Vermont Legislature SmartTranscripts:

[Edye Graning (Vice Chair)]: Good morning. This is the House Commerce and Economic Development Committee. Today is Wednesday, January 28. It's 09:03 in the month. We are here to talk about H205, an act relating to agreements to NAFEMAEP. Jessa Barnard's here with us this morning. So good morning.

[Jessa Barnard]: Yeah, thank you so much for having me. Jessa Barnard. I am the executive director of the Vermont Medical Society. It's my first time here this year, so thank you for welcoming us. We represent individual physicians, physician assistants and medical students. We are the try to be the voice of individual clinicians rather than any employer type or facility. Our members work at hospitals, independent practices, federally qualified health centers sort of across the healthcare landscape. And we were part of the work group that met over the call to talk about agreements not to compete, and we support the new direction that the draft is taking in H2O5. I will talk a little bit about why this is an important issue in healthcare, because I'm not sure you've sort of necessarily heard exactly the healthcare perspective, but we do support restricting the use of non competes to the maximum extent possible. Also, appreciate addressing non solicitation and stay or pay provisions. I do have some sort of requests for either additions or clarifications in the language, but again, in general, we do support the direction that this draft is taking. We think that agreements not to compete are a particularly important issue in healthcare, not only from the workforce perspective, to allow individual clinicians to be able to make the decision of where they best want to work, where they want to serve patients, to potentially be able to move from hospitals to independent practice, or vice versa, and serve Vermonters. But really also from the patient perspective of making sure patients have choice, have options, have access to their healthcare providers. It's been an issue that's been taken up or looked at at the federal level. The Federal Trade Commission, as recently as this fall, issued warnings to healthcare employers and staffing firms to take a close look at employment agreements, and they recognized the harmful effects that noncompliance can have in the healthcare market in terms of restricting patient choice of care, especially in rural areas where access to services is already maybe more limited, like here

[Chris D’Elia]: in Vermont.

[Jessa Barnard]: The American Medical Association disfavors covenants between employers and physician employees, and state that they can restrict competition, disrupt continuity of care, and limit access to care. So again, sort of in summary, we do think non competes can restrict patient access, disrupt care continuity, especially if you think about more hard to find specialty services that may only have one or two providers giving that specialty care in a certain area, reduce clinician choice and increase health disparities. So we actually support in an outright, and I shared this with the group meeting over the fall, an outright prohibition on non competes specific to healthcare, or at least in our I can really only speak to healthcare because that's where I work. That is not uncommon. Many states actually have healthcare specific provisions around non competes, either banning them or significantly restricting them. The language varies somewhat between how the states have approached it, but we do think that a ban for healthcare extended to all types of healthcare professionals makes sense. We see the draft 1.2 in H. Two zero five takes a little more narrow approach with only an exception, as we read it, for those individuals who are executive level employees making over $100,000 We do think that language around executive employees is at least a good starting point. We think that that will generally extend the ban to most healthcare providers. We would welcome or encourage, if possible, a little more definition around what that means to be an executive level employee, especially in the healthcare setting, just so there's clarity around who's really in or not in that kind of a restriction. But we do appreciate that approach. I do wanna mention that at this point, that there is also a bill in the House Healthcare Committee under consideration right now, a much broader bill that really is intended to more get at the role of private equity in healthcare, but that does contain a ban on non competes in healthcare for healthcare workers. And so, that will also need to be sort of reconciled how this, if both are moving, how they work together, or do they work together clearly. So again, while an outright ban in healthcare specifically is our first preference, we do think the executive level employee approach at least is very important point, and would support moving forward with that. We do think clarity around non solicitation is very important. We think that overly restrictive non solicitation agreements can prevent healthcare professionals from communicating with patients that limits continuity of care. In fact, I've had this own personal experience when my provider left a local practice and I wanted to know, well, where did they go? I was told by the receptionist, Oh, I can't tell you they've left. Whether that's an accurate interpretation of a non solicitation agreement, I don't know, but at least that's the way it's being communicated to patients. So you can't even, even if you want to follow that provider somewhere else, you may not be able to. So we strongly support the language in H205 that says that healthcare providers can provide notice of their change of employment, even if you're not going as far as sort of a ban on non solicitation agreements, which we would also support. We would support some additional clarifying language that gives a little more definition again, around what that means to provide notice of your change in employment, just so there's not kind of confusion about what can be said or cannot be said. I, in with my testimony, gave some suggestions taken from Colorado, which delineate a little more clearly. For example, a healthcare provider can state they are continuing to practice medicine, their new contact information, and the patient's right to choose a healthcare provider. Again, So it just gives a little more definition around what contents can be communicated to a patient when you change employment, we think that could be helpful clarity. We do support the continued use of pay or stay provisions. They are actually quite an important tool in healthcare, in particular for training employees and retaining employees. So for example, helping train a nurse from one level to another level of nursing, and then saying, for every year you continue to work, we will pay this year of tuition, that kind of thing. I know you walked through what those provisions might look like. We are comfortable with parameters like N-two zero five around when they are or not enforceable. We do think it might be important to clarify, I didn't see this in the bill, though it's possible I missed it, whether that's just prospective versus retroactive, because there could be employees kind of currently in the middle of one of those provisions, and it could be hard to modify that kind of wall that's in effect. So again, we would sort of appreciate clarity that these new guardrails around what they can contain would be for new agreements entered after the passage of the bill. One element that I did not see addressed in the new language that we've also been paying attention to is trying to address the component of contracts entered or drafted by an out of state employer that impacts somebody working in Vermont. So the example we hear most often in healthcare is a staffing agency, like a nurse staffing agency that may be located out of state while they are, but they have placed the nurse in a Vermont healthcare location, and that nurse may want to stay. In fact, and ideally that's what we would love is more nurses and physicians and others coming to Vermont wanting to continue after that contract ends. And yet some of those staffing agencies do use non competes, and so that prohibiting that nurse from doing so. And so this was an issue actually, we shared some language that New Mexico has adopted to try to address the fact that healthcare employment agreements cannot be subject If the person is working in Vermont, can't be subject to the laws of another state. They have to be subject to the laws of Vermont, so that if Vermont says we don't allow covenants not to compete, that contract controlling that employee's work in Vermont has to be subject to Vermont's laws, rather than be a contract that was drafted and subject to the laws of wherever that staffing agency is based, so that we can try to make sure that nurse or other healthcare worker wouldn't have a covenant preventing them from continuing to work in Vermont after the fact. That makes sense. So the language again, is specific to healthcare that I included, though I think it could be adapted to be broader since this bill obviously is not just submitted to the healthcare context. So again, thank you, thank you for taking up this issue. We think it's really important. Our members very much support moving in the direction of a much narrower use of covenants not to compete, and I'm happy to stay engaged in this work and bring the perspective of healthcare employees to the work. Happy to answer any questions.

