On March 24, 2025, Governor Glenn Youngkin signed into law legislation that amends the threshold compensation level of a “low-wage employee” with whom the Commonwealth restricts employers from entering into agreements not to compete. Virginia currently prohibits employers from entering into, enforcing, or threatening to enforce non-compete agreements against “low-wage employees,” who were previously defined under the state’s non-compete statute as individuals who earn less than the Commonwealth’s average weekly wage. In 2025, that amount is $1,463.10 per week (which equates to an annual salary of $76,081).1 The new law amends the definition of “low-wage employee” to include 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. In other words, this amended definition now expands the definition of a "low-wage employee" to include those who are deemed “non-exempt” from the federal Fair Labor Standards Act (FLSA). This new law will go into effect on July 1, 2025.
Notably, the FLSA’s minimum salary threshold for exempt employees is $1,128 per week (an annual salary of $58,656) which is lower than the Commonwealth’s average weekly wage. Thus, the practical effect of this new law is that there is now a smaller pool of employees with whom employers are permitted to use and enforce covenants not to compete in Virginia.
Employers in Virginia that use or are...
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