What To Know About Virginia S New Non Compete Law Hogan Pritchard Pllc

Taking Fear And Intimidation Out Of The Legal Process, And Arming You With The Facts On Behalf of Hogan & Pritchard, PLLC | Oct 9, 2025 | Firm News | There’s been a lot of attention on non-compete agreements in recent years — particularly on how they’ve been overused by some employers. Even workers at fast-food chains have had non-compete clauses in their employment contracts, preventing them from getting work in the same industry if they left their employer. Despite the efforts of the Biden administration, changes to the law that would minimize the use of non-compete clauses on the federal level were blocked. However, some states have changed their laws to limit “non-competes” to those employees with valuable skills and/or knowledge that could benefit a competitor if they went to work for them immediately after leaving an...

Virginia’s new law regarding non-competes took effect this July. It’s intended to protect “low-wage” employees from having to agree to these restrictive and often financially harmful clauses. The law states, “No employer shall enter into, enforce, or threaten to enforce a covenant not to compete with any low-wage employee.” Virginia Noncompete Laws: Essential Information for Employers and Employees Regarding New Restrictions Virginia’s legal landscape regarding noncompete agreements is undergoing a significant transformation, impacting both employers and employees. Effective July 1, 2025, Senate Bill 1218 (SB 1218), signed into law by Virginia Governor Glenn Youngkin, introduces sweeping changes to how businesses can utilize these restrictive covenants.

The new Virginia law is codified at Virginia Code § 40.1-28.7:8. This article provides a comprehensive guide to the new Virginia noncompete laws, outlining the key changes, exploring the implications for both employers and employees, and offering practical advice for navigating this evolving legal terrain. This shift reflects a growing national trend towards limiting the use of noncompetes, particularly for lower-wage workers, aiming to foster greater employee mobility and competition. Understanding these changes is crucial for Virginia businesses and their workforce. This article will delve into the specifics of SB 1218, defining key terms, explaining who is protected, and outlining the potential consequences of noncompliance. Understanding the Evolving Landscape of Noncompete Agreements in Virginia

Traditionally, noncompete agreements have served as vital tools for businesses to protect their competitive edge. These agreements aim to prevent former employees from leveraging insider knowledge, client relationships, and trade secrets to benefit competitors or start competing ventures. This protection is particularly important in industries with highly specialized knowledge, extensive client networks, or valuable proprietary information. For instance, a software company with proprietary code would use a noncompete to prevent a former engineer from joining a competitor and using that knowledge to develop a similar product. A recent study by the Economic Policy Institute found that noncompetes can stifle innovation and wage growth. On January 21, 2025, President Trump signed Executive Order (EO) 14173, “Ending Illegal...

Virginia's General Assembly passed legislation in 2021 to phase out the use of expanded... Many business owners, especially those on the edge of rapid scaling, use licensing, distribution,... Summary of Virginia’s Amended Noncompete Law Virginia’s decision to ban noncompete agreements against low-wage employees is not entirely new. As we previously reported, Virginia enacted a law in 2020 that prohibits covenants not to compete against “low-wage employees.” Until recently, the term “low-wage employee” had been defined as an employee whose average weekly... In 2020, the salary threshold for a “low-wage employee” was approximately $62,000 per year.

By 2025, that amount had increased to $76,081 per year. In an effort to expand the protection available to Virginia employees, the amended law still prohibits noncompetes against any employee who falls below the salary threshold, but also includes any employee “who, regardless of... § 207 for any hours worked in excess of 40 hours in any one workweek.” In other words, starting July 1, 2025, employers can no longer enter into or attempt to enforce noncompete agreements... Fortunately for employers, the amendment does not invalidate or otherwise affect covenants not to compete that were entered into (or renewed) prior to July 1, 2025. As such, employers have a narrow window of time to consider entering into noncompete agreements with nonexempt workers, provided those workers earn more than $1,463.10 weekly or $76,081 annually. Furthermore, the new law allows for the continued use of nondisclosure agreements if they are designed to “prohibit the taking, misappropriating, threatening to misappropriate, or sharing of certain information to which an employee has...

Starting July 1, 2025, Virginia employers cannot enter into or attempt to enforce a covenant not to compete with any workers who are (or should be) classified as nonexempt under the FLSA. Thus, the amended law will offer protection to a significantly larger population of employees than in the past. Carefully drafted covenants not to compete are enforceable in Virginia provided the restraint (1) is no broader than necessary to protect a legitimate business interest of the employer, (2) is not unduly harsh and... However, since July 1, 2020, an employer has not been permitted to “enter into, enforce, or threaten to enforce a covenant not to compete with any low-wage employee.” Va. Code § 40.1-28.7:8(B). Under current Virginia law, a “low‑wage” employee is one whose average weekly earnings are “less than the average weekly wage of the Commonwealth,” which is set annually by the Virginia Department of Labor and...

