Virginia is the latest jurisdiction to enact legislation broadening restrictions on the use of noncompete agreements.
Employee restrictive covenants are governed in Virginia in part by statute. SeeVa. Code Ann. § 40.1-28.7:8. In April, Virginia Governor Abigail Spanberger signed into law two important amendments to this statute.
First, Virginia Senate Bill 170 (SB 170) prevents employers from enforcing any noncompete where the employee is terminated without cause and there is no provision for severance benefits or other monetary compensation that were disclosed when the noncompete was signed. Second, Virginia House Bill 627 (HB 627) makes noncompete agreements for health care professionals unenforceable, subject to limited exceptions.
Both amendments are effective as of July 1. The amendments apply only prospectively to agreements entered into, amended, or renewed on or after that date.
Currently, Virginia law prohibits noncompete agreements only for statutorily defined low-wage employees and employees classified as nonexempt under the Fair Labor Standards Act. In January, the Virginia Court of Appeals further clarified the scope of the existing statute in Sentry Force Security, LLC v. Barrera, holding that customer non-solicitation provisions that preclude employees from soliciting customers do not fall within the statutory definition of noncompete covenants and, thus, are enforceable to include against low-wage...
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