[Edye Graning (Vice Chair)]: Any questions? Here.

[Jessa Barnard]: Thank you very much. Thank you for your time this morning.

[Michael Marcotte (Chair)]: Yes, I know that our health care committee is looking at She did. Okay. Yeah.

[Jessa Barnard]: So their bill is actually also have some suggestions for that bill because it's really basically one sentence in the bill saying there cannot be non compete agreements in health care. And so I think that needs a little more definition. I don't know. I know that bill will be getting some redrafts. Is a very small component of that bill. That bill is really looking at more broadly the role of private equity in healthcare. So I do not have a crystal ball to know what direction that committee is going with the bill in general, or that section. But at this point, there is some lack of harmony between the two sets of language. So I think that will need to be cleared up in one place or another, sort of are both moving one or the other and what direction are they going? Because right now there would be some inconsistencies between the two.

[Michael Marcotte (Chair)]: The conversation I guess could be in one place or the other, but not both. And if they're

[Austin Davis]: in both, it should be consistent. Agreed.

[Jessa Barnard]: Thank you. Yeah. Thanks for looking at that issue. Thank you very much. Thanks for your time this morning.

[Michael Marcotte (Chair)]: Thank you. Chris.

[Chris D’Elia]: Morning, mister chair, committee members. For the record, Christina, you're president of the Vermont Bankers Association. Thank you for the opportunity to testify on this new draft of h two zero five. If I need to switch hats from running the summer study committee to the VBA, I'm happy to do that, but I'm gonna start with the VBA hat on and just offer comments on this draft. Let me begin by saying thank you. This is a big step in a positive direction from our perspective, this new draft, and we greatly appreciate, you taking into consideration the work, the summer study committee and representative Olson and representative Duke and their interest in this. I had the opportunity to go through the bill last night line by line, so I'm going to offer some comments and seek perhaps some clarifying, answers, if you will, or just put some issues on the table for clarification at some point. So as I went through the bill starting on page one with the legislative intent, no issues there with, again, on page one, the definition section agreement not to compete, no issues on one v, which is agreement not to compete, no issues there. On page two, line 12, this is the executive employee. I guess, similar to you, mister chairman, yesterday, highest level of employee to me just doesn't make sense because that does seem to limit it to the top individuals. So I think whether it's senior executive officers or however you decide to define that, I think there's lower categories below that CEO, but still you can call him executive employee. Page two, line 15 on no solicitation, no issues. But on page two, line 21, I do have a few comments, and that's parenthesis b line 21, and that flows over to the top of page three. So I understand what you're trying to accomplish and absolutely have no objection to a consumer wanting to go with their provider, lawyer, health care, fiduciary, whoever it may be. But I'm concerned about the grayness of this language. And I think we need to understand what, if anything, already exists for those entities that you call out. Not and I'll accept let me say two entities. I'll leave health care out because Jess did a great job on that. In talking with a friend in the legal community, he's under the impression there's already an obligation on the part of the lawyer to communicate to their client. I'm trying to find out if that's true for fiduciary as well. So calling these three out, you may not need this language. However, if you decide to put the language in, I don't think there's enough guardrails because each one of us is going to come up with a different type of letter and language in the letter that we're gonna use to our customers. So whether it's something that you look at as Jess just explained to you or as we've done in statutes, for many, many decades, a short form with a clear letter paragraph that says, I'm doing this, this, and this, period, end of discussion. What I'm concerned with is we'll all come up with something different, and the employer can look at that and say, I think you're you're on that fine line of solicitation, and I think we might open up the door for some legal conflicts, if you will. So I think the more prescribed you can be in what goes in that letter, I think the better off we are as far as providing that opportunity. On page three, line four, severance agreements, this is something that I had, mentioned to the committee last year, and and I'm appreciative of the way this paragraph is written. What I want to convey to the committee and still working on, and I will certainly work with alleged counsel on this if necessary, is there are defined compensation agreements also considered severance agreements. You're gonna terminate employment. I I get to retirement age. I terminate employment. I've got a, defined, or what's called in some cases, a nonqualified deferred compensation plan, which is recognized under IRS. Is that a severance agreement? You know, I just wanna make sure that we have some clarity that severance is expansive enough to include those defined compensation agreements because that person is getting compensation as they go out the door. If they wish to jeopardize that conversation excuse me, compensation by going to work for somebody else, they know they're gonna jeopardize that. And I've heard of stories where the future employer pays the employee for the losses that they experienced with that defined comp. I just wanna make sure that we're covering the basis with that severance piece.

[Michael Marcotte (Chair)]: Thank you. Is this nonqualified plans when someone separates I'm just wondering under UI, if they were claiming unemployment, would that I know with severance, you lose your ability to collect until your severance is it just done. Yeah. That'd be the same as

[Chris D’Elia]: I the the experiences that I'm aware of are at the time somebody decides to retire, not when somebody is let go from employment. So I don't know the answer to your question. Page four, wage threshold. I I think you guys are gonna have the conversation and make the policy decision on wage threshold. I would just offer a couple of things. Legis Council provided to you a comment, and we provided in our report wage thresholds are all over the map. And what is the right wage threshold? Is it a 100,000? I would say I think that's too high. Is a 100,000? I think others will say it's too low. And we leave it to you to deal with the policy issue. I I will say a straight figure in statute is stagnant. It doesn't allow for growth, whatever it may be. It doesn't fluctuate over time, and I would not recommend doing that. I would recommend some type of an approach that allows for growth over time, whether it's some percentage of poverty level or whatever it may be. The second issue, and representative Olson and I have been talking about it, is wage is one thing. It's also the function of the person in the job. I think of startups out there where you don't have the money to pay that high wage, but the person is involved with trade secrets, is involved with critical business information. I would ask the committee to also consider that, and and do it in an or approach, not an and approach. So that you may have that high level executive, a 100,000 or whatever the number is. No issue. But you know as well as anybody with the tech community we have in Vermont, start up, I'm not making 50,000, but I've got all of the secrets that that company is involved with, I'm working on. And how does that how is that taken into consideration in this discussion? Because I think you wanna protect that information for that company. So wages isn't the only, answer in our opinion. The next issue is on page four lines thirteen and fourteen. Again, I think this is an issue the working group brought to your attention. It's it's the new hire is easy to deal with agreements provided at the hiring process, the time limits all apply, etcetera. But you do have situations where I am, the employer, representative Olson is the employee. I want to, move representative Olson to a position that is dealing with that sensitive trade secret business information that you all have nicely dealt with in the bill. I wanna give representative Olson a noncompete agreement, go through the whole process of disclosure, etcetera. This bill does not speak to that. This bill only speaks to new employee, and we would ask you to look at both existing and new employee. Same approach. Nope. No problems, but just expand that. And then the final thing that I looked at was the state of pay provisions, which I appreciate the approach that you've taken in there. But, again, I I wanna flag for you what I think is something that could be problematic. And that is on page six, line nine, parenthesis d. And it's really the word retaliation. I I don't know how that's defined, if at all. And I think all of us could probably come up with different thoughts on what retaliation means or doesn't mean. For example and I'm not disagreeing with the retaliation. I'm just trying to figure out what the scope is. If I have representative Olson as an employee great guy to pick on this morning. Thank you. As an employee, and I want to move representative Olson to a new position, but there is going to be training that's required in order for him to do that work. If if he does not want to go through that for some reason or whatever, and he is not eligible to move into that new position, am I in any way retaliating against him because I'm not giving him that new job? He's not qualified for that new job without the training. I'm trying to eliminate any, again, potential gotchas where we're all gonna come up with a different view of what retaliation means. And somebody who knowingly retaliates absolutely should be addressed, but where's that gray area that people might get trapped in? Other than that, again, I thank you very much for the work that you did on the bill. From others this morning. And, again, I'll also just thank all of the folks who worked on it this, fall to help you make the changes and review that you're doing.

