Virginia’s new noncompete law — effective July 1, 2026 — bans noncompete agreements if an employer terminates an employee without cause and does not provide severance benefits or other monetary compensation. Employers should start preparing for compliance now to avoid costly penalties.
Virginia’s General Assembly recently passed Senate Bill 170 (SB170), which becomes effective for any noncompete agreement executed, amended, or renewed on or after July 1, 2026. (Agreements executed, amended, or renewed before July 1, 2026, are not affected.)
SB170 essentially implements a severance requirement for noncompetes. Under SB170, a noncompete is unenforceable if an employer terminates an employee without cause and does not provide the severance pay or other monetary compensation that the employer had already “disclosed upon execution” of the noncompete. The statute does not define “cause,” leaving employers with discretion — but also legal risk — when relying on that exception. Nor does SB 170 define “severance benefits or other monetary payment,” meaning this compensation need not correspond to what the employee would have earned during the noncompete period.
Recall that Virginia law already outright prohibited noncompetes with non-exempt employees and employees below a certain income threshold (currently $78,364.52). Assuming an exempt employee earns more than the threshold and can therefore enter a noncompete in the first place, SB170’s new severance requirement applies to...
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