Thank you to this week’s sponsor of our Advocacy Update:
April 18, 2025
In a typical year, adjournment would be about four weeks away; however, this is not a typical year.
- Legislative leadership reaffirmed their aim to adjourn by the end of May, despite rumors that the session could go into June.
- A veto session is already scheduled for June 16th and 17th.
The Senate received and began reviewing the education transformation bill passed by the House on Friday, and they feel they have a lot of work ahead of them to reconcile the differences between the House and Senate’s wishes, while simultaneously closing the gap with the Governor’s desired bill.
- The passage of the education transformation bill left no one with a sense of elation, as most felt that it was a vehicle for change that could keep the conversation moving forward, rather than a final comprehensive draft.
- Reminder, the Governor has signaled that he will not let the Legislature leave until they have passed an education transformation bill he approves.
This isn’t the only thing that could keep them here longer.
- In the background are potential federal budget cuts,
- The Governor and the Legislature have an ongoing dispute over the voucher program for those experiencing homelessness, and
- Many would like to see this legislative session end with further advancement on enabling housing production.
In this week’s update:
- Noncompete agreements discussed in two House committees
- Infrastructure and appeals stay center stage in housing conversations
- Credit card interchange fee bill on ice until litigation is resolved
- The Laundry List
We strive to make these concise and easy to read. Feedback is not just welcomed, it’s encouraged – [email protected]
Noncompete Legislation Discussed in Two Committees
2-minute read | Action – Send this to your HR team
For years, attempts to ban noncompetes have been a perennial issue in the House, however, this year, there is a twist: two committees are looking at the proposal. Furthermore, this year’s proposal has gone even further, threatening to restrict sign-on bonuses, training, and other employee benefits.
Catch Up Quick: Noncompetes are contracts in which an individual agrees to restrictions on their employment or economic activity for a specified period, scope of work, and geographic region after separation from employment, the sale of a business, or termination of a similar form of commercial relationship.
- Why are these agreements important? These agreements help protect trade secrets and intellectual property, safeguard customer relationships, encourage investment in training, and preserve business stability.
What is being considered? There are two bills being considered in two separate committees.
H.205 – Employee and Franchisee Agreements
The House Committee on Commerce and Economic Development took up for the first time this session H.205, which would seek to affect non-compete agreements. H.205 would affect two types of agreements;
- Employee agreements: This bill would ban noncompete agreements within the state of Vermont, with the exception of those affecting employees earning above $100,000 per year.
- Franchisee agreements: Noncompete clauses between franchisors and franchisees that restrict operation in certain geographic areas, limit competition for a set time after separation, or otherwise significantly restrict the franchisee’s ability to compete.
H.334 – Employee and “Stay or Pay” Agreements
The House Committee on General and Housing is not typically the committee of jurisdiction for this topic; however, this year, a bill was referred to the Committee under the consideration of it being a labor bill rather than a commerce bill. H.334 would;
- Employee agreements: The bill would outright ban noncompete agreements for employees statewide.
- Restrict “Stay or Pay” Provisions: The bill would restrict employers’ ability to use agreements where employees are required to repay costs, such as training, moving expenses, sign-on bonuses, and other benefits, if they leave a job.
What’s next: both committees will be taking more testimony with the aim of adding the language to the Senate’s Economic and Workforce Development bill.
Here is a helpful overview of current Vermont case law around noncompete agreements.
Infrastructure and Appeals Take Center Stage as Housing Bills Considered
4-Minute read
As we’ve covered previously, the House and Senate have each sent the other a housing bill already this year with more similarities than differences (find a side-by-side here). Where they are different is in two areas;
- Infrastructure: The Senate bill creates a Community Housing and Infrastructure Program (CHIP)
- Appeals: The House bill includes language on who can proceed with an appeal of a municipal permit.
Zoom out: Two massive pieces of legislation have been passed in recent years, overhauling Act 250 jurisdiction and restricting municipal zoning, among other things, yet our state is still not producing enough housing.
House Discussion on CHIP
Catch up quick: multiple iterations of a program to support housing-related infrastructure by allowing towns to retain a portion of the property tax increment have been introduced this year, with the Senate eventually combining many elements into the CHIP.
- In testimony this week, the Vermont League of Cities and Towns shared survey data showing a $240 million existing gap in funding for municipal water and sewer projects needed for housing development, excluding major cities like Burlington, and only accounting for currently planned projects.
- In case you haven’t been following along, Vermont cannot afford that level of investment necessary in communities at a time when we can only afford to do half as much road work as in typical years, and our federal funds are being threatened.
