool to protect legitimate confidential information. “There are non‑exempt employees who meet the traditional century‑old standard for application of a non‑competition agreement,” Harlo said, citing executive assistants and inside sales people as examples that a pure FLSA test would miss.

Labor advocates and public interest witnesses pushed the committee toward H.205, a bill they described as the product of years of study. A representative for Working Vermont argued H.205 better reflects national practice and the federal debate over non‑competes, citing recent Federal Trade Commission statements urging limits on non‑competes to preserve worker mobility.

Healthcare organizations urged industry‑specific protections. Jessa Barnard of the Vermont Medical Society said non‑competes can worsen rural access to care when traveling nurses or physicians are barred from local hiring after a contract. “If you are restricted from seeing or following your health care provider, that really restricts access,” Barnard said, urging the committee to adopt a broad statutory definition of health‑care providers rather than narrow carve‑outs.

Committee members discussed practical fixes including a wage threshold (witnesses referenced figures ranging from roughly $60,000 to federal proposals near $151,000) and the Hendrick amendment to H.205, which would explicitly include teachers. Given the complexity and tied‑up calendar this week, the committee chair said senators would use time next week to compare the House language in S.230 with H.205 and the Hendrick amendment before deciding whether to replace S.230 or amend it further.

No final votes were taken on S.230; the committee’s action was procedural: to schedule targeted follow‑up sessions and to draft potential amendments after reviewing the H.205 package and hearing any remaining stakeholders.

The committee is expected to reconvene next week for brief hearings on S.230, H.205 (including the Hendrick amendment) and related health‑care language.