Effective July 1, 2026, Virginia has amended its noncompete statute to prohibit enforcement of a noncompete against an employee discharged without cause unless the employer provides “severance benefits or other monetary payment.” The amendment – SB 170 – applies to agreements entered into, amended or renewed on or after July 1, 2026, and does not apply retroactively.
Virginia currently restricts noncompete agreements for “low-wage employees,” defined as those whose average weekly earnings are below the Commonwealth’s average weekly wage (currently $1,507 per week, or $78,364 annually), and, as of July 1, 2025, employees entitled to overtime compensation under the Fair Labor Standards Act (FLSA), regardless of their earnings.
The amendment does not change the statutory definition of a noncompete, which covers any provision that “restrains, prohibits, or otherwise restricts an individual’s ability, following the termination of the individual’s employment, to compete with his former employer.” Notably, the existing law provides that a noncompete does not “restrict an employee from providing a service to a customer or client of the employer if the employee does not initiate contact with or solicit the customer or client.” In a recent case, Sentry Force Security, LLC v. Barrera, the Virginia Court of Appeals clarified the scope of this exception, holding that customer nonsolicitation provisions fall outside the statute and remain enforceable...
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