Effective July 1, new legislation will take effect in Virginia imposing further restrictions on the use of covenants not to compete and prohibiting their use for employees who are eligible to receive overtime pay under the Fair Labor Standards Act (FLSA), i.e., non-exempt employees.
Since 2020, Virginia has restricted the use of noncompete agreements for “low-wage employees,” defined as any employee whose average weekly earnings fall below the average weekly wage of the Commonwealth. In 2025, that amount is $1,463.10 per week, according to the Virginia Department of Labor and Industry, or $76,081.20 annually. This number increases annually.
Beginning July 1, the definition of “low-wage employee” will expand to include those employees who, regardless of their average weekly earnings, are entitled to overtime compensation under the FLSA for any hours worked in excess of 40 hours in a workweek. In other words, employers will be prohibited from entering into agreements not to compete with employees classified as non-exempt under the FLSA.
The update to the law is not retroactive, and states that it will not invalidate, alter, or otherwise affect any agreements not to compete entered into or renewed before July 1.
Other provisions of the law remain unchanged. The amended law continues to permit employers to enter into agreements not to compete with any employee whose earnings are derived, in whole or in predominant part, from sales commissions, incentives, or bonuses paid to...
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