Vermont Legislature SmartTranscripts:

[Michael Marcotte (Chair)]: Good afternoon, everyone. This is the Vermont House Committee on Commerce and Economic Development. It is Wednesday, 02/11/2026 at 01:05 in the afternoon. We are going to begin our afternoon on H six thirty nine, which is an active agent for genetic data privacy. We have our legislative council with us, Rick Segal. I asked him to pick up data that's trying to create a process where the genetics would automatically go. There wouldn't be a cure period, but anything else, there could be a cure period.

[Rick Siegel (Office of Legislative Counsel)]: Hear earlier. So Rick Siegel, office of legislative council. As the chair said, I have a draft with just a small verbiage wise change. I'll show you where that change is. So this is draft 2.1, again H639. The change is in the enforcement language. There's no other changes to the bill from the last draft, maybe it was 1.1, maybe 1.2, I can't remember. So we're in the enforcement section. You probably remember that this bill falls under the Vermont Consumer Protection Act. That's not changing. The AG has the authority to make rules, conduct civil investigations, the standard language. There is a new subsection C on page 14 added, highlighted in yellow. So as the chair mentioned, this is a way to potentially provide a cure period for certain violations of the bill that are not maybe related to sensitive data. I'll kind of walk you through what that looks like. So a consumer pursuing a civil action pursuant to subsection 20.061 B of this title, that is the civil right of action for consumers under the Consumer Protection Act against a direct to consumer genetic testing company or service provider for a violation of 2421B. A. One or subsection 2421BB or 2421BF and I will, before I continue, let me finish the paragraph and I'll show you what those sections are. Of the subchapter shall, before initiating the civil action, send a written notice to the company or service provider that includes as many details as possible of the alleged violation. So let me show you what we're looking at here. So only these three sections would be subject to a cure period, everything else, there's no cure period. So twenty four twenty one b a one is the privacy terms that the company must provide. So companies must provide clear and complete information regarding the company's policies and procedures for the collection, use, maintenance, and disclosure as applicable of genetic data by making available to the consumer the following. A summary of the privacy practices, a prominent and easily accessible privacy policy, a notice that the consumers de identified genetic or phenotypic information may be shared with or disclosed to third parties. So again, this is just a privacy notice that the genetic company must provide the consumer. If they don't do this, and the consumer wants to sue them for not providing this information, they would have to write to the company and give them fifteen days to cure this violation by presumably posting the information or sending them specifically the privacy notice. Okay, that's the first one. So the second cure period is 2421BB. So I'm gonna skip over subdivision two, which is where you must obtain the express consent for all these various things you do. That is some of the most sensitive things that I assume the committee wants to protect of the consumer. But again, let me go to subsection b. This is the marketing exception. So the marketing of a consumer, the kind of exception will be requiring the consent of the consumer. It does not require a direct to consumer genetic testing company to obtain a consumer's expressed consent to market the consumer on the company's own website or mobile application based upon the consumer having ordered, purchased, received, or used a genetic testing product or service from that company if the content of the advertisement does not depend upon any information specific to that consumer. Nothing in the subdivision alters, limits, or negates the requirements of any other anti discrimination law or targeted advertising law. Any advertisement of a third party product or service shall be prominently labeled as advertising content and be accompanied by the name of any third party that has contributed to the placement of the advertising. So again, this subsection B1 and two would be subject to the cure period, where if a genetic company violates this advertising exception, then the consumer would have to write to the company saying, hey,

[Michael Marcotte (Chair)]: I

[Rick Siegel (Office of Legislative Counsel)]: think you marketed to me in an inappropriate way, or a third party, you allowed a third party to market to me, you need to cure that violation, and they would have fifteen days to cure that violation. Okay, the final cure period exception is BF. So we're gonna skip tasks for revoking consent. If a genetic company does not allow consumer to revoke consent, that's not a cure period. The consumer has the right right away to follow civil action if they want to. Same thing with d, the data security and access. These security protocols must be done by the company. There's no cure period for this. The contracts between the direct to consumer genetic testing company and a service provider is also not subject to the cure period. I'm not sure how you would cure a contract, but also this to me would not appear to be a more sensitive issue, or it is a more sensitive issue that I would think the consumer would wanna insure is correct right away, that you don't have a contract with a service provider that allows the disclosure of a sample or genetic data. Okay, discrimination. Is the section where this is subject to a cure period, where a person or public entity shall not discriminate against the consumer because the consumer exercised one of the rights provided by the subchapter. You may remember denying good services or benefits to the consumer, charging different prices or rates for goods and services, providing a different level of quality or quality of good services or benefits. Suggesting the consumer will receive a different price or rate for good services benefits or a different level of quality. And then considering the consumer's exercise of rights on the subchapter as a basis for suspicion of criminal wrongdoing. So again, this is subject to a cure period where if a business is doing one of these things, the consumer must notify the business and give them a chance to cure the alleged wrongdoing before the consumer can follow civil action. So let me finish up with the new language and then happy to answer questions. Subdivision two, if the company or service provider does not cure the violation within fifteen days after the notice is received by the company or service provider or if there is a disagreement as to whether the violation has been cured, the consumer shall have the right to initiate a civil action against the company or service provider pursuant to the Consumer Protection Act. And subdivision three clarifying there is no cure period for any other alleged violation of the components of chapter justice three specific sections. So that's the changes to the bill. Happy to answer questions or

[Anthony "Tony" Micklus (Member)]: Alleged a violation. You're being sued for an alleged violation. To me, alleged sounds like we're not sure it's a violation yet.

[Rick Siegel (Office of Legislative Counsel)]: So you would suggest the verbiage be of the violation?

[Anthony "Tony" Micklus (Member)]: Yeah. I I think if if we're gonna do this and they're not gonna get they they better know full well that that's been a violation.

[Michael Marcotte (Chair)]: It's not Maybe it isn't. Maybe it's Yeah. Maybe the the violation is in the eyes of the consumer where it really isn't a violation. Yeah. It's just an allegation at that point.

[Anthony "Tony" Micklus (Member)]: My understanding in reading this is that we're allowing people to sue right off the bat because there might be a violation. That's what

[Michael Marcotte (Chair)]: the word alleged means to me. No, this is to provide the cure period if people think they've been, if there is a violation.

[Anthony "Tony" Micklus (Member)]: Well, this said there's no cure period for alleged.

[Michael Marcotte (Chair)]: And the alleged is going to be on the genetics.

[Rick Siegel (Office of Legislative Counsel)]: So let me just so the alleged, we can talk about it. That's not the proper word. If if you I understand his his issue is that when you file a lawsuit, these are facts, right? They're they're in your petition. You're saying this happened, this happened, this happened. You can claim it's a violation, but it's really up to a court to determine if this actually amounted to a violation. So if you're making allegations in your petition in the civil action and, again, happy to think about other ways to word this if that's not settling right, if there's questions as to if that means something different than I think it means.

[Michael Marcotte (Chair)]: I see what you're saying. You said a three, right?

[Rick Siegel (Office of Legislative Counsel)]: Bottom of c one and then three. C one,

[Michael Marcotte (Chair)]: like c one is different than three because there's no cure period. You're saying my data is out there. So there's been a breach and you can't pull that back in again.

[Rick Siegel (Office of Legislative Counsel)]: And then two, two is violation. So this may just be drafting. You're looking at the person that needs maybe to to adjust the language. So, yeah, if you wanna keep it at just violation, like it is in number two, I think we should be consistent. So either we use alleged, we add it in two, cure the alleged violation. And then in nine line nine as to whether the alleged violation has been cured. I'd rather be removed, Marcel, if that's just me.

[Herb Olson (Member)]: I think I'd I'd be okay with that. You know, I I actually don't see a whole lot of distinction, but I think moving the ledge works for me too.

[Rick Siegel (Office of Legislative Counsel)]: I guess, and let me I'm thinking more about this. When a consumer writes to the company, it's assuming there's a violation. We're giving the company fifteen days to cure the violation. Right? There has been a violation in the consumer's eyes. So I think maybe it is right to remove the legend because, you know, you're you are, That's the claim, and you're not suing because you can't. You you fifteen days. So the more I think about it, the more I think you may wanna get rid of the legend.

[Michael Marcotte (Chair)]: What happens if the consumers made a mistake and there is no violation and so that what the provider would then send back to them is to tell if there is no violation.

[Rick Siegel (Office of Legislative Counsel)]: Yeah, and this happens in regular without a cure period where you think you have a violation and you sue. And during the discovery process, it's very clear that there was not a violation or maybe even before that during settlement talks. The company makes it very clear, no, this is not a violation. Here's our evidence that we can show you. So, you know, maybe that answers your question.

[Edye Graning (Vice Chair)]: Regarding the alleged violation as someone that's been received an alleged violation on open meeting laws, I can understand the reasoning for the language in there just because we've had a, I know I personally experienced a alleged violation, which clearly state, I mean, was just someone saying that you're in violation, but we weren't in violation. And the cure period is intended for open meeting laws for the nominations. If I I think that having that alleged, I think it's all those semantics. I do think it's useful in when there's allegations.

[Anthony "Tony" Micklus (Member)]: But in this case, that's what it's saying. There's no cure period.

