Expansion of Restrictions on Non-Compete Agreements for “Low-Wage” Employees
Virginia already prohibits employers from entering into, enforcing, or threatening to enforce non-compete agreements against “low-wage employees,” who were previously defined as individuals whose earnings were less than the Commonwealth’s average weekly wage. As of 2025, that amount was $1,463.10 per week, or an annual salary of $76,081. Effective July 1, 2025, the definition of “low-wage employee” includes employees who, regardless of their average weekly earnings, are entitled to overtime compensation under federal law for any hours worked in excess of 40 hours in any one workweek. The law generally precludes non-compete agreements for employees deemed “non-exempt” from the Fair Labor Standards Act. Exceptions remain, however, for employees whose earnings are derived, in whole or predominant part, from commissions, incentives, or bonuses. These changes in the law do not apply to agreements entered into or renewed prior to July 1, 2025.
Employers should remain mindful of other requirements and penalties for violations that have not changed:
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