[Austin Davis]: Thank you.

[David Mickenberg]: Good morning. David Mickensburg here on behalf of Working Vermont, which is just as a reminder, the largest coalition of public and private sector labor unions in the state of Vermont, and we advocate on behalf of working issues generally. So and I wanna say we participated in the working group over the summer and fall, and just a big shout out to Chris Delia for organizing a very a very animated and an energetic group, and he did an amazing job. And I really appreciate all the work that he did with us on this issue. So as you know, on the most basic levels, you know, we just see noncompetes as a restraint on employees' opportunity to seek, other employment, and we support the lot of what's in, this draft and appreciate the good work that's gone into it. It's estimated just for a little context that some, 30,000,000 Americans are subject to noncompetes, which is 18% of the workforce. And oftentimes, while these agreements are for higher paid employees, 30% of the workers that are subject to noncompetes make below $13 an hour. So that's really the focus and the lens that we are putting this through. We even heard in our conversations over the summer. Certainly, we don't have the exact numbers of the applicability in Vermont, but we know they apply. We know they apply to to some lower paid workers, and so that's the lens in which we come. As many of you know, the Federal Trade Commission had issued a rule, banning noncompetes nationwide, similarly sort of similar to the to the framework that you have. And I just wanna highlight something that they they highlighted in their press release around the the the rationale for this. The FTC estimated that the final rule banning noncompetes would lead to new business formation growing by 2% per year, resulting in more than 8,500 additional new businesses created each year. The final rule is expected to result in higher earnings for workers with an estimated expect earnings increase for the average worker by an additional $524 per year, and it's expected to lower health care costs by up to 194,000,000,000 over the next decade. In addition, the final rule is ex expected to help drive innovation leading to an estimated increase of 17,000 to 29,000 more patents each year for the next ten years under the final rule. Other states have certainly gone down this path. There are 34 states that have some version of NDC that have some version of a ban or a limitation on noncompetes. Three New England states, Maine, New Hampshire, and Rhode Island, and four of the states would be considered total bans, California, New York I'm sorry, North Dakota, Oklahoma, and Minnesota. So just a little context. This is an important issue, and we're very happy that you're working on it. Some of the specifics around provisions of s two zero five in the as Chris identified in his testimony, the income threshold is one in terms of, like, what who this applies to or not, is one that we advocated in the work group be higher. The FTC limit was a 151,000 a year approximately, and we certainly would be comfortable with that. But understand why a 100,000, is a good starting point for this bill and see it's if it's a it's an effective deterrent. And that is something that I should mention that we're really talking about for lower paid workers deterrents here. You know, 90 of noncompetes are not negotiated. They're they're really take it or leave it. So for instance, if you work for a sandwich shop, this was a Chris mentioned in his testimony a few weeks ago, there was a famous case of a a large sandwich chain sub shop in the Tristate area that was using noncompetes. Those workers, when they go to take that job or to interview for that job, they're not negotiating out noncompete clauses. They're signing what they're given. It's a take it or leave it type situation. So and relate so the broadest approach as possible is one for certainly for the lower paid workers is something we would support. In terms of these other issues around proprietary information. Just wanna be clear, like, this bill does not limit other ways to limit the transmittal proprietary information. So this doesn't address nondisclosure agreements, people could be required to sign. This doesn't address trades. I mean, there's a mention of trade secret, but clearly, if somebody has a trade secret, they leave. They're not allowed to then go use that under whatever provisions of law that are currently exist. So this doesn't negate any other protections that employers may have related to, protecting their proprietary information, and we think that's appropriate. One thing in review of some of the other legislation around the country, one suggestion might be and

[Austin Davis]: I

[David Mickenberg]: know employers, you know, every time we bring this up and brought this up many times, but workplace postings, just so, you know, there's a lot that people have to post in their workplace and a lot of information. But just so somebody that's going to apply for a job has some understanding that, in fact, they are not subject to a non compete if they're if they're captured under the, for instance, the income threshold. So just some way of transmitting that information may be covered in the bill. I think there's a, you know, conversation that has to happen between workers and I mean, prospective employees and employers, but potential, it's just popped up in other bills, workplace postings related to noncompetes as a requirement. The DOL is good at creating these, and they're pretty simple to do. So another issue and for the vast majority of workers, even if this bill goes into effect, which we think is a really good thing, we we see this as a sort of a barrier to a a prophylactic ability to prevent folks from employers from doing this. But but for most people, working people, their ability to actually bring a claim is very difficult, to to go out and hire a lawyer, to bring a claim for a violation of even the statute. And I should say we we support the remedy provisions in this bill. I think it's under four ninety five b, and and that's good. That's a great starting point. Some other states have considered in legislation a liquidated damages clause. So for instance, if we had a clause in there that set a defined amount of a violation, which said if you violate this law, you're subject to, I'll just throw this number out, a $10,000 penalty per violation and all the other remedies that are contained under four ninety five b, that sends a message to employers, you know, follow the law. It's the law. Because oftentimes for individuals, who are subject to a violation of law, it's just an it's just the the barrier to entry for the legal system is really is really high for folks, so it could be difficult to that's a suggestion that you may wanna include or at least discuss. And then we had a discussion in our work group about sort of whether this would apply to current existing contracts or not. And sort of I'm not an expert on contract clause and all of that. You know, there was some legal question about whether it could apply to it. The FTC rule did apply to existing noncompetes. And so as I read this, I don't see anything in it that says it shouldn't or wouldn't apply to existing to existing noncompete clauses. But that's a legal question. If retroactivity is legally possible, we would certainly support that, particularly for those workers that are that are under the threshold. Just doesn't make sense to have a workplace that has, you know, the five new employees at the sandwich shop that aren't subject to noncompetes and the five existing employees at the sandwich shop that are. So that's really a legal question more but but philosophically and the FTC obviously felt it was appropriate now. I should say the FTC rule was there was a court case brought against the FTC rule. The rule was stayed and pending further appellate review, and then, ultimately, the Trump administration decided to not pursue that. So so I don't know if that question has been that Sophie may know whether that question about applicability has been resolved or not. So those are my main my main issues. I'm happy to come back and talk about as you're moving through the specific provisions of the bill, but I think you've done, you know, this is a really great, a great start and on a very important issue for working Vermonters.