[Edye Graning (Vice Chair)]: So that down there, can't speak to, but I was just thinking of the alleged violations up above. But yeah, there's no cure period for any other alleged violations. But isn't that.

[Anthony "Tony" Micklus (Member)]: Yeah. I'm okay with it in the fifteen day thing because at that point, it's still under investigation.

[Edye Graning (Vice Chair)]: I do have a question, but I I should squeeze this one out first. But

[Jonathan Cooper (Member)]: Is there time for another question? Well, I mean, I have a

[Edye Graning (Vice Chair)]: different question, but I don't know if we're done with the alleged.

[Rick Siegel (Office of Legislative Counsel)]: Are we?

[Anthony "Tony" Micklus (Member)]: Allegedly we are. I

[Edye Graning (Vice Chair)]: guess I'm kind of confused by that too. There's alleged violation up there with a cure period and then there's no cure period for any other alleged violations of this sub chapter. Yes. But that just might be the beliefs that's confusing me.

[Rick Siegel (Office of Legislative Counsel)]: I didn't put this much thought into it as you are. So I think maybe as you all know. No, no, no. It's just, there's a lot of words in these three paragraphs and I think we need to be consistent. So if, I think with Herb Olson, don't think it matters legally how we're what we're calling this, but if if it bothers you all, it will bother other people. So we need to make sure we get this correct. Make sure we word it the way we wanna word it.

[Emily Carris Duncan (Member)]: Isn't it sort of technically any of these allegations, any of the public, yes, any violations are allegedly until they've been adjudicated. So it applies basically to all of them, even the cure period one, they're saying the company driver does not cure the violation, but it's still only alleged at that point.

[Edye Graning (Vice Chair)]: Till it's gone to court.

[Michael Marcotte (Chair)]: Jonathan?

[Jonathan Cooper (Member)]: Thanks much. My question pertains to the third element there about there being no cure period for any other parts, you know, anything else. And I was wondering if, in that language, is is it frequent, or does how does this align with how federal interpretations of genetic data privacy and, you know, special harm have sort of been thought through or adjudicated over the years? Is that is am I asking a question for the attorney general, or representative thereof? And whether we are are there any risks inherent with the state making that sort of assertion? Or is that something that states are fully capable of doing at any point?

[Rick Siegel (Office of Legislative Counsel)]: So I think you are you are you asking the cure period in general? Is that something the state can do? Is that your question?

[Jonathan Cooper (Member)]: No. The that that third part where for any part of the subsection or the you know, there is no cure period. That's what I wanted to know about.

[Rick Siegel (Office of Legislative Counsel)]: If you are creating this cause of action to sue a genetic data company or have the AG enforce it. So when you create a cause of action, you can put limitations on it however you want to some extent. And I see no problem with having a cure period legally with this type of thing. It's not typical. I don't think Vermont has done it before, but it is something that you all can choose as a policy choice. If you want to give fifteen days, that's something you all can debate. So I don't think there's any and we have Todd Delos here from the AG's office, but I that's my view of it.

[Monique Priestley (Clerk)]: Yeah. Rick, I guess I'm trying to look at the specific a, b, and f, and I'm having a hard time making a case for or even understanding how we make a case for the cure period to apply. Like, so for Sorry, going back through this. So for somebody violating the privacy terms and consent, which is providing clear information that they are disclosing that they're doing a thing, mean, I'm curious how anybody actually proves that this didn't happen and or isn't happening. And then for B, the marketing exception, I feel like if a company is deciding to include people's genetic data in marketing profiles, then what as soon as they're, like, entering, like, a real time bidding auction or, like, marketing space where they're trading profiles and then acting on those to do ads and then brokers are entering that auction, then the the data brokers and stuff already They have that data. So we're not really protecting anybody from I guess, like Todd has been saying, once the genetic data's been out there, it's out there. And then as far as F goes, the discrimination piece, I'm also just, like, curious what this help like, how this the cure period on this helps anything if people are being discriminated against.

[Chris Steele (President, Vermont Bankers Association)]: Yeah. So I can't speak

[Michael Marcotte (Chair)]: to that last one. That's something Sure.

[Rick Siegel (Office of Legislative Counsel)]: Other witnesses help you with. But I think subsection a, the privacy terms, that one's pretty clear. Like, you either provide the terms or you don't. You know, can things slip through the cracks there, guess, but we're not talking about genetic data or sensitive data. It's just

[Monique Priestley (Clerk)]: How does somebody prove the disclosure, though? Because b is the active the act of like of clicking a consent button. A seems to be like a a disclosure that may or may not be like a clicked thing. So how does anybody prove that that happened or didn't happen?

[Jonathan Cooper (Member)]: Do mean

[Rick Siegel (Office of Legislative Counsel)]: do you mean one and two?

[Monique Priestley (Clerk)]: Well, we're that just just applies to a one. Right? Right. So and two is more of a two is more of a, like, a active Yes. But but a is basically disclosure, And I don't see how that's an action that you can take or prove that it was taken or not.

[Rick Siegel (Office of Legislative Counsel)]: A prominent and easily accessible privacy notice that includes

[Monique Priestley (Clerk)]: Yes. If say I go on a website and it didn't happen and I'm like, the website didn't disclose its terms to me, if I go to if I'm seeing how do I prove that that banner didn't show up or something? I guess I'm curious. I guess what all of these questions are, I don't necessarily support the cure period on this, and I'm just curious, are we muddying things up by adding these things that I don't know that actually any of these add to anything? And certainly for the consumers protection piece.

[Rick Siegel (Office of Legislative Counsel)]: So let's say there's no cure period. Let's say there's just back to the language in the last draft. You would still have a cause of that. That's still a thing that a company can violate by not providing a privacy notice. So I think it's the same problem that how would a consumer prove that they didn't do this thing.

[Anthony "Tony" Micklus (Member)]: So that's

[Rick Siegel (Office of Legislative Counsel)]: kind of a problem that just exists. Adding the cure period would give that company a chance to rectify if the consumer believed that I do not have this piece. It may be too late.

[Monique Priestley (Clerk)]: I guess that's my hard question.

[Rick Siegel (Office of Legislative Counsel)]: Depends on the situation. So, can't answer that specifically, but I think the point of the cure period and how you all should be thinking about it if you're going to do this is can it be something that can actually be cured? The consumer's whole is where they were before the violation happened. Is that possible? That's up to you all to determine. Don't know.

[Edye Graning (Vice Chair)]: This is kind of a pain, but I apologize. So we're going to hear complaints about the private right of action. When I think of, you know, going back to consumer protection, I don't think of the conversation that we had earlier this year where we were doing, like, a thousand dollars per day for violation. Is that ringing any bells? You got a brokers? We were talking about

[Rick Siegel (Office of Legislative Counsel)]: Not per day, but yeah.

[Edye Graning (Vice Chair)]: Was something like that. People could sue to claim that money, which became a cottage industry in my opinion. Can you just explain to me the consumer protection lawsuit process, just so that I kind of understand that or would that be better for you?

[Rick Siegel (Office of Legislative Counsel)]: I'm going to defer to all of that one. Okay.

[Edye Graning (Vice Chair)]: And maybe afterwards, does everybody understand it or is it

[Anthony "Tony" Micklus (Member)]: just I need a better understanding.

[Edye Graning (Vice Chair)]: Because honestly, I mean, one of the reasons why it was defeated last year, the data privacy bill, and was because of that private right of action. And we should, I wanna make sure that I can defend the passage of this bill if we're doing, because you keep saying private right of action, which is a trigger word.

[Michael Marcotte (Chair)]: Well because I think of I don't if I remember. It was two years ago. Oh, two years ago. Year we passed the kids code, which had private right of action. Right. Right? Correct. There's reason why that passed with private right of action. I think there's a reason why this would pass with private right of action because you're talking about your genetics.

[Edye Graning (Vice Chair)]: Correct. And I completely agree with you on that. It would be nice to have like a firm understanding because I know that I'm pretty sure I'm getting it confused with the other one where we were talking about, you're able to sue for $1,000 per violation. That's what it was. It was a thousand dollars per violation. And, you know, after fifteen days, it was it was to me, I looked at it as a cottage cottage industry.

[Michael Marcotte (Chair)]: Sixty day cure period. Yeah.

[Rick Siegel (Office of Legislative Counsel)]: That was $3.42, Jane O'Sall? Yeah.

[Michael Marcotte (Chair)]: Yeah.

[Anthony "Tony" Micklus (Member)]: That's it. And really, from my point, I don't have a problem with a private right of action for something like this at all. You know, first and foremost, in my mind, is the letters that come in from these attorneys and these tautage industries saying, you're in violation of this, gives you 12 pages of stuff and says, send us $10,000 now and we'll take care of it. That's what I want to stop. And my thought with a cure period, and maybe it's the wrong tool, is this gives a person who's been accused of all these things to say, Okay, okay, I hear what you're saying. Give us a couple days, a few days, to substantiate the claims. That's all I'm looking for.

