Virginia has joined the growing list of states passing and expanding legislation restricting the use of non-compete agreements. Beginning July 1, 2026, if employers want to enforce a non-compete agreement against an employee terminated without cause, they must provide the employee with severance benefits. In addition, non-compete agreements for health care professionals will be unenforceable, except in connection with the sale of a business. These restrictions are part of Virginia Senate Bill 170 and House Bill 627, which amend Virginia Code § 40.1-28.7:8.
Currently, Virginia law prohibits non-compete agreements for low-wage employees who are entitled to overtime compensation under the Fair Labor Standards Act (FLSA). In January 2026, the Court of Appeals of Virginia issued a decision clarifying the scope of this law with respect to low-wage employees. In James R. Barrera v. Sentry Force Security, LLC, the Court distinguished between customer non-solicitation provisions and employee non-solicitation provisions. The Court held that agreements restricting the solicitation of customers and clients is not a “covenant not to compete” for purposes of the statute and therefore is enforceable against low-wage employees. However, agreements restricting solicitation of the employer’s employees is a “covenant not to compete,” which is unenforceable against low-wage employees.
Senate Bill 170
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