[Anthony “Tony” Micklus (Member)]: I'm just curious, you know, you know, this bill only covers nonexempt employees. Are you seeing, like, salaried employees in the, like, 50 to $100,000 range? Or at what point do you start to see more exempt employees versus nonexempt employees income wise?

[David Mickenberg]: I mean, I haven't I've had a few of these cases, and they've been the the cases when I was practicing were were more the the higher wage workers. We do know, and we heard in some of the discussions that we had, that the lower wage workers do are are subject to these non competes, we certainly know that to be the case in other places. So for instance, now we're starting to see I live in Burlington and in Burlington and outside in Williston. We see, you know, every time there's a new chain that comes into Williston, it's celebrated by my kids, the crumble cookies and the, you know, the, you know, the sub shops and all of that. Now I'm not saying any of them do this, but we know from the experience in other states that those types of chain stores have in the past subject their employees to this. So this is really, like, a protective measure to prevent that from happening.

[Anthony “Tony” Micklus (Member)]: So But most of these most of these companies, cookie crumble and all, they're paying by the hour. Yeah.

[David Mickenberg]: And I I mean, my reading of this is this they would be protected by

[Herb Olson (Member)]: Correct. Yeah.

[Anthony “Tony” Micklus (Member)]: Yeah. I was just trying to figure out the threshold because as you as many people have mentioned here, the $100,000, I I have an issue with it, not so much the number not so much that it's there, but it's at the right number. Yeah. And and also the the ambiguity around, you know, the positions.

[Michael Marcotte (Chair)]: Yeah.

[Anthony “Tony” Micklus (Member)]: And I'm I'm trying to kinda maybe pick up some solutions to hone that down and make it a little more unambiguous.

[David Mickenberg]: I think the because it's an and a 100,000 and an executive. I think certainly the definition of who is an executive could be clarified as Chris and others have mentioned. I think that that could use some further honing and who was who exactly would be considered an executive. So

[Edye Graning (Vice Chair)]: Can you talk a little bit more about the notice for employees that you're you mentioned? That's for stay pay?

[David Mickenberg]: Yeah, the stay or pay provision. Yeah, that's not something that I've focused on. I'm happy to think about it, certainly.

[Edye Graning (Vice Chair)]: But you did mention it, right? I didn't

[Anthony “Tony” Micklus (Member)]: I think I'm

[Abbey Duke (Member)]: saying none.

[Edye Graning (Vice Chair)]: Oh, okay. Yeah.

[David Mickenberg]: I was talking about the postings. Yeah. So just to clarify for those that aren't familiar, I don't

[Michael Marcotte (Chair)]: I

[David Mickenberg]: don't see one here, but, but in every workplace employ there's a requirement that, for instance, your right to workers' comp or OSHA requirements, and the posters get small print and get bigger and bigger as we go. But for some people, that could be an important I just think people knowing about their rights and most employees who are gonna go for a job aren't thinking like we're gonna have to negotiate a noncompete agreement or that they wouldn't, you know, even if one was included, they wouldn't know that they were prohibited in the state of Vermont. So just some level of knowledge. And I think there is provision in the pill that talks about, you know, giving, you give it to people that have a period to think about it. But just as a general rule, having more information is better.

[Michael Marcotte (Chair)]: Thank you, David.

[David Mickenberg]: Great. Thanks so much.

[Michael Marcotte (Chair)]: Good morning, all. Great morning.