[Herb Olson (Member)]: Or is that? The testing company might say, well, we did that wrong. The notice has really should be such and such. Mean, I'd like to hear a little more about what you're thinking about, why I guess the cat's out of the bag with those three requirements. And I'm sort of thinking those three are the kinds of requirements that, to me anyway, seem appropriate for a cure because they're curable.

[Anthony "Tony" Micklus (Member)]: Are they? What's that?

[Monique Priestley (Clerk)]: Are they? That's my question.

[Herb Olson (Member)]: Okay. Yeah, I was just, those would

[Michael Marcotte (Chair)]: have been, What

[Herb Olson (Member)]: I was thinking about over the weekend,

[Edye Graning (Vice Chair)]: you know, those would be the

[Herb Olson (Member)]: three because if they did do something wrong, they can be cured without harm being caused having been caused to the consumer. You got advertising, you never had it.

[Monique Priestley (Clerk)]: I don't think advertising is not a harm. I don't think the use of genetic data in advertising that results in other things and ends up in a market that other collectors

[Herb Olson (Member)]: are Advertising excluded the actual information. Advertising, I thought, was defined as I could be wrong. Sure. I thought it excluded the actual use of the genetic information.

[Monique Priestley (Clerk)]: I'm assuming it builds a profile that infers data from the genetic data though. Like you have cancer or you're likely to have whatever.

[Herb Olson (Member)]: And that's prohibited in other sectors, the transfer and disclosure kind of things, because those are not subject to curing,

[Chris Steele (President, Vermont Bankers Association)]: I think. Yeah, the transfer.

[Rick Siegel (Office of Legislative Counsel)]: It requires consent. You still worry, consumer can consent to that, can express a consent to that data being transferred. But so we're looking at on page nine. Subdivision E, the marketing or facilitation of marketing to a consumer based on the consumer genetic data or the marketing data.

[Herb Olson (Member)]: So again, they can do

[Rick Siegel (Office of Legislative Counsel)]: that if the consumer has expressly consented to that marketing. And D too, if you're looking up D and E both kind of address.

[Herb Olson (Member)]: It's the content of the advertising, not depend on any information specific that consumer. I was reading that as excluding the actual transfer of identifying information. Maybe I'm reading the wrong. Don't

[Jonathan Cooper (Member)]: I think that when the screen is shared, I was just hoping I could raise a hand or ask a question about something Representative Priestley just said. Is it okay to ask for more information there? Thanks much. Sorry

[Michael Marcotte (Chair)]: about that. Sorry, Jonathan. Say it again. Yeah.

[Jonathan Cooper (Member)]: Thank you. Can you hear me okay?

[Michael Marcotte (Chair)]: Yep.

[Jonathan Cooper (Member)]: Great. Been trying to figure out, I think maybe I was trying to get at this with my previous statement. If we have a shared understanding of the specific harms of what we're describing with genetic data. And I know in previous testimony, were told, like, it's you. You know, it's immutable. My birthday is also immutable. But in I'm trying to understand if we have, like, more examples of what Herb Priestley was talking about of the things that the how this risk is greater than, say, credit card data or things of that nature. And so I'm I'm hoping that I know that's important to me to understand more. And so if if there is some body of evidence around what one runs the risk of, My own attempts to learn about it through various law review documents suggested things, maybe in employment employers, suggested things that if you have markers for Alzheimer's disease that perhaps later in in life, an employer that knows that could use that against you in your decision making. So I'm hoping to sort of really get a a good sense of not just the idea, but the specificity of the harms. And I think that'll be important for us to have on the record if people know what those are.

[Monique Priestley (Clerk)]: I do not have any exhaustive list, Jonathan. Actually, we'd probably come up with one pretty quickly. I mean, just to what you were saying with the possible impact on employment stuff, I think in general, when we had that testimony from that hearing two weeks ago, last week, whatever it was, of the example of things like if you're likely to or have Alzheimer's, and then people going into marketing, like that being used for marketing, things like medicines or treatments or that kind of stuff, but also ending up in profiles about you that are then sold through data brokers, which is then used by other parties for advertising to you and or scamming you and and making it like this person has Alzheimer's. So if you call them or text them a certain thing, they're not really they're like they are more like how likely how much more likely are they to fall for the scam, basically. So used both to target products to them and services, but also to go after people for scams.

[Jonathan Cooper (Member)]: Okay. So it's like, the reason that it's worth stealing is that it has value, and part of reason that it has value is that, for example, one could improve their batting average by through through targeted sort of solicitations, etcetera. Am I sort of hearing that?

[Monique Priestley (Clerk)]: Yeah. Yeah. Yeah. Yeah.

[Jonathan Cooper (Member)]: Okay. Okay. Thank you. It's it was the sort of thing that I found I thought I would have many more examples right at hand immediately, and it it seemed harder to come by. And a lot of what I was learning was that federal courts haven't been as receptive as, state and stuff. And so I I I think it's important for us to if you know, to to understand sort of exactly how how we're trying to protect people and from what. So I I I do appreciate that, Monique. Thank you.

[Michael Marcotte (Chair)]: Anything else?

[Edye Graning (Vice Chair)]: I don't mind talking about the compelling maybe you'll find it. It's the part where there's no retaliation for lack of subsection F, discrimination. A person public entity shall not discriminate against the consumer because the consumer exercised any of the consumer's rights under the subchapter of buy. So my issue and concern, it's not like a, you know, a day stopper for me on this particular bill, But it is a concern that I have where we are telling people to provide a service if the expectation is that your data is going to pay for that service. And I've stated it multiple times. We have to look at our personal data, not as something that we necessarily it's currency. We are paying for services. It truly is, every time we sign off on one of those, you know, we're going to use your data. It's about $600 a year that we're receiving in services for our data. That's what it's worth. And whether that be marketing, whatever.

[Abbey Duke (Member)]: I think the baseline question is, is that appropriate or safe for customers? Sorry? Is that appropriate or safe for customers to have our currency? We could be paying actual currency and not information, genetic, this is you information. And I think that's kind of what we're trying to figure out.

[Edye Graning (Vice Chair)]: Right. I'm saying that if you can't use it, but you're forcing a company to give you services, that to me is a little problematic.

[Michael Marcotte (Chair)]: In this case, you're paying for the service. Paying Yeah. Upfront to have your genetics tested. Right.

[Abbey Duke (Member)]: Because most of these companies don't have a free because the product itself is so expensive, they don't have a free I think it would be different if we were talking about

[Michael Marcotte (Chair)]: And they're selling you other products that they have. Right. And

[Edye Graning (Vice Chair)]: if that again, your data, your information is money. So if the part of the deal for and let's just use Ancestry as an easy example. If they use that data and they charge a certain rate for you to get genetic testing. And then you say, well, you can't use my data and we still pay a $100, but it actually costs like $120 but they're making the $20 through genetic sharing, the genetic data. If you want to pay that extra $20 I feel like that's perfectly fine. But to say that you can't charge more when you're not receiving money.

[Michael Marcotte (Chair)]: They're already building that into their

[Abbey Duke (Member)]: It's

[Anthony "Tony" Micklus (Member)]: a calculated risk of doing business. Yeah. I do free CMAs for real estate clients all the time. Right. I'm not gonna get any money for that, but the hope is that through that relationship, they'll abuse me.

[Edye Graning (Vice Chair)]: So let's

[Anthony "Tony" Micklus (Member)]: and I would probably not do a CMS anyway.

[Michael Marcotte (Chair)]: Let's get back to so we're talking about do we add their period or not. So why don't we hear from Richie and then hear from Todd, and then we can have that conversation, and we can get back to it. Hi, Richie.

