Careers

Diversity

With 18 offices, from New York to Los Angeles and Seattle to Orlando, we live and work in communities all over the U.S., collaborating across locations, disciplines and even borders. Our experienced, highly ranked lawyers serve businesses wherever they are and wherever they want to go.

Offices

About Us

Pages

Professionals

Thought leadership: blogs, podcasts, videos, publications, events and news

Insights

Practices & Industries

Pro Bono

Am Law 100 firm with practices in Business, Digital Assets and Data Management, Intellectual Property, Labor & Employment, Litigation and Tax.

Home | BakerHostetler

Virginia Expands Noncompete Restrictions

Antitrust Advocate

State Action Update: ‘Megatel Homes, L.L.C. v. City of Mansfield, Texas’

Columbus Women’s TEF Stages Sustainability-Themed Panel, Reception for Women’s History Month

Jacqueline Romero Joins Panel at Committee of Seventy’s Women in Public Leadership 2026

core/heading

Effective July 1, in Virginia, post‑termination noncompetes will be void and unenforceable for employees terminated without cause unless the employer provides severance or other monetary payment disclosed at the time of execution.

core/list-item

The amendment applies to all Virginia employees. Unlike prior law limited to “low‑wage employees,” SB 170 applies regardless of compensation, job title or exemption status, though existing pre‑July 1 agreements remain unaffected.

Employers should update restrictive covenant templates to comply with the new law, including defining “cause” carefully and adding disclosed severance where covenants not to compete are used.

Employers must also update required workplace postings to comply with the new law.

core/list

Virginia has enacted new legislation, SB 170, which amends Virginia Code Section 40.1-28.7:8 and further restricts the enforceability of noncompete agreements in the Commonwealth. Effective July 1, post-termination covenants not to compete will be void and unenforceable against employees who are terminated by the company without cause unless the employer provides “severance benefits or other monetary payment to the employee.” The severance benefits or other monetary payment must be disclosed at the time the covenant not to compete is executed. SB 170 applies only to noncompetes entered into, amended or renewed on or after July 1. Existing agreements executed before that date are not affected.

core/paragraph

In 2020, Virginia began prohibiting employment noncompete provisions with low-wage employees, which at the time were defined to include (1) employees whose average weekly earnings were less than the average weekly wage of the Commonwealth; (2) interns, students, apprentices or trainees employed, with or without pay, at a trade or occupation in order to gain work or educational experience; and (3) independent contractors whose hourly rate fell below the median hourly wage for all occupations in the Commonwealth, as reported for the preceding year by the Bureau of Labor Statistics of the U.S. Department of Labor. The average weekly threshold is adjusted annually, and for 2026 is $1,507.01 ($78,364.52 per year).

Effective July 1, 2025, Virginia expanded the definition of a “low-wage employee” to also include an employee who, regardless of average weekly earnings, is entitled to overtime compensation under the provisions of the Fair Labor Standards Act for any hours worked in excess of 40 hours in any one workweek.

The new amendment applies to all employees in Virgina, regardless of compensation level, job title or exemption status.

The prohibition on enforcing covenants not to compete applies to any agreement between an employer and an employee that retains, prohibits or otherwise restricts the employee’s ability to compete with his former employer. The statute expressly excludes nondisclosure covenants.

On Jan. 27, the Virginia Court of Appeals in <em>Sentry Force Security, LLC v. Barrera</em> clarified the scope of covenants not to compete as defined by the statute and held that clauses that prohibit accepting unsolicited customer business and employee non-solicitation provisions fall within the definition of covenants not to compete, while customer non-solicitation clauses that bar direct solicitation of customers do not.

When Are Covenants Not To Compete Enforceable?

For Virginia workers who fall outside the definition of a low-wage employee, covenants not to compete remain enforceable if:

The employee is terminated without cause but receives severance benefits or other monetary payment in accordance with the terms of the statute

Notably, the statute does not define “cause” or specify a minimum severance amount necessary to comply with the statute.

The statute grants a private right of action to employees whose employers attempt to enforce a covenant not to compete against them in violation of the statute’s requirements, and it authorizes courts to award injunctive relief, liquidated and actual damages, and reasonable attorneys’ fees and costs. Employers are prohibited from discharging, threatening, and discriminating or retaliating against employees who bring such claims.

Employers also face the possibility of civil penalties of $10,000 per violation.

Before July 1, employers with employees in Virginia must review their existing restrictive covenant agreement templates and update them to comply with the new law by either removing post-termination noncompete and employee non-solicitation covenants or adding severance or other monetary consideration to be paid upon a termination without cause. Developing reasonable, defensible definitions of cause to include in these agreements will maximize the enforceability of the post-termination covenants.

In addition, Virginia law continues to state that “[e]very employer shall post a copy of this section or a summary approved by the Department in the same location where other employee notices required by state or federal law are posted.” After July 1, the posted notice must conform with the new law.

Please contact the author of this alert or your BakerHostetler attorney contact if you have any questions.

Related Services

Featured Insights