[Austin Davis]: You folks had a better slushy drive in than I had. For the record, Austin Davis. I'm the director of government affairs at the Lake Champlain Chamber. I have testified on this issue many times over the years, And so I'd like to just thank you folks for the diligent work you've done to grapple with this area of policy that's very intentionally difficult because it's dealing with these gray areas between different protections and trying to balance employee flexibility with employer protections of intellectual property as well as just the more difficult things to describe in this. Know? Just even, like, the ethical considerations that fall around these. So I thank you for working for that nuance. I wanna thank Chris for his work on the working group over the summer who participated in that as well as Jessica and David for participating in that as well. You know, I think we believe that these agreements have important uses to protect, you know, from outcomes spanning from impropriety to illegal actions to just downright unethical things. And we've heard some outlandish examples that were kind of framed and at being happening at the national level and and chains and such like that. However, we haven't really seen much evidence of the being misused in Vermont, and it seems that our judicial system is working as designed on our reasonable reasonableness standard to handle these on a case by case basis. We agree that, you know, in many of those outlandish and outrageous examples, they those need to be restrained. And we wanna keep working towards a solution that can accommodate restricting the use of those in in instances that we can all agree that they're not supposed to be while protecting them for very important aspects of our economy, our small businesses, our startups, our tech sector, etcetera. You know, my colleague who just departed from working for our our business accelerator, you know, would remind me that these are an instrument that employers don't take lightly, that they weigh these their options when including these employment contracts. And that's because sometimes it does it has an effect of narrowing the talent pool that you're putting the job out for. Some folks will not want to enter into a contract for employment with a non compete agreement. They won't want to limit their options. Others will look at do the broader calculation and say, this is the place I want to be. This is the opportunity I want to go for. I'm fine with the non compete agreement. I know how to work with that. And they will make that decision or they'll likely negotiate based off that. So I just want to reiterate that in our competitive labor market, where it's difficult to hire talented people, employees, you know, including non competes, has not taken lightly. You know, understand that what they're doing in terms of narrowing the potential field of applicants in there. You know, we see this in the startup sector in less voluntary instances too. Actually, not long ago, think a couple of the legislators in this room as well as some of the advocates concerned, you know, we were at a talk a couple years ago, a few years ago maybe, with our state treasurer and other businesses about accessing capital. And one thing that actually one of a very notable aerospace startup mentioned was how when they started accessing capital to grow themselves as a non employer, many of those financers wanted to see non compete agreements. Because when they're at the ground floor of this innovation, the risk is very high for one individual to just take what they have and immediately act on it. These are valuable. An employee can't necessarily unlearn a business strategy. An NDA allows for the business to sue after the damages and the secret's out. But for a startup, once a competitor knows your roadmap, they can grab that first mover advantage and move with it very fast and it's gone forever. And so we have a lot of scrappy startups here in Vermont who are competing against the behemoths at the national level and international level, and they're doing so to great effect. This is one of the few tools that they have in their arsenal to go against these goliaths. If you have someone from a five person small Vermont business move to a direct competitor, they don't have to steal anything. You know? They already know what experiments failed, what marketing channels didn't work, where money was wasted, and they can just kind of move forward with that knowledge and also knowledge of what the company they're leaving was going to do for the next six months. So I think in the context of small Vermont startups, the current salary threshold, as as Chris alluded to, and executive standard proposal here are are quite difficult. You know, I think many founders aren't of startups aren't necessarily taking, you know, a salary at this level even. And many of the folks who are in the early stage are are doing so to be on the ground floor and to be there for the innovation, not necessarily for the wages. There's a total compensation package that might exceed that, let's say, if there's sweat equity involved or just an intangible compensation in terms of just the experience of being at the cutting edge of this field, this technology, this industry that folks might be putting into their calculation when they're deciding to work with an employer. One thing I would say is maybe have section two subsection eight one reflect, you know, not just as instead of having the language of salary threshold and executive status, make that an or, and then work on what that executive status truly means in terms of proprietary information and access to key components of the business. This might be worth looking at at the size of companies. I think there's an interesting you zoom out. There's an interesting contrast when we're talking about a noncompetent competing agreement in the contrast of a very large multinational corporation where things are very much siloed and you're working in a specific division, you don't have much information about what's happening in others. In a Vermont employer or a small business and when I say small business, I can be speaking to businesses up to 100 plus employees, but small businesses where many employees operate as generalist in a way that they want it in a large, and they have a lot of cross cutting knowledge of what other teams are doing that exceeds what you would at the same job title in a much larger corporation. You know what research and development, the marketing, what all these other departments are doing just by virtue of how the luncheon works and just the size and having to wear many hats. So, I mean, I think we'd like to see potentially that dual test be multiple single tests that are tailored to those specific issues. An executive employee at the highest level might have critical knowledge too, but a senior employee who's mid level could have been longer than they're longer than the CEO and have just as much knowledge. In terms of solicitation, I'd echo some of the comments that Chris are on guardrails here. The millennial me sees this kind of as a slightly dated issue. When I like someone who's rendered me a service and they move on, if the person at the front desk says they're not here anymore, and I say, where are they? And they say, I don't know. I pull up my phone and I quickly Google their name, and I can generally find where they've set up shop elsewhere. So, you know, employ like, will follow talent that they appreciate, I think, in this day and age, and it's easier than ever to do that. That said, I understand what this provision is trying to get at, and I certainly don't want a situation and this is already handled in case law when talking to some of the attorneys in my membership. I don't want a situation where somebody walks into a provider's office by their choice after they Google that provider and say, Hey, I found you after you left my old provider. I like you and I want to be a patient or a client. We don't want a situation in which just the fact that they render that service in that instance, once the person's found them, they might be seen as violating non solicitation. So I I understand that context. That's a slightly more weed y area, a little bit more gray. It's something that, frankly, like, you know, our our judicial system was better suited to understand, but I understand what you're getting at here. I appreciate the direction. I agree with Chris that maybe some more conversation might need to happen around just guardrails for fiduciaries, providers, attorneys, etcetera. And then that brings me to stay or pay. And I think this is an important conversation around companies investing time and money to their employees. And just thinking about this in the context of potential reluctance of employers to do that as there's constraints on it. We talk to many employers in this tight labor market who will start employees at high wages just with the understanding that they will be training them up at a six month interval and then raising their wages even more. And we want that. I mean, I think in this really difficult environment that we have, labor market that we have, due to all the things we talked about ad nauseam, our demographic crisis and so much more, we want employers to take that initiative find people and invest in them. The question then becomes, once they invest in them, what stops another person from coming in and kind of seizing that investment? And to the employee, they're not looking at the broader balance sheet of how the employer has decided to make this work, the employees are saying, I can get a little bit more if I go to this next employer and thanks for the straining. So these are important. And I think that there's some really reasonable to five criteria that are in here are really reasonable. But I wanna just kind of specifically zoom in on the transferability of high value certifications and the like and the the proration of that debt. And I think you have to think about this in the context of the economic principles of your sunk cost and your realized value gap. And to make this most down to home, I think think about this in the context of a home renovation. If you have a contractor that you want to come in and say completely renovate a kitchen or bathroom, expensive project, and they strip the kitchen down to the studs and then they decide, You know what? This job isn't for me. I can make more money down the road. And they leave. They're 20% done, but you're in a situation where you're left in a worst off place. You've made the initial investment. Just saying, Well, you owe 20% and that's a deal, is kind of adding insult to injury to some extent. So if you think about this in the context of a business who, say, pays for a three months intensive certificate for an employee and then that employee decides to leave before the state of pay agreement is done, the company has paid 100% of the cost of that and they've approved 0% of the value of that. And so the prorated conversation doesn't really work there in that situation. They haven't really gotten the value of that certificate at that time. So, you know, in short, these are just not linear. These are kind of agreements. I just think that some clarity around that would be helpful in the statute to make sure that, you know, employers can recoup in an effective way the actual cost of these services. And then, I think in closing, I think I just, again, thank you all for this work. I think these are important agreements, and I'd be remiss to not point out, which I have before, that as legislators, you have a de facto non compete agreement that prevents you from very specifically lobbying within the state of Vermont for one year at the conclusion of your term. Previous legislatures have had the foresight to believe that a cooling off period is important to protect the state of Vermont from improper or unethical use of what was made available to you by virtue of trusts of your constituents and, know, in fact, public members in the general assembly. If both non competes and and the agreement you have are about protecting the integrity of a specialized relationship and inside information gained through positions of trust. So we remain committed to working with you on this as we have over the years. We thank you for the work you've done so far in in building a much more palatable version of this, and would love to come back if need be to have discussions around the as you folks discuss the things that were brought up here today.

[Michael Marcotte (Chair)]: Doctor. Johnson?