[Richie Engelhardt (Head of Government Affairs, Ancestry)]: Hey. Good afternoon, chair Marcotte and members of the committee. Richie Engelhardt, head of government affairs, here again today to discuss the comments we submitted in response to the committee's questions and discussion last week. First on the law enforcement access issue, Ancestry requires a valid legal process, either a warrant or a court order, in order to even consider disclosing our consumers' genetic data, including genetic data, to law enforcement. In the fourteen years we've offered direct to consumer genetic testing, have never disclosed genetic data to law enforcement. We also publish a periodic transparency report for our consumers detailing the number of requests we've received and the nature of any information that we've disclosed. And in the past, this has been limited to personal information directly related to credit card fraud investigations and only in response to a court order. Other services such as GEDmatch allow their consumers to provide separate express consent so that their data can be used by law enforcement in service of solving cold cases. While Ancestry does not provide this option, we did note in our comments a suggested amendment that would prohibit a direct to consumer testing company from providing information to law enforcement without separate express consent unless in response to a valid search warrant or court order. On this topic of nondiscrimination, Ancestry does not have different pricing for our DNA customers versus our nondDNA customers for our nondDNA testing related services, essentially our family history subscriptions. If a consumer exercised their rights under this bill, they would not have a different experience on our websites or be charged different amounts than any other user. However, if they elected to delete their genetic information, any services that require that information, such as ethnicity estimates or features that show how your genes have traveled across the globe over time, would be unavailable after that deletion. Regarding the lawsuits that we've encountered in Illinois, they were brought after Ancestry was acquired by a private equity company in 2020. The initial suits were against the private equity firm and were dismissed as the Illinois statute prohibits the disclosure of genetic information and not the reception of it. The same plaintiffs filed against Ancestry the following week. At no point since the financial interests of our company were sold did Ancestry ever disclose genetic information to third parties who had a financial stake in the company. That said, it took nearly two years and substantial staff resources to have the claims brought against us dismissed. Another case currently pending in Illinois that I am not at liberty to discuss while litigation is ongoing, but we assert the claims brought by the plaintiffs there are also meritless. On the subject of the proposed cure period, we appreciate the committee's willingness to work with us on the provision in this bill. I think one of the things that's been overlooked in our discussion is the fact that Ancestry offers services well beyond our genetic testing product, and those services involve other types of sensitive personal information, particularly when it comes to race and ethnicity. In some cases where the information was where the information was derived would dictate whether it's covered under the Genetic Information Privacy Act or the state's Consumer Privacy Act as sensitive personal information. Providing a private right of action with no cure for the majority of the bill could trigger lawsuits for potentially millions in damages for technical glitches that we discovered and fixed before any privacy harms occurred. A technical glitch on our website that could be curable, one that perhaps allowed someone to view a user generated family tree, would have no cure period under the proposed cure language even if the glitch were resolved before another party saw that information. Worse, if the data was not derived from a genetic test, we would have no way to clarify that outside of the courts. Finally, we believe a thirty day cure period is more workable than the proposed fourteen day period. Ancestry is not a big tech company. We're at best a big genealogy company, and with that comes far fewer resources than most companies that are typically in scope of a privacy statute. If the staff with knowledge of an alleged claim is out of the office for any reason, it could complicate our ability to respond in good faith under such a short window. We look forward to continuing the discussion on the cure provision as the bill advances. And in conclusion, like, we really do appreciate the committee's openness to our comments and concerns on the bill. We understand that we may have differing opinions, but we value being a part of this process. And I'm here for the whole hearing if you have any questions or wanna direct anything else at me. Thank you.

[Michael Marcotte (Chair)]: Questions for Richie?

[Monique Priestley (Clerk)]: Richie, I guess this might be a question for you and Rick. And I'm just wondering how many companies fall under the scope of this bill. Guess I'm it's good to hear from Ancestry and and understand that you guys are being responsible with with your data and that kind of stuff. I am curious as far as the scope of this bill that it feels like it could apply to hundreds of companies, if not thousands, that do not only genealogy resources, but also any type of genetic testing or lab services and that kind of stuff. Guess that's why I was including Rick. I'm assuming that we're this is anybody that's handling any type of genetic information.

[Richie Engelhardt (Head of Government Affairs, Ancestry)]: Yeah. So, I mean, on the market for DTC genetic testing services, the three big companies in the space are Ancestry, 23andMe, and MyHeritage. That accounts for more than 90% of the direct to consumer genetic tests that are are purchased in The United States in any given year. It's hard to say how many of those smaller start up companies that I discussed the last time I testified are out there. The ones that say, download your info from Ancestry and upload it to us, we'll tell you if your kids are gonna be good athletes. There was a period of time where I was seeing ads for those all the time on my Facebook just because of virtue of the fact that I worked for ancestry. They assumed I would be interested. But we don't have any good data on how many of those those firms are out there.

[Herb Olson (Member)]: So you were talking about warrants and things like that. And I think you had said you had limitations on what you would respond to. Do you distinguish between administrative warrants and judicial warrants at all?

[Richie Engelhardt (Head of Government Affairs, Ancestry)]: Yes, absolutely. We would need a valid warrant from a court. We would not respond to an administrative warrant. We'd fight it. And you know, by and large, law enforcement's interest in genetic databases is for investigative genetic genealogy, right? So they're not looking for the DNA of a specific person that they've suspected of committing a crime. What they use the databases for are uploading an unknown suspect's DNA into a database like GEDmatch, and then seeing how many people in that database is that person related to that they know the identity of so that they can reverse engineer a family tree and identify that suspect. We would fight back on those under Fourth Amendment grounds vigorously, right, because they they would be basically asking for access, to millions of people's genetic information who are not accused of a crime, and have a right to privacy of that information.

[Herb Olson (Member)]: Just to follow-up, but so yeah, you wouldn't respond to administrative warrant, the judicial warrant under those circumstances. I'm hearing you would fight it, but the court finally orders it, Right?

[Richie Engelhardt (Head of Government Affairs, Ancestry)]: If we ran out of Yeah, exactly.

[Edye Graning (Vice Chair)]: Appeals and Right.

[Richie Engelhardt (Head of Government Affairs, Ancestry)]: But like I said, in the fourteen years we've offered direct to consumer genetic testing, we've never disclosed genetic information to law enforcement. Even the FBI has guidance on how they interact with databases like GEDmatch. They can only interact with databases where the consumers have a right, to, at a minimum, opt out of participating in cold case investigations. GEDmatch does a separate express consent. It's an opt in, and we strongly believe that the opt in is the the correct approach. This bill requires an opt in for that.

[Michael Marcotte (Chair)]: Questions for Richie? Thanks, Richie. Thank you. Something Jonathan?

[Jonathan Cooper (Member)]: Yes. Thank you. I'm sorry about that. Richie, just to be clear, an administrative warrant would be something that can you, like, can you just help us make sure that we understand how how this legislation is this legislation proposing administrative warrants?

[Richie Engelhardt (Head of Government Affairs, Ancestry)]: Not to my knowledge. I haven't seen anything referencing administrative warrants in here. And, you know, we actually submitted, a proposed amendment in our comments that would say that you can't disclose any genetic information to law enforcement without a valid warrant, or court order.

[Michael Marcotte (Chair)]: Good afternoon. Good afternoon.

[Todd Daloz (Office of the Attorney General, Assistant Attorney General)]: To the record, Todd Delos, office of the attorney general, assistant attorney general. Thank you so much for having me back. I wanna make sure to get to your concept, rep Boutin, but let me just start by saying appreciate the conversation, appreciate the concern around cure periods. And I would continue to reiterate that from our perspective, one, this would be a first cure period that we're aware of under the Vermont Consumer Protection Act. It would appear to be one that, while narrowly tailored in this circumstance, may have some ramifications outside of the kind of narrow technical violations that may be alleged. I'm not gonna get into whether it's an alleged violation or violation, but let your lawyer

[Rick Siegel (Office of Legislative Counsel)]: take care of that one.

[Todd Daloz (Office of the Attorney General, Assistant Attorney General)]: And and three, you know, we have very good players in this marketplace. I'm looking at you, Richie, but you can't quite tell that. We have folks who, for the most part, right, we're looking at three companies that take up 90% of the market share. It's a pretty big step from our position to create this kind of cure period in this kind of space. Beyond all that and this will kind of dovetail with the here's how a consumer lawsuit might look. We know these gunning letters are out there. These these letters come out. I just got one through our consumer assistance program from a a local retailer who was sort of just wanted to understand, you know, what the allegations were. I don't know as even a cure period is going to change that. Right? Because an individual can still file the lawsuit and get it dismissed because the cure period was never honored, and they can still harass and challenge businesses. And and I I will say in response, you know, I think Ritchie gave some good examples of their experience in Illinois. Right? Two pieces of litigation in Illinois. You know, at any given day, the state of Vermont is in active litigation against. Right? I used to be a defense attorney for the state of Vermont. Probably dozens, if not hundreds of cases. Some of them, maybe maybe a good number of them, I would argue, were without merit. That's what a lawyer does. So you want your lawyer to do? So I I I don't mean I I don't disagree with Rich's characterization, but I will say that's the position. Even when we go after a company in the consumer protection space that we feel very strongly based on our investigation is in clear violation, violation, the response is almost always that there is no violation or they don't believe there's merit in it. And then even when we get to a a settlement, we often agree to a settlement that says no one says there was a violation here because that's what a company is looking for. So I I lay all that out there, you know, to get back to more of the question. Right? So somebody comes in in that nine VSA twenty four sixty one b. That's the private right of action opening. I I can read you the language, but the the essence of it says, right, you've got to have relied on it, the deceptive or fraudulent practice, and then you have to be able to demonstrate damages. So I don't know how to take an example from here, the the marketing piece. Right? The the real space I see there is twenty four forty one f or b f. Anyway, it's the second part of it that says, if it's not clearly disclosed that this is a third party ad and may not be affiliated with the site you're on, that's in a violation of the of this bill. You'd still have to demonstrate damages, Or arguably, you could then say, well, I relied on you following the law, and so give me my whatever the cost is for ancestry.com. It's not some astronomical figure. Right? The goal is to make the consumer whole, either because they were actually damaged, they can demonstrate that, or because they relied on this misrepresentation and paid you money that they wanna get back. So that's not to change the reality of these letters going out. I don't I don't dispute that. It is to say, though, to really move litigation forward, there's more to it than just you violated the law. The other spaces where there are sort of damages that accrue over time based on violations, those tend to be and I'm not gonna speak to to h two eleven, but those tend to be in the AGO enforcement space. And I will tell you as a matter of prosecutorial discretion, we usually operate in a cure period space with a lot of these more compliance based violations. Right? We write a letter to the company. We may do some discovery, not litigation discovery. We have our own civil investigative process. But we then may say, depending on what it is, hey. Fix these things because we don't see that there's been damage, but we see that it's a violation. So I offer all that as just kind of the world of what consumer litigation might look like. I mean, I think I can speak more to the specific carve outs for the cure, but I I feel like at this point, what I'd really like to say is, you know, the big policy question is whether this door gets opened or not. I think this yeah. I'll leave it at that.