Two committees to watch: While the House Committee on Commerce and Economic Development has possession of the bill and will work on CHIP, ultimate authority in this area lies with the House Committee on Ways and Means.
What is a “but-for”? In every TIF conversation, the toughest question is always the “but-for.” It means: Would this development have happened anyway, without public investment? If the answer is yes, then any diverted tax revenue is seen by some as a loss to the Education Fund.
- Even in the worst-case scenario, that “loss” is capped at $6.5 million—a small risk in a $2.5 billion fund. And the upside? If CHIP or TIF actually drives new development, the revenue it generates is only a net positive.
Not Just a Hypothetical: the House Committee on Commerce and Economic Development heard from the owner and developer of Hula that their proposed 13-acre Burlington south-end development, which would be the state’s largest neighborhood, NEEDS this policy to become a reality.
Bottom line: The Legislature spends far more on other programs that impact the Education Fund, such as current use, often with less scrutiny than this one, and unlike those, this investment directly addresses a crisis we all recognize:
- Vermont needs more housing, and it won’t get built without tools like this.
- Lawmakers shouldn’t tie themselves, or the communities trying to build housing, in red tape.
Senate Discussion on Appeals:
The Senate Committee on Economic Development, Housing, and General Affairs has been grappling with the appeals language submitted by their House colleagues, which aims to restrict standing for those seeking to bring appeals in the context of municipal development regulation.
Curveball: The Committee got a stark warning from Chief Superior Judge Thomas Zonay that: “If the intent of the legislature is to restrict standing, this language does not accomplish that.”
What’s changed: Under current law, persons interested in appeals have a two-part test: proximity and physical or environmental impact. This legislation would transition to a “person aggrieved” standard that allows appeals by anyone alleging injury to a “particularized interest.”
Cause of hesitation: Judge Zonay cautioned that shifting from the current two-part test could unintentionally expand standing rather than narrow it and that, without a clear definition, courts could be asked to consider claims based on emotional, financial, or other non-physical harms, leading to uncertainty and new case law. He emphasized that the existing standard has decades of precedent, while the proposed change invites legal ambiguity.
Credit Card Interchange Fee Bill on Ice Until Litigation Settled
2-Minute Read
Both the House and the Senate have been considering legislation that would ban credit card companies from applying interchange fees to taxes and gratuities and require businesses to accept cash on all transactions under $500.
- This week brought an understanding that it’d be better to wait and see how such legislation plays out in other states.
Potential legal exposure: Illinois has passed a bill that includes the interchange fee prohibition language found in S. 135 and is currently facing federal litigation on that provision due to federal preemption and the dormant Commerce Clause.
- A federal judge in that case granted a preliminary injunction for national and out-of-state banks on preemption grounds, and the case remains unresolved.
Bottom line: Vermont legislators, along with many others around the country, will be watching the litigation in Illinois and will have a clearer picture when it is resolved.
The Laundry List
Hundreds of hours of committee discussion each week culminate into our advocacy update, so not everything makes it into the overall update; however, we often cover what is left on the cutting-room floor here for our most dedicated readers.
- Read previous updates: Week 1, Week 2, Week 3, Week 4, Week 5, Week 6, Week 7, Week 8, Week 9, Week 10, Week 11, Week 12, and Week 13.
- The House Ways and Means Committee heard that, as of March 2025, Vermont’s General and Education Funds are tracking slightly above forecast, while the Transportation Fund is tracking slightly below due to delays in DMV fee processing. However, the Joint Fiscal Office warned of significant future fiscal risks, including rising tariffs, declining tourism, financial market volatility, and potential federal policy changes that could impact state tax revenue and Medicaid funding.
- Hypothetical question: currently, there is no universal school calendar, resulting in staggered and different breaks across the state. If the school calendars were uniformed, would you be concerned about scheduling, being inundated with too much traffic, or other issues? Reach out to [email protected] with input.
- Act 181 (2024) mandated Act 250 jurisdiction for projects in Tier 3 areas as determined by the rules of the Board. During the rulemaking process, the Board will identify what resource areas will be included in Tier 3, where these resource areas are across Vermont, and what types of projects will require an Act 250 permit in these areas. See more about the process and a map containing layers of geographic variables that could be included as jurisdictional triggers.
- Help craft the future development mapping for our region! As part of Act 181, Act 250 jurisdiction is moving to a place-based jurisdiction, which will be based on mapping that you have the opportunity to help create. LCC’s Regional Affairs Committee will meet with the Chittenden County Regional Planning Commission on May 12th at 2:00 p.m. to provide input on an initial draft, now available via the Act 181 Map Viewer. To learn more and join the meeting, please email [email protected].
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