[Edye Graning (Vice Chair)]: I just Oh, you want to go first? Just have one little pushback. We've had this situation in our family where you have an appointment with a medical provider and you made it eight months ago, and you get the call to confirm your insurance a couple of days before, and they tell you that person, your appointment is with someone else. And you say, why is my appointment with someone else? And they tell you that person isn't there And then you have to make So you've been waiting months. And then if you track this person down, you're waiting another eight, ten For us, it's been really long to get services. And so that's where I feel like that Google the person analogy doesn't quite fit. And so I appreciate we can track people down better than we ever have been able to. And also, the harm that can be done to the consumer by not having that information in a more timely way is real. And so especially in the medical world, also in these other situations, maybe not as much harm, but it's still an issue. So again, appreciate that we can find people, and also I think there's more there. Yeah. And I should have been more clear. I mean, I think that the notification is fine. I understand that. I think it does insert more gray area, but I

[Austin Davis]: think some guardrails can take standard form language for notification, some criteria around what that looks like, because there's a big difference between something that crosses the line into the solicitation as an advertisement and something that is just a notification that says, I moved on, here's my contact information. Those are very different. So if we could put some more there, there, that'd be helpful.

[Herb Olson (Member)]: So I appreciate your testimony. And you know, a lot of points as other witnesses mentioned about me for some clarification around terms and things like that. I think that's that's very, very helpful. One of the issues that you mentioned was how do you define executive employee or some other employee that has proprietary information. And I'm wondering, I I I'd love for you to think about, how to specifically how to further define that, to clarify. It seems to me that there are different types of proprietary information. Some of them have their concrete, know, it's a concrete thing that maybe you could deal with in a non disclosure agreement and others, like you said, maybe strategy, some stuff that it's harder to pinpoint. So would you be able to think about how to specifically how to address that issue in the detonation? I think it'd be helpful. Yes. Think that the

[Austin Davis]: It's an interesting conversation around just how the gates work. In my testimony, I said that So thank you for asking this follow-up. There's a wage threshold you folks want. I'd say that the wage threshold as written is too high. I think that said, I think we can all agree that folks working in sandwich shops should not be covered by these agreements. So what if we had a conversation about having stage gates that folks go through and starting with a very low wage threshold or a lower wage threshold, such that we are sure that we're not pulling in sandwich shop offers, but then start defining what these important criteria that folks are working on. And this is where it gets kind of difficult. Mean, like I said, I've been discussing this with the legislature since pre 2020. I remember back in 2019 having an employer in here talking about how for them collaboration is just such a competitive advantage. This is an employer who's doing incredible things at a global scale with optics, like printing and photography, etcetera. And his thing is, anyone who's in my business, I'd like to create an environment where they can advance, where they can learn, where they can be part of the team. And he's like, The difficulty is, I want to invest in these people and trust them with this and not have them go to Samsung or some other international competitor. So it becomes a question of how do you filter in. You don't want to suppress, let's say, the sharing and collaboration that happens. That's really important to building the ecosystem we want, the innovative ecosystem we want. We also want to create balance these protections. I think that starting with a lower salary threshold than what's proposed and then building on proprietary information from there is a valuable way to go. I also think, again, looking at the size of the employer is valuable as well. There's a difference between your large multinationals that have silos and then your your small Vermont employers who you know, your mid level employees can have just as much information, if not more at times than some of the executive employees. So I'd love to chat for I think that's a much bigger conversation. But, you know, I think, representative mix, you were getting at it a little bit too, the exempt, nonexempt. But I think broadly, what what you're hearing from us is that there's a lot of gray areas and nuance in it. And it's kind of by design. Like I said, these are covering the gray areas between trade secrets and non disclosures and other components of our laws because it's protecting some of that scrappiness that happens at small scale, the first mover advantage, competing on an international scale with large companies, etcetera. I don't know if that was the official. I'm sorry.

[Michael Marcotte (Chair)]: Can I have one more follow-up?

[Herb Olson (Member)]: Or you I can wait.

[Michael Marcotte (Chair)]: Abbey has a question, then we have Sarah.

[Abbey Duke (Member)]: Just want to understand better your testimony about the proration stay or pay. I didn't fully understand the concern about the language in here. Because right now, agreement would The employee would have to repay would decrease over time. We'll send the agreement. But it doesn't specify how quickly it would go down.

[Austin Davis]: I think more just meat on the bones there to understand, because I would hate to see a situation where someone disagrees with their proration and then challenges it. So you just want more specifics about

[Chris D’Elia]: how that

[Abbey Duke (Member)]: would work?

[Austin Davis]: Well, I don't think it's necessarily We could assign different value schemes to the proration. You might think it's just a linear proration. I might think it's more of an exponential. If we have an agreement that means you need to stay employment for one year after I invest in your training, to you, you might say, Well, I'm six months into that agreement. You've gotten 50% of the value. To me, I'm like, I haven't gotten. Actually, really, I've gotten 20% of the value. Over the next four months, I'd say I get 40% more of the value. And then really the last three months of this project that I trained you for are where the bulk of the value comes from of that training. So I think just reflecting that and just understanding that these agreements, it's not as clear cut. Employers work on different timetables all the time. Like, I might have I might have sent you to a training out of state to work on a very specific job that that we're working on. Let's say that's, like, you know, something advanced, like horizontal, directional drilling through foundations or something like that. And that is not a really important part until the end of the job, but you're leaving for the end of the job. I've gotten zero percent of the value in that trip. Thank you.

[Michael Marcotte (Chair)]: Thank you for joining us this morning.

[Sarah Crandall]: Thank you. Thanks for having me.

[Michael Marcotte (Chair)]: So if you could just state your name for the record and then continue on with your testimony.

[Sarah Crandall]: Great. Yeah. My name is Sarah Crandall, and I'm here to share my story about my experience with a non compete agreement. I live in Hardwick, Vermont, and I moved to Vermont in 2021 as a chiropractor. I had just graduated chiropractic school, and I took a job in East Hardwick. And the non compete agreement there was a 30 mile radius for two years. And essentially I was hired, in my opinion, into a practice that actually didn't have enough clientele to support a third chiropractor. So, you know, I was never actually able to get up to much of a good wage at all due to that. And yeah, sorry, I got a little nervous. I've never testified before.

[Michael Marcotte (Chair)]: Not a problem.

[Sarah Crandall]: Yeah. And so I left that job. I had a three year contract there. I left that job in August 2024. So in August, '26, my non compete will be up. And I did have a lot of people telling me, a lot of other chiropractors saying, you know, non competes can't really hold up. And I did contact a lawyer. The issue with contacting a lawyer is I had to I contacted at least 17 lawyers to try to find someone that would work with me. So it was extremely hard to find a lawyer in the first place had I wanted to fight this non compete. Asking them literally like five questions with follow ups was over $2,000 And so that felt really prohibitive to even fight the non compete that I felt was pretty extremely broad. 30 miles is really far from this community and it's outside of every major town. You know, it's outside of Stowe, it's outside of Montpelier, outside of St. Johnsbury. There's Newport that would be available and otherwise you know you're traveling an hour basically from your community. So yeah, that is the real basics of it. And I feel like, you know, looking back, it's easy to see that I was in a really vulnerable position having just graduated chiropractic school and not being experienced at all. And, you know, entering into a bad contract. And yeah, the other thing I'm not sure how you know how important it is, but it was the wages there were pretty much under $25,000 and, you know, the highest that it ever got under 30,000 It was not to have to be 30 miles away traveling basically an hour from your community and not having had enough money to even live on for this last three years makes it pretty much impossible, in my opinion, to go start a brand new practice from the ground up, you know, 30 miles away. And there aren't really a lot of other chiropractors in the Northeast Kingdom, there's a handful, and so it's not there's not a lot of competition already. And so there's a lot of people that need care here that just aren't getting it, aren't able to get it without traveling pretty far. And for whatever it's worth, you know, during this non compete time, since I've been away from that business, The business I left has pretty much been closed down a lot of time, from what I hear, due to the illness of the owner. So that business is not very available either. So I think that's the gist of it. I'm happy to answer any questions.