[Michael Marcotte (Chair)]: Thank you all very much. Jonathan's got a question.

[Todd Daloz (Office of the Attorney General, Assistant Attorney General)]: Sorry, Jonathan.

[Jonathan Cooper (Member)]: Sorry, Todd. Slow on the uptake here.

[Anthony "Tony" Micklus (Member)]: Can Two of us.

[Jonathan Cooper (Member)]: So something that I I sort of mentioned earlier, would like to hear your thoughts on specifically, And it pertains to understanding, you know, I think in when you arrived earlier in previous testimony, you talked about how your genetic data is you. And I was wondering if as I've tried to sort of follow how federal, you know, circuit courts are assessing genetic data, you know, theft, like, harm, can I hear your thoughts on like, does this rise to a a level of harm that might otherwise be hard to describe? You know, that's I think that's part of what makes this a stick sticky, is that it's it's future looking. We're looking into the future with it. And is there an evolving body of jurisprudence that is seeing this differently than maybe it saw fifteen or ten years ago?

[Todd Daloz (Office of the Attorney General, Assistant Attorney General)]: It's a great question and and a great concept. So I would say, I think it is largely future speculative and part of that, and I I wanna credit companies like Ancestry that are very protect I mean, you just heard what Richie said. They fight even when a government is seeking that data for law law enforcement purposes. They still protect that data. I think and again, right, we heard from Ancestry, they largely they support most of this bill, and I think the industry largely does that because they recognize the sanctity of this information and and the the serious ramifications of in the same way that we recognize there are tremendous both privacy effects and and harm done if your medical data is released. I think the genetic data is in a very similar circumstance, whether it's the ability to understand what products somebody might be looking for, what needs they may have in the future, how items are priced, how they may be treated in the marketplace. And yes, like the feds have a genetic information discrimination act, But that was precisely for this purpose that if this information is out there, people shouldn't be able to discriminate about it. And I think what we wanna say is let's not let the information get out there unless the consumer chooses to do it. And I think that's, you know, there's another conversation floating around here, which is, I think, fascinating and and incredibly valuable, about the value of our data and the freedom to which people may have to sell their data or not and whether they know they're selling their data or not. Again, I would say that may not be the case in this marketplace. I think there's value to it. And that precise conversation is what are the harms done when your data is out there? What harms can be done to you because your data is out there? And I would I would just go back to say, I keep looking like you're looking that way, Jonathan, but I know you're in this little box here.

[Edye Graning (Vice Chair)]: Isn't he? Isn't that how it works? Yeah, he's very important. You.

[Todd Daloz (Office of the Attorney General, Assistant Attorney General)]: Yeah. All of which is to say, I recognize that your genetic data, similar to your birthday, but I would say much deeper than your birthday, is information that can be monetized, potentially weaponized, and cannot be changed, at at least in the current moment. And for all those reasons, it's really vital to protect it more thoroughly.

[Herb Olson (Member)]: More of a technical question. Maybe it's a bit of a data can be transferred to third parties and service providers for various reasons.

[Todd Daloz (Office of the Attorney General, Assistant Attorney General)]: Service providers.

[Michael Marcotte (Chair)]: Well, think third Well, okay, I'm not

[Herb Olson (Member)]: sure what third party means. But are those service providers subject to the same consent security?

[Todd Daloz (Office of the Attorney General, Assistant Attorney General)]: That's where we get into, I think,

[Rick Siegel (Office of Legislative Counsel)]: key Contract.

[Todd Daloz (Office of the Attorney General, Assistant Attorney General)]: Yeah. The contract piece, which requires the contracts to maintain. So the contract that if my new company, right, genetictestforfree.com is just a website and is a consumer facing entity, but then I contract with a lab that's gonna do the actual service of doing the genetic testing, I have to make sure my contract with that lab contains all the protections laid out. And that's a legitimate transfer under the law. It's not preemptive or prohibited.

[Herb Olson (Member)]: What about after the contract is terminated for?

[Todd Daloz (Office of the Attorney General, Assistant Attorney General)]: So I I mean, Rick may have this near to hand, but I think there are requirement. One, the the destruction request would have to be honored by the service provider. When the service is done, I think there's a requirement that the data is either retrieved or destroyed. But that's I'd have to go back and read. I'm sort of looking at

[Michael Marcotte (Chair)]: the clock too, Herb. So I Yeah.

[Herb Olson (Member)]: Yeah. No. I'm sorry. Yeah. That's fine.

[Michael Marcotte (Chair)]: I could stop there.

[Todd Daloz (Office of the Attorney General, Assistant Attorney General)]: I'm I'm more than happy to walk through it and just make sure it's Yeah. Covering it. You think.

[Rick Siegel (Office of Legislative Counsel)]: Herb Olson, I'll email you. That's it. Yeah.

[Michael Marcotte (Chair)]: Good stuff. Thank you very much. You need to go? No, I'm good. So I wanna know where the committee is. Where do you want to go if you want to include a cure period or not. And do we wanna include language in there about judicial warrants or be silent?

[Edye Graning (Vice Chair)]: Nothing to say about the cure period, but the judicial warrants, I think that being silent is, unless we do something about, you have to disclose it, which I think that would be beneficial. But other than that, I'm

[Herb Olson (Member)]: overly concerned about it.

[Edye Graning (Vice Chair)]: The other one? The cure, I really don't have any opinions on the cure.

[Michael Marcotte (Chair)]: I form an opinion on

[Anthony "Tony" Micklus (Member)]: the cure, I would, you know, we've heard Todd was saying, I'd be interested to see ancestry.com and why they think a cure period would help. So he's saying it doesn't make much of a difference.

[Richie Engelhardt (Head of Government Affairs, Ancestry)]: That's back to me. Sorry for the delay there. So the only other state that has a private right of action in their genetic privacy statute is Wyoming. It's got about the same population as Vermont, a little bit less, And that's been on the books for four years, and we've we've not had an action brought against us there. So we feel that it it is something that insulates us a bit, from folks just running directly into court.

[Michael Marcotte (Chair)]: Do they have a cure period in there, Richie?

[Richie Engelhardt (Head of Government Affairs, Ancestry)]: In Wyoming, yes. They have a sixty day cure period for the entire bill.

[Michael Marcotte (Chair)]: Do you you have any data of whether it was it's ever been used?

[Richie Engelhardt (Head of Government Affairs, Ancestry)]: We have not been approached by anyone since that statute has been in place. I can't speak for other companies, but that's been our experience.

[Michael Marcotte (Chair)]: K.

[Rick Siegel (Office of Legislative Counsel)]: I I do wanna confirm. I'm not sure Wyoming's the only state with a pro rata action. I I don't know that for sure, but I wanna double check that to see you all have a correct information on that.

[Michael Marcotte (Chair)]: Why don't we noodle on a little bit? Think about where you're thinking about going. We'll let Rick take a look, and and we'll come back to it probably next week. But k. Great. Thank you. Yeah. Thank you. Now we'll switch to 205. Hi, Sophie. How are you? Good. We are onto a new draft.

[Sophie Zdatny (Office of Legislative Counsel)]: Good afternoon. Sophie Sedatney for the Office of Legislative Counsel, and I'm here to talk about the draft number 3.2 on H two zero five, which is the noncompete bill currently in front of the committee. Do I have your permission to go ahead and share my screen?

[Michael Marcotte (Chair)]: Yes, please.

