On April 13, 2026, Governor Abigail Spanberger signed two bills further restricting Virginia employers from entering into non‑compete agreements. Both bills go into effect on July 1, 2026. A third bill was returned to the House of Delegates with minimal changes from the Governor.
Virginia’s efforts to restrict non‑competition agreements began in 2020, when lawmakers enacted Section 40.1‑28.7:8, prohibiting employers from entering into non‑compete agreements with “low‑wage” employees—defined in 2026 as those earning less than $1,507.01 per week. Those restrictions were soon expanded. In 2025, lawmakers amended Code Section 40.1‑28.7:8 to prohibit employers from entering into non‑compete agreements with non‑exempt employees.
The most significant change this legislative session is Senate Bill 170 (SB170), which again amends Section 40.1‑28.7:8. Under SB170, if an employee with a non‑compete is fired “without cause,” then the non‑compete is unenforceable unless the employer provides “severance benefits or other monetary payment,” which must be “disclosed upon execution” of the agreement. The law does not define “cause,” “severance benefits,” or “other monetary payment.” Nor does the law mandate that the required monetary payment fully compensate the employee for the restricted period. The law affects only non‑competes entered into or amended on or after July 1, 2026.
The second bill, Senate Bill 240 (SB240), amends two different statutes, Sections 13.1‑559 and 13.1‑563....
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