[Michael Marcotte (Chair)]: Thank you. Yeah. Hi,

[Anthony “Tony” Micklus (Member)]: Sarah. Tony Micklus.

[Anthony “Tony” Micklus (Member)]: I'm just curious about the terms of your agreement with the chiropractor. Were they paying you by the hour? Were they paying you by the job? Was it a contract? Was it salary?

[Sarah Crandall]: Yeah, so it's a little bit complicated. I got a base pay of 25,000 and then anything like I had to earn 6,000, anything over that I earned a percentage of 30% of. And that would be like, it would take a couple of months to get paid because we took insurance. So after the insurance was calculated, you know, we're a couple months behind on if that makes sense. So whatever I earned in January, I'd actually get paid for in March.

[Anthony “Tony” Micklus (Member)]: So you basically got a base pay and then, I guess, for lack of a better word, a commission on top of that.

[Herb Olson (Member)]: Yeah. Okay. Thank you.

[Michael Marcotte (Chair)]: Yeah. So your employment contract was for three years?

[Sarah Crandall]: Three years. Yes.

[Michael Marcotte (Chair)]: Okay. And then they did you decide to not sign a new contract or did the employer decide that, you know, he didn't want you, he wasn't going to employ you any longer?

[Sarah Crandall]: Yeah. That was my choice to leave before I had to give a ninety day notice. So I put my notice in in May. My contract would have renewed. It is in before my contract renewed. Yeah.

[Michael Marcotte (Chair)]: Can you say that over again? Because we lost you for a minute.

[Sarah Crandall]: Oh, sorry. Am I still am I here? Yep. You're now. Yes. I put my notice in in May and my contract would have run out in July. And I had to give a ninety day notice, so I actually left in August.

[Michael Marcotte (Chair)]: And then you can't practice now for two years.

[Sarah Crandall]: Correct. So this August will be the the end of that of the second year. I could start in August.

[Michael Marcotte (Chair)]: Yep. They could be pretty hard for that to stop you from earning a living. Courts it pretty much. Okay. I'm

[Sarah Crandall]: so sorry. Now I lost you. I heard I think it would be pretty hard, and then I didn't hear after that.

[Michael Marcotte (Chair)]: Yeah. It may be hard for them to win in court when they're stopping you from earning a living, but we don't know. That's the reason why we're looking at this.

[Sarah Crandall]: Yeah. Yeah, it's it's definitely been challenging. I can see both sides of the argument in many ways and having experienced it, I feel very grateful. I've had other things to fall back on where I've been able to have employment, you know. But if I would have if that was the only thing I had and had to, that would have been impossible, I think. Know, it would take, in my estimation, at least a year to try to build up to a decent practice size that could keep you sustained. I mean, I'm sure that all has a lot of variables, but that's sort of what was on my mind about it.

[Michael Marcotte (Chair)]: Did you have patients that were trying to touch base, try to get in touch with you?

[Sarah Crandall]: I bet if you reach out and they're like, where are you? And it's really awkward, you know? And they're like, you know, the office is closed down. I would like to get care. And, yeah, it's really hard.

[Jonathan Cooper (Member)]: Good morning, Sarah.

[Sarah Crandall]: Yeah. Sorry.

[Jonathan Cooper (Member)]: Good morning, Sarah. I'm Jonathan Cooper. I'm a representative from the Southwestern corner of the state. Thank you for joining us today. And my question for you is whether that noncompete in your knowledge of the industry or just specifically specifically in your instance, was that noncompete a negotiable element or was that a take it or leave it circumstance? As far as you know, and any other, is that something that is common among the people that you went to chiropractic school with in their experiences?

[Sarah Crandall]: Yeah, that's a really good question. I had no understanding that that could be negotiable at the time. And so I don't think so. This owner is pretty firm on the contract and other folks that I've talked to from other states, you know, there's I remember in Atlanta someone had to sign a seven mile agreement and that felt egregious there because seven miles puts you, you know, almost outside the city. But I think from what I understand, they're pretty firm. It's sort of a take it or leave it.

[Michael Marcotte (Chair)]: Thank you.

[Edye Graning (Vice Chair)]: Yeah. Good

[Kirk White (Ranking Member)]: morning, Sarah. Good to see you Kirk White from Bethel. So when you said that, I mean, so you couldn't solicit any of your previous clients some of them found you. Did you feel like you were able to provide chiropractic services to them or because of that fear of that non compete, you had to turn them away from that and offer something else or refer them or whatever?

[Sarah Crandall]: Yeah, no, I still maintain my chiropractic license, but my business is now doing energy work, which is the other thing that I was already doing. And so my business is not a chiropractic business. I'm not insured as a chiropractor. There was a lot of fear. I was threatened with like, these are literally the five ways I will sue you if you break this contract. And I took that really seriously. And like I said, it was really hard to find a lawyer and really expensive. So I was like, even if there was a chance of like winning, I don't think I could have afforded the cost.

[Austin Davis]: Yeah.

[Michael Marcotte (Chair)]: Any other questions for Sarah? Edye?

[Edye Graning (Vice Chair)]: I guess, thank you, Sarah. Edye Graning from Jericho. You bring up an interesting point, which is that you have a license to maintain and you can't see clients in a region. And so you actually have a cost associated possibly, right? Depending on when this happens.

[Sarah Crandall]: A lot of costs.

[Edye Graning (Vice Chair)]: Yeah. Yeah. And I think that's just an important piece for us to know here.

[Sarah Crandall]: Yeah, I would say the license renews every two years. It's about $300 and it costs, I would estimate about $1,000 every two years to take the appropriate amount of continuing education. So, you know, dollars 1,300 every couple of years to maintain.

[Edye Graning (Vice Chair)]: Yeah. Thank you. Yeah. Right, without the ability to work in the field. Yeah.

[Michael Marcotte (Chair)]: Any other questions for Sarah? Sarah, thank you. We appreciate your testimony and certainly helpful to us. We're hoping 'll be able to do something so others don't get caught up in the same issues that you're caught up in.