[Sophie Zdatny (Office of Legislative Counsel)]: Large enough for folks? There have been some additional changes since we went through the bill last week. Does is everyone comfortable with the bill? I mean, do you want to just in case anyone needed an overview on it. There's two two pieces to the bill. There's a non compete prohibition, and then there's a prohibition around stay or pay provisions. And this would be in title 21 BSA under the Fair Employment Practices Act. So just getting to the changes. There's language in the bill around non solicitation agreements and that certain people are allowed to reach out when they're leaving a position to let their clients know that they're changing jobs. One of them is if you have a fiduciary relationship. And so this version of the bill includes a definition of fiduciary relationship as a relationship in which an employee owes a client the duties of loyalty, care, and good faith to act primarily in the best interests of the client. You touched on that a little bit last time. Old car. It's a good job. And again, the other highlights here are really just to renumber. And then there's a new definition for health care service. And there was a question raised about the prior definition that was talking about devices and things. This is a different version of the definition. Any treatment or procedure delivered by a health care provider to maintain an individual's physical or mental health or to diagnose or treat an individual's physical or mental condition, including services ordered by a health care provider, chronic care management, preventive care, wellness services, medically necessary services to assist in activities of daily living. So a very broad definition. And this is important because it ties into the approach further in the background, not allowing non compete agreements for healthcare providers. So again, healthcare providers are providing healthcare services, so again, very broad This is the language on the non solicitation agreement. I'm just flagging here the previous draft just omitted the word help, so this just adds it back in. And again, this is where the direct fiduciary relationship definition comes in, into this bit here about when you're allowed to share information when an employee is leaving. And an employee who's leaving, it's either somebody that provides direct health care services to a patient or someone with whom the employee has a direct fiduciary relationship. And then these are the permitted communications that can be made by that separating employee. Again, this has been in the bill before, but this is just allowing the employee to notify those in those situations that they're continuing to practice their profession, what their new professional contact information is, and the client or patient's right to choose a provider. So there had been interest in having some language around what that notice was, so there would be less concern down the road as to whether a notice violates the provision or not. Moving forward, the definition of total annual compensation. Previously, this definition lists what is included and what is not included. In the last draft that you looked at, contract from foster retirement plans was explicitly excluded from the definition of total annual compensation. This moves it up into being included in that definition. And then the big change here. So this section goes through sort of prohibition is an agreement not to compete, is void and noninvoiceable, and then there are specific exceptions. So, again, the sale of an individual's ownership interest, dissolution of a partnership, dissolution of a limited liability company, a severance agreement. So that those have all been in before. And then this is the section that's been worked on several times with the committee. This is around this version of the of the bill takes out the definitions executive and takes out the definition of a start up employee and now is back with a single definition of when an agreement not to compete would be acceptable. So and you would have to meet each of these criteria. So an agreement with an exempt employee so again, this bill is really looking at eliminating non compete agreements for those that are hourly employees, that are nonexempt employees under the Fair Labor Standards Act. So this just picks up that language, an agreement with an exempt employee that meets each of the following criteria. So the agreement is individually negotiated between the employer and the employee. So there's some sense there of bargaining power, there being some ability to control what the agreement looks like rather than what's called an adhesion contract, like take it or leave it. You can't negotiate over the terms. That the employee earns at least 250% of the state minimum wage in total annual compensation. So right now, that's just a smidge under $75,000 And again, it's tied to the state minimum wage because that means it's got some flexibility that it will move as the state minimum wage moves rather than having an amount that's fixed and then sort of stuck in the statute for twenty years. The next requirement is that the agreement is strictly necessary to protect a specific and documented business interest of the employer other than an interest in preventing ordinary competition. And without the agreement, the employer's business would be at immediate risk. And I think this is the language that is specifically targeted to really address specifically like start up companies, where it can be sort of existential if that knowledge and information is leaving the company and they want to protect that. And then finally, the limitations set forth in the agreement are reasonable in time, geographical area and scope, and are no broader than required to protect the employer's legitimate interests. And it refers just up here to the same provisions that are under a permissible severance agreement. So, again, the time, how that's calculated, geographical area, and the scope of activity to be restrained. And then there's a couple more changes here. This is under the stay or pay provision. This just adds in it's a pretty open ended description of a stay or pay provision, but it specifically now adds in relocation expenses as an example of a stay or pay provision. And then this adds in that, again, there are criteria here of when you can have a permissible stay or pay provision, and it lists out what those criteria are. And one of them was that it only requires repayment if the employee is voluntarily separated from employment. This version of the bill now adds in or is terminated for cause. So if someone is riffed or they're let go for whatever reason but not for cause, then they would not be required to repay under the stable pay provision language. So those are the changes that have been made to the draft.

[Anthony "Tony" Micklus (Member)]: Just coming back on fiduciary. So in real estate, you can actually have a contract as a, you have two tiers, there's salesperson and broker, and only a broker is allowed to sell real estate. Salesperson is not unless they're under a broker. Situations can often come up where a salesperson gets recruited from another brokerage firm. And they have contracts with all of the sellers, buyers, whatever. Are when you do the contracts, it's the salesperson that signs off on them. But statute says that the broker is responsible for those transactions. I'm wondering how that would play out with this in a situation where a salesperson said, I'm going to I I I work for Berkshire Hatham and go Keller Williams. Are with the the losing agency now have no can can they do anything? I think it's a very legal kind of

[Sophie Zdatny (Office of Legislative Counsel)]: So what the what the bill wrote here, it permits, is non solicitation agreements. So, again, you can you can have those. Right? So those are allowed. And that you can't they can't be for more than one year in duration. And the employee can has to agree not to solicit or recruit the employer's employees or solicit business with customers or clients. So you can still have a non solicitation agreement. The language that comes in on the fiduciary relationship is only on this exception, which is saying that although you can't solicit the customers or the employees, if you provide direct healthcare services or you have a direct fiduciary relationship, you can just provide notice to the clients. You can't scale the client list and do that. But if you have a direct relationship with a with a client, you can let that client know that I'm now moving from Berkshire Hathaway to.

[Anthony "Tony" Micklus (Member)]: I guess I guess what I'm wondering is who who is the fiduciary in that situation with a broker and a salesperson? Because the salesperson alone can't sell real estate. They have to be under a broker. So is that fiduciary relationship with the broker regardless of who signed on the contract?

[Sophie Zdatny (Office of Legislative Counsel)]: So I guess that would be something that would be determined on whether or not they meet the definition of having a fiduciary relationship. So, I mean, essentially, and I think you had raised this the last time. Right. Right.

[Jessa Barnard (Executive Director, Vermont Medical Society)]: If you if you have

[Sophie Zdatny (Office of Legislative Counsel)]: a fiduciary relationship, you have you you have the obligation to act the best interest of the client, not in the best interest of yourself or your or your business. I guess it would come down to a legal determination.

[Michael Marcotte (Chair)]: It's kinda

[Herb Olson (Member)]: like saying, I'm reading that language to say that the salesperson does not have that fiduciary relationship could be subject to a not solicitation. But

[Michael Marcotte (Chair)]: if the broker well, I guess the broker's a firm, but is the broker a person?

[Rick Siegel (Office of Legislative Counsel)]: You can be a person.

[Herb Olson (Member)]: Yeah. So but the broker who does have that fiduciary relationship and they move, be an exemption for that. That's the way I

[Michael Marcotte (Chair)]: made it.

[Sophie Zdatny (Office of Legislative Counsel)]: Well, will be subject to the non solicitation agreement. All that's all that language it's doing is just allowing you to provide notice.

[Anthony "Tony" Micklus (Member)]: I agree with you. I I mean, that's my interpretation of it is that if you are needing to be under a broker, then it's the broker you have that fiduciary relationship. I guess my question is, is that something that needs to be clarified in the language?

[Sophie Zdatny (Office of Legislative Counsel)]: I think you run the risk of having a very long, very complex bill if you try to anticipate every single possibility. Fair enough. So again, here, this bill would allow you to have a non solicitation agreement for that person that's leaving. And then in those particular certain circumstances, you can provide notice just to let somebody know if you're their doctor or whatever, or you have a direct you're a financial adviser, whatever, that you have that direct relationship. Again, it's not solicitation per se. It's just simply notifying them. I'm leaving here. I'm moving over here. I'm still practicing, and that the client has the right to choose their provider.

[Michael Marcotte (Chair)]: Questions? Sophie, on the state of pay, we have the non exhaustive list or non exhaustive. So when we talk about I think you just went by it. That list of relocation into as well. Right. So what if there were what if the business made a loan to the employee?

[Sophie Zdatny (Office of Legislative Counsel)]: If it was a bank or something, again, that would just be something we'd have to work out in terms of the bill. If you're thinking of a bank has employees and they have loans with employees, I would assume you'd have to repay them if it would just be a regular loan. So, yeah, I mean, as you mentioned, so this is a pretty broad definition. It says it can take a variety of forms or any other types of cash payments tied to a mandatory stay period. I guess I would it'd be helpful to have So it

[Michael Marcotte (Chair)]: would have so if it was a loan and if it was tied to, I'm gonna make this loan to you and you have to stay work for me for the next ten years, that's tied to something. But if it's not tied to anything, you're still obliged obligated to pay your loans back.

[Sophie Zdatny (Office of Legislative Counsel)]: Right. And then this provides the criteria. So it does allow stay or pay provisions, but you it has to be it has to meet these criteria. So the employee voluntarily agrees. So, again, if they're receiving a loan, the repayment amount is reasonable and does not exceed the cost to the employer of the benefit received by the employee. The repayment amount is specific and provided to the employee before the employee agrees to the provision. The length of the stay period, again, is reasonable, and then it lists out some of the factors. And it only requires repayment if the employee voluntarily separates or is terminated for cause. Again, I

[Michael Marcotte (Chair)]: It could be a loan that no interest loan, and you're agreeing to stay working for me, then I won't charge you any interest on the loan, but if you leave, then you have to pay interest on the remainder of what you haven't paid on on the loan, what you owe on the loan? Right.

[Sophie Zdatny (Office of Legislative Counsel)]: I mean, again, I think it would depend on the particular circumstances of what's required. You know, is it a reasonable thing? And, if there's if the committee feels more clarity as we needed around what the definition is, that's obviously something we can look at doing.

[Kirk White (Ranking Member)]: Just to put a little flesh to that, as it were, but specific types of situations. I work for an employer that in certain circumstances, usually health related, if you had an emergency or a need, they would advance you leave. And how would this affect if you still owed leave or you hadn't earned the amount that they lent you, which is usually how it happened, how

[Michael Marcotte (Chair)]: you'd repaid it? You'd wage advancement.

