The bill H.205 aims to prohibit noncompete agreements that restrict franchisees from operating their businesses after separating from franchisors, as well as employees from competing with their former employers after their employment ends. It introduces a new chapter, Chapter 153, to 9 V.S.A., which defines key terms such as "agreement not to compete," "franchise agreement," "franchisee," and "franchisor." The bill states that any agreement not to compete is void and unenforceable, and requires franchisors to notify affected franchisees of this status.

Additionally, the bill adds a new section to 21 V.S.A. that similarly prohibits noncompete agreements between employers and employees, with specific definitions and exceptions outlined. It allows for certain agreements related to the sale of business interests, partnership dissolutions, and severance agreements, provided they meet reasonable limitations. The bill also establishes a wage threshold, stating that the prohibition does not apply to employees earning $100,000 or more annually. Employers must notify employees of the unenforceability of existing agreements and adhere to provisions against retaliation. The act is set to take effect on July 1, 2025.