[Sarah Crandall]: Thank you very much. Yeah, I really appreciate what you guys are doing. And can I ask one question about the bill? Just something that came to mind in the non solicitation part was there was a line that said that you couldn't transact business with former clients or customers, and I was curious how that might relate to, let's say I didn't have a non compete, but I had a non solicitation. If I were to advertise in the area, I was told that that could be viewed as soliciting to clients because those clients already were in that area. That's just a thought that was on my mind. Thought I would pass that along.

[Abbey Duke (Member)]: This is Abbey Duke from Burlington. The TRANZACT is not in the bill anymore in So the latest the non solicitation does not include TRANZACT. So that was why we put in the current draft, if you were to leave, you could notify patients, I have left, this is where I am now. You could also do transactions. You just couldn't solicit those former clients. Good. Would advertising be solicitation? I don't think so because it's not I mean, that's my understanding.

[Anthony “Tony” Micklus (Member)]: I'm a real estate broker, so I totally understand what you're talking about, about a license and all that stuff. I will share with you what the policy is in real estate. We have to take code of ethics and things like that. In real estate, if you move to another agency, you are not allowed to solicit these specific customers. However, if they of their own free will say, I want to work with you and they choose to terminate their contract with the previous brokerage, that is totally within the purview. We've also been instructed that if you're going to do like a blanket mass mailing to a specific area, that is not considered soliciting, as opposed to taking your names list and sending a personalized letter. That would be. Is the way it works in real estate, just if that helps.

[Sarah Crandall]: Yeah, that does help. Thank you. Yeah.

[Michael Marcotte (Chair)]: Anything else for Sarah? Great. Thank you, Sarah.

[Sarah Crandall]: Thank so much. Good luck.

[Michael Marcotte (Chair)]: Thanks. So we've heard some suggestions that Abbey and Herb can work with Sophie on. I think there's things that we could do. You know, instead of I'm thinking, this is what I'm thinking, don't know what the committee is thinking, but, you know, the straight $100,000, I think we look at it, x amount above the poverty level, and I like the idea of creating you either use that or you use a definition where you're you know, could be a mid level, but if you have you know, if you're counted on by the and you're salaried and you're counted on to do specific things, then it could be proprietary information, sort of thing. So either a wage threshold or this and then of course looking at the executive and trying to figure that. I think there were some there were other good suggestions as well. But I hope

[Anthony “Tony” Micklus (Member)]: I hate to be the stick in

[Michael Marcotte (Chair)]: the

[Anthony “Tony” Micklus (Member)]: mud, but I am going to be. I I'm perfectly fine with banning no competes for non exempt employees. I'm not on board with messing with no competes for exempt employees. And I feel bad what happened to Sarah. And the thing that I was thinking about is the business there who doesn't have a lot of people to pull from at Hardwick. And if there was a situation where you know, that could actually cause a business that's currently in existence to fail. Right. So, I think I'm just going to write, just say a hard line. If we want to ban them for non exempt employees, I'm fine with that. But to start meddling as the exempt employees, I'm really not comfortable with. But I'm just one person. I'm a terrible stick in the mud and angry person, and it's okay. Mean, it's not the first

[Chris D’Elia]: I time I've been following people already through

[Edye Graning (Vice Chair)]: guess my question for you is, we're trying to draw the line at an incredibly high level employee and a non exempt employee isn't only There are a lot of people who are non exempt employees who are not top of the business employees. Most businesses I think it's almost an arbitrary place to draw the line when you're saying exempt versus non exempt. And so, because it doesn't take into account the job, the knowledge and all of those things, which is what this bill is trying to do. And so I just want to, I would want to talk more about what an exempt employee is and what, it's somebody who manages other people, right? You're exempt if you have employees, right? Like that's one of the things. If you have a bachelor's degree, that's one of the things. So the things that put you into that category might not be the things that mean that you can start a new business and earn a big wage and do all of those things. And I just So that's my pushback on it. No.

[Anthony “Tony” Micklus (Member)]: And I get that. I mean, the exempt versus nonexempt is, to my understanding, is pretty clear in the labor law from 1930s,

[Austin Davis]: I think.

[Anthony “Tony” Micklus (Member)]: You can't just be an exempt employee for work that you do. It's like there's specialization involved where it kicks it up to the non exempt position. And that's the reason why I just think that's a bar to set for me. Again, it's just me. And like I said, it's not the first time already today that I've been called evil. So

[Abbey Duke (Member)]: I want to explain my thought process and why I actually think the two part test is important. Number one, I think we're all in agreement that lower wage hourly employees, clearly there should not be noncompete agreements. So then we're talking about this other class of employees. And you start thinking about different scenarios in which there could be a non compete agreement. And I think that's why the reason for a two part test is, number one, they're making a wage in which they can actually pay their bills. And then I'll get into that a little bit more. And then number two, also, they are an important critical employee to the organization. And I get Austin's testimony about very small employers who might have five employees, and each one of those knows everything about the business. Then when you think about those five employees, we tend to romanticize startups. We tend to romanticize So if somebody's making $25,000 and they're working eighty hours a week, and they can't pay their property insurance, they can't pay their rent, and it seemed like a good idea. The startup is not taking off. There is not a vision in which in the near future they will be able to pay their bills, even though they're a critical employee, that I don't think they should be held to a non compete because going to go to a competitor. And so I think that's where we think about what is that level when the percent of poverty line, for example, could be it. Let's say that person's making $105,000 and they're a critical employee. Well, okay, then maybe a non compete is appropriate. So I don't think we can not have a floor of what that salary is. And then I think then the definition of what is a critical employee is where we knew when we were working. We knew that we said, let's put one out there, which is that senior executive, at the highest level. Whereas I think that definition does need work in order to capture the intent, which is really those critical employees. So does that make sense about those ideas of why I think that two part test is important? Or if it's not a two part test, then that salary floor would need to be higher. But I know if somebody is making $200,000 a year and they're not a critical employee, should they be held to a non compete? And then to keep going on points, think we're talking about medical care providers, I actually think is different.

[Austin Davis]: And I think Sarah's case

[Abbey Duke (Member)]: shows several of those elements. Number one, she was not making enough money to pay her bills and was being held to a non compete agreement. I don't think that's right or should be allowed. And then I think medical providers are a little bit of a

[Austin Davis]: different case than whether So anyway, those are some

[Herb Olson (Member)]: thoughts. So,

[Michael Marcotte (Chair)]: committee were National Life and the House of Power. We're back here at 01:30 to take a look at 02:11. We've got a bill of testimony. Then we'll have the floor. No. The more is coming in at three on the floor at 03:30. So with that, you can go up long.