[Sophie Zdatny (Office of Legislative Counsel)]: Yeah. I mean, I think this is what this is really getting at is the the the kind of abusive stale pay provisions where, you know, somebody gets locked in to an agreement that they haven't necessarily been able to be in a position to bargain over. And then when they leave or they're terminated, they're then being told they've got to repay. And and it can be a lot more than whatever the cost was to the employer to start with. So I don't think it would necessarily interfere with an employee's you know, employee employer sort of flexibility around a leave situation or a wage advancement.

[Michael Marcotte (Chair)]: Any other questions for Sophie? Support? Okay, thanks Sophie. Jessa?

[Sophie Zdatny (Office of Legislative Counsel)]: Do you want me just to quickly go through the health provider thing, just so the committees I'm assuming that's what Jess is going to talk about, would that be helpful? Could just quickly touch on. So right now there's language in here that specifically Under that, we went through here when you could have an agreement not to compete. Again, salary is relevant, etcetera, etcetera. We then have in subsection e for health care providers, it says, notwithstanding subdivision d five, essentially, you cannot have an agreement not to compete with a health care provider. And again, the definitions are very broad that we have in this in this bill. So even if you're making a higher salary and you're in a position to negotiate, etcetera, this would preclude having non competes in the medical field. And then there's a second provision here that provides a provision and agreement to provide health care services in the state is void, unenforceable and against public policy if the provision makes the agreement subject to the laws of another state or requires any litigation arising out of the agreement to be conducted in another state. My understanding, and I'm sure this will be followed up here, was this is really around traveling nurses and agencies. This is language that was adopted or included in here that comes from a New Mexico statute, but I just thought it might be helpful to orient the committee on that.

[Michael Marcotte (Chair)]: You.

[Edye Graning (Vice Chair)]: Thank you

[Jessa Barnard (Executive Director, Vermont Medical Society)]: very much. Good afternoon. I'm Joseph Barnard with the Vermont Medical Society. We represent individual physicians and physician assistants. And I do apologize. Some of my line numberings referenced in my testimony will be off. I didn't know you were having a new draft, I think the section numbers are still correct. And I overall really want to thank the committee for your work and including health care in this bill. I think this is really important work for the health care providers and health care system of Vermont and the language. We are strongly supportive of where the committee is going. I think it's looking really good. So thank you. Thank you to legislative council. As I stated when I testified on the bill earlier, we think this addresses really important policy issues around not just provider autonomy, but patient continuity of care and access to services. And we also do encourage the committee to keep moving forward with language. I know you've heard that there's another bill in house health care that has a section on non competes. It is much less specific, and I'm also not sure the path with that bill at this point in time. So I really thank you and encourage you to keep it in this bill.

[Michael Marcotte (Chair)]: We're having conversations with Great, what you thank you.

[Jessa Barnard (Executive Director, Vermont Medical Society)]: So a couple of things I just wanted to note that we, again, we really think we are supportive of. We like the current language around non solicitation, and saying that individuals who offer direct healthcare services can inform former patients that they're continuing to practice their contact information and the patient's right to choose a provider. It seems helpful. Know on the last draft, there was some conversation around sort of, say, saying specifically what could be said, I think this hits a really nice balance. One comment I will make that the exemptions reference employees, and this is something I can maybe talk to legislative council about, as we read the later exempt prohibition on non competes, it's for basically all healthcare agreements, including partnerships and other forms of healthcare facilities. So they may not necessarily be an employee. They may be, say, for example, a former partner or a member of the practice. And so there could be a way to perhaps broaden the language referencing say healthcare providers, rather than using that term employee for the non solicitation section. We strongly support the section, the broad clear bar on non competes in healthcare. We support the language stating that, as it states right now, Any contract or agreement that establishes the term as a partnership, employment, or other form of professional relationship, is void and unenforceable. Kind of the same point I just raised, because at least the way I'm reading that language, that is broad and would include things like partnerships. I am wondering if the, where there's language later saying sort of notwithstanding these exceptions, non competes are barred, but that actually needs to be broader. Because right now in one place, it's unclear, for example, it says it basically not withstands some of that language in terms of salary and other provisions around employment, but not the partnership agreement, if that makes sense. So I just think we would want some clarity to make sure we all are saying the same thing about what's prohibited or not in healthcare specifically. We support also the language that as Legis Council mentioned is from New Mexico stating that it applies to contracts related to healthcare services provided in the state. We have heard from not only our own members, but other types of healthcare facilities. They really do often, or try to in fact, keep nurses, for example, or physicians who are temporary employees after that temporary contract has ended. We do think that will help in local hiring and reduce staffing costs. Know you had some questions, or the committee raised some questions around, would that dissuade or be a challenge to having staffing companies come here in Vermont? I raised the question, my colleague with the long term care facilities, who's most familiar with this scenario, Her summary response was, Vermont is already paying quite a premium to get these staffing companies here. She thinks they have enough incentive to stay here, and that really the benefits would outweigh the risks, because what we really want is to be able to hire our own nurses and keep them here after those contracts are over. And I did reach out, this language has been in place in New Mexico since 2017. I reached out to my counterpart there, I haven't heard back yet, but when she was sharing this with some other states, they didn't raise any concerns about the ability to still enter into nursing or physician contracts after they that in place. And we do support the approach of the stay or pay provisions on the guardrails that you're providing, and also that they would be prospective. That is important for employers who may have these in place currently. So thank you very much, really support the draft.

[Michael Marcotte (Chair)]: Yeah, if you could work with Sophie.

[Jessa Barnard (Executive Director, Vermont Medical Society)]: Yeah, for sure, thank you, I'd be happy to.

[Michael Marcotte (Chair)]: Any questions for Jessup?

[Jessa Barnard (Executive Director, Vermont Medical Society)]: Thank you. Thank you for your work.

[Michael Marcotte (Chair)]: So I understand this is still a work in progress. So next week we'll take this up again and we'll ask Chris to ask you to weigh in, David, Jamie. Hopefully we're at a point where we can find out. Okay. I'm

[Chris Steele (President, Vermont Bankers Association)]: happy to weigh in now

[Michael Marcotte (Chair)]: if he gets out. Sure. We've got another half an hour if anybody wants to weigh in.

[Herb Olson (Member)]: I you want to get out of here,

[Edye Graning (Vice Chair)]: a half an hour.

[Michael Marcotte (Chair)]: We have somebody else at three. We could provide a door break for today.

[Edye Graning (Vice Chair)]: Well, that's what you spoke. Thanks.

[Anthony "Tony" Micklus (Member)]: Let me Yeah.

[Chris Steele (President, Vermont Bankers Association)]: For the record, Chris Steele, your president of Vermont Bankers Association. Two good things, and then three things that are still outstanding. Number one, thank you for getting rid of the definition of executive. I think that's cleaner. Number two, thank you for tying the dollar amount to the minimum wage in Vermont. 160,000 was quite high. So having it something less than that is better. Rick Micklus, I'm with you on the fiduciary piece. So your vice chair has kept me busy today, but I do have an email from a member that I can go back to the office and share with you that speaks to the concerns about the fiduciary language. And in his case, which is a financial services company, the way you've got it written here would imply that the employee is the fiduciary For his company and for the financial service providers who provide trust services, wealth management, the fiduciary is the company. And there are many people within that company that provide service to that customer. So his concern, and again, I'll share the details of his emails with you because I think he does a much better job of explaining it, is the language here, whether it's the definition or including fiduciary where you had lawyer healthcare fiduciary, is problematic. So we're trying to figure that out to get to a point where it's not problematic for her. I could be mistaken, but I wanna go back to what prompted this section in the bill and the discussion was health care. Give guess what she's looking for, but it was all about the continuity of health care because of the circumstances people find themselves in. So one possibility, and I haven't settled on this, but just to throw it out there, is take fiduciary out, and you deal with what Jess has got going on. The second thing that came up today, which I did not know before I responded to rep Olson and Abbey Duke, was on page three in parenthesis b lines nine through 14. Wait a second. I

[Michael Marcotte (Chair)]: mean, I don't have the room.

[Chris Steele (President, Vermont Bankers Association)]: Oh, no. Sorry. Page five, lines 12 through 15 parenthesis c. An agreement the agreement is strictly necessary to protect the specific and documented business interests of the employer other than an interest in preventing ordinary competition. And without the agreement, the employer's business would be at immediate risk. I don't know how the hell you demonstrate that, to be candid. I I just haven't had enough time to think about it, but I I just that language is troubling to me that a business has to protect a specific documented business interest or demonstrate immediate risk. So I would just like to noodle that a little bit more. And then my other comment is on page eight, lines five through seven. And, mister chairman, this gets to your question, and then it gets robust to your example of, if you will, wages or Sophie, added to your example of perhaps wages. So the language that you've got now says, and other contracts in which an employee must pay an employer in the event the employee voluntarily involuntary separates from employment. So the loan concept is very much in our minds in that realm or an advancement of pay. I don't think that's what you're going after. If I work for a bank and I get my mortgage through that bank, I regardless of whether I'm working with them or not, I still owe that bank. And it's gonna be it it's not gonna be a loan that provides a favorable environment for me only because that violates fair lending practices. I have to the bank treats everybody equally. So I've gotten concerns having after people reviewed this of, well, wait a second. Because it says other contracts, that's very broad, And we we would wanna somehow acknowledge that we're not talking about loans where you've got a promissory, no principal of interest, etcetera. And then the other thing was, what if you do have a situation where you've advanced a wage? We're not talking about compensation for getting your master's degree or whatever, but advancing your wage and you drop out before you've worked the allotted amount of time to earn that wage. That was the only other item that was flagged for me. Those three items are the ones I almost got. I'm reminiscing of the earned wage bill. Anyway, those were the three items. I'll share the fiduciary link or email with you because I've got permission to do that. I'm still noodling the second one that I raised about business interests, immediate risks, and I would ask for clarity on loans and wages.

[David "Dave" Bosch (Member)]: Just a question. Your very last point was about if someone doesn't complete their the education that they work that was paid.

[Chris Steele (President, Vermont Bankers Association)]: No. Wait. But what doesn't work to earn the wages that were paid?

[David "Dave" Bosch (Member)]: So whether they complete the education or not, once the business pays for whatever that education training

[Chris Steele (President, Vermont Bankers Association)]: Two totally separate issues. We're not I'm not I'm focusing on the training piece, you've dealt with here. Yeah. I'm focusing on a wage component unrelated to training. So you I advance you a month's worth of wages. You work one week.

[David "Dave" Bosch (Member)]: Just to make sure that's covered.

[Chris Steele (President, Vermont Bankers Association)]: Yeah. That it's that you're not intending to deal with that under other contracts.

[Emily Carris Duncan (Member)]: So just to clarify that piece around in other contracts under which the employee must pay employer. So your concern is really about non employment related other contracts, like they get a mortgage as opposed to Is that what you're saying?

[Chris Steele (President, Vermont Bankers Association)]: Yes, we're not giving you a loan as a condition of employment. That answers your question.

[Emily Carris Duncan (Member)]: Yeah. So that yeah. That makes that makes sense to me. Yes. Make sure that was yes. That's where you find find those. Yes.

[Michael Marcotte (Chair)]: It'll be

[Chris Steele (President, Vermont Bankers Association)]: the first time today.

[Edye Graning (Vice Chair)]: Overall, your members, what is their sentiment about us modifying no complete garment closets and prohibiting them?

[Michael Marcotte (Chair)]: Say that again. Yeah, couldn't hear you guys.

[David "Dave" Bosch (Member)]: It's a little loud in here.

[Edye Graning (Vice Chair)]: I'm sorry. I'm asking the members what the sentiment of your members are about us, for lack of a word, meddling with the no compete.

[Chris Steele (President, Vermont Bankers Association)]: I would say that the general sentiment is for

[Rick Siegel (Office of Legislative Counsel)]: our world, let

[Chris Steele (President, Vermont Bankers Association)]: me speaking for our world, and then in working with the committee that had an opportunity to see what the bar association produced and the document from Downs Rackland, my members would say, are we in search of a problem that we're trying to solve? That's only from their perspective. What I've tried to, as I do with any bill, get them to understand that there is a desire to consider a public policy, And based on the written words, is that desire problematic or not? Can we live with the language that's been drafted, or is it something that we absolutely can't live with? So I'll start with, are we in search of a problem? But then I also recognize that there is a desire to try and do something, so how do we navigate through those waters? Is that my best non answer?

[Anthony "Tony" Micklus (Member)]: It's a good one. Yes. Thanks.

[Edye Graning (Vice Chair)]: Very good. When you're running for office.

[Chris Steele (President, Vermont Bankers Association)]: Yeah. A few years of, actually a few years of spending time in meetings with ambassadors where you learn very quickly they give very good non answers to big international policy issues, which was a fascinating education. Yep.

[Herb Olson (Member)]: The other question? You had a question.

[Michael Marcotte (Chair)]: Emily, sorry.

[Abbey Duke (Member)]: On the fiduciary relationship, it make sense to say something like fiduciary relationship means a relationship in which an employee or a company owes a client a duty of employee loyalty care?

[Michael Marcotte (Chair)]: Speak of.

[Abbey Duke (Member)]: Oh, does it make sense to add or company in the fiduciary relationship?

[Chris Steele (President, Vermont Bankers Association)]: I think that the challenge that you might run into is within that company, I use again us first as an example, that that employee could very easily sit there and raise the claim that I am a fiduciary when the company says, no. You are not a fiduciary. We are the fiduciary. And I think that that dual approach for us, only our industry, is problematic because it is not the employee that's the fiduciary. If you say that in statute, then you're opening up the door for well, statute says I am. Or I could claim to be.

[Herb Olson (Member)]: Yeah, but the fiduciary. It, wouldn't the contract that the employee has with the bank or the brokerage or whatever, the financial advisor, right, or firm, wouldn't it talk about whether it's a fiduciary relationship with the client?

[Chris Steele (President, Vermont Bankers Association)]: I don't know whether every position, employer, employee relationship has a contract.

[Herb Olson (Member)]: Well, yeah, in some ways, it's pretty clear what they're telling or something.

[Chris Steele (President, Vermont Bankers Association)]: Those those are not even under consideration. This is this is when, I'll use myself as an example. I go to work with Morgan Stanley. Morgan Stanley is administering my four zero one k plan. I have an individual that I work with Morgan Stanley. He is not the only individual within Morgan Stanley that's servicing my portfolio. In fact, he's just the one that communicates with me. He doesn't place the trades. Right. He doesn't do anything else behind the scenes aside from just communicate with me. Is that a fiduciary relationship? Morgan Stanley, I theoretically would say, no. Morgan Stanley is a fiduciary because of all of the activity that people are doing within that company. So I'll just I'll replace Morgan Stanley with the entity that's gonna be highlighted in the email.

[Herb Olson (Member)]: Yeah. I'm just thinking about it's we're we're already talking about an employee that's needed to seek other employees and whether they should have the ability to provide notice.

[Chris Steele (President, Vermont Bankers Association)]: Well, you you the way you've written it is you are giving them that ability because they are, quote, a fiduciary.

[Herb Olson (Member)]: It's complicated.

[Michael Marcotte (Chair)]: What's that?

[Herb Olson (Member)]: Yeah. Yeah. Know where I am. I know what I know.

[Emily Carris Duncan (Member)]: So sounds like fiduciary is a broader term than what you think we need here, that we need more something like direct service, so do we even need it?

[Chris Steele (President, Vermont Bankers Association)]: I think what would be best is to share the emails with you so that you have a real example without going through an interpreter, me, from a direct company that would be representative of others within the industry so you can understand what his primary concern is, and then we can figure out what if any changes are made or what's the path forward.

[David "Dave" Bosch (Member)]: Just to go back to your first statement is, are we trying to solve a problem that isn't a problem for us? Because what we're trying to do is create a situation where if a person is leaving employment where they have their clients, that they're allowed to notify their clients that they're leaving, but not solicit them to leave with them. And what I'm hearing you say is you're not hearing that that's a problem.

[Chris Steele (President, Vermont Bankers Association)]: No, I was responding to the overall question on the bill of whether the bill is addressing a problem, not in your narrow area of questioning.

[David "Dave" Bosch (Member)]: Because I think the reason that we have the delineation for the fiduciary relationship is so that when a person who has clients changes their employment, that they can notify their clients that they're leaving without soliciting them to go with them to where they're doing it. We're trying to walk that tightrope.

[Chris Steele (President, Vermont Bankers Association)]: I understand, but

[David "Dave" Bosch (Member)]: By removing it, we leave it the way it is today, and we don't know if it's a problem or not.

[Chris Steele (President, Vermont Bankers Association)]: No. I I understand what you're trying to accomplish. Yep. Person who has communicated to me says the employee is not the fiduciary.

[David "Dave" Bosch (Member)]: Yes.

[Chris Steele (President, Vermont Bankers Association)]: And that's what your bill focuses on, the employee.

[David "Dave" Bosch (Member)]: Yes. So I understood all of that. I'm still trying to figure out how to walk the tightrope with them and down.

[Chris Steele (President, Vermont Bankers Association)]: Yep. So that's why I wanna get let me send you the email, and then that will further educate on how the concern that people have and what we figure out going forward.

[Michael Marcotte (Chair)]: The question is for Kirk.

[Edye Graning (Vice Chair)]: Thank you. Thanks. Good team.

[Michael Marcotte (Chair)]: Anybody else want to weigh in now or wait until we have a pretty solid bill that's back.

[Edye Graning (Vice Chair)]: You could weigh, I'm just saying this.

[Michael Marcotte (Chair)]: So, Alright. So, committee looks Christian's been very helpful in allowing you to be able to take a fifteen minute break before I'm done. Don't forget to thank him. We'll go offline now. We'll be back at 03:00, so we'll be here promptly. We have a couple of businesses that are coming in to talk to us about how they work with disabled employees. So we don't want to keep them waiting. We're back at 03:00.