Va. Code § 40.1‑28.7:8(A). Effective July 1, 2025, the definition of “low‑wage” employee will expand to include any employee classified as “non-exempt” under the Fair Labor Standards Act (FLSA), regardless whether the employee meets the average weekly wage... Although this statutory revision may seem narrow in scope, it poses significant potential consequences for employers throughout Virginia who choose to pay employees on an hourly, rather than salaried, basis and who rely upon... Below, we further explain the change and offer recommendations for consideration. A “covenant not to compete” is a “covenant or agreement, including a provision of a contract of employment, between an employer and employee that restrains, prohibits, or otherwise restricts an individual’s ability, following the...

Code § 40.1-28.7:8(A). As noted, currently an employer in Virginia cannot “enter into, enforce, or threaten to enforce a covenant not to compete” with a “low‑wage employee.” Va. Code § 40.1-28.7:8(B). Any employer who violates the above prohibition faces civil penalties, costs and attorneys’ fees, and may be sued for up to two years after the latter of: (i) the date the covenant not to... Va. Code § 40.1‑28.7:8(D)-(E).

Assessing whether an employee is “low‑wage”—and therefore covered under the statute—depends on the employee’s average weekly earnings. Va. Code § 40.1‑28.7:8(A). In 2025, the average weekly wage threshold set by DOLI amounts to a $76,081 annual salary. Through June 30, 2025, employers may require individuals who work in Virginia and who earn more than this amount to comply with an appropriately drafted non‑compete. Starting July 1 this year, Virginia’s prohibition on certain non‑competes will not apply only to employees earning below the “average weekly wage” threshold of $76,081.

Instead, as of the effective date of the revised statute, employers also may not enter into or renew contracts or agreements that contain a covenant not to compete if the employee is a non‑exempt... This is because the General Assembly recently enacted Senate Bill 1218, which will expand the definition of “low wage” employee to include any employee “who is entitled to overtime compensation” under the FLSA, “regardless... Acts. Ch. 585 (amending Va. Code § 40.1‑28.7:8).

The FLSA generally requires employers to pay overtime to employees who work over 40 hours per workweek unless the employee is exempt. 29 U.S.C. § 207(a). To qualify for an exemption, an employee must satisfy both specific job duty and salary requirements, which vary depending on the type of exemption. Thus, starting July 1, 2025, an employer assessing whether an employee is protected under Virginia’s non‑compete statute must consider not only if the employee earns “less than the average weekly wage” threshold set by... Given the additional restrictions on non‑competes governed by Virginia law, employers should take measures between now and July 1, 2025, to prepare for the change in law.

We offer some recommendations below. Confirm Employees Subject to Non‑Competes are Exempt under the FLSA If you’ve been paying any attention to labor market trends lately, you’ll likely have heard of noncompete agreements — a type of employment contract that generally prohibits the covered party from accepting employment with... You’ll also know that such agreements have become increasingly disfavored in both law and policy, with many states, including Virginia, working to curtail or outright ban them. Virginia took another step toward that goal earlier this year when Governor Youngkin signed into law an expansion to the original 2020 ban. Here, our Norfolk noncompete lawyers explain everything you need to know about the expanded ban, which is now in effect.

Generally, noncompete agreements (or noncompete clauses within larger contracts) place limits on how and where a former employee can work after their employment relationship with their current employer comes to an end. They typically apply only to companies in the former employer’s industry within a certain geographic area for a limited amount of time. For example, a noncompete clause for a veterinarian in Richmond might prohibit her from working for any other veterinarian within 100 miles of Richmond for one year after termination or resignation. Virginia courts traditionally have enforced noncompete agreements provided that they are: Assurance Data, Inc. v.

Malyevac, 286 Va. 137 (2013) Courts evaluate the reasonableness of noncompete agreements on a case-by-case basis, taking into account all relevant considerations and balancing the interests of both the employer and employee. As such, it’s difficult to make blanket statements about their enforceability. For more specific questions about a noncompete agreement, please contact a Norfolk noncompete lawyer. This article is from The National Law Review: https://ow.ly/3x3r50Vx5UE Virginia employers will soon face stricter limitations on the use of non-compete agreements, thanks to a newly signed law that broadens the definition of “low-wage...

1218, amending Virginia Code § 40.1-28.7:8 to further protect employees from overly restrictive post-employment covenants. The amendment takes effect July 1, 2025, and significantly expands the scope of workers for whom non-compete agreements are prohibited—regardless of how much they earn. Under the prior version of the law, a “low-wage employee” was defined as an employee whose average weekly earnings fell below the Virginia average weekly wage—$1,463 per week (or $76,081 per year in 2025). S.B. 1218 expands that definition to include any employee entitled to overtime pay under the federal Fair Labor Standards Act (FLSA). This means that many hourly and non-exempt salaried workers, even those earning more than the Virginia average wage, will now be protected from non-compete clauses.

Other key features of Virginia’s non-compete statute remain unchanged, including: Effective July 1, 2025, new legislation in Virginia further restricts employers’ ability to impose covenants not to compete on employees. Previously, Virginia law prohibited employers from enforcing non-compete agreements against employees earning below a defined compensation threshold. For 2025, employees earning below $76,081 are considered low wage employees. Beginning July 1, 2025, the law expands these restrictions to include employees entitled to overtime compensation under the Fair Labor Standards Act (FLSA) – that is, non-exempt employees who receive overtime pay for hours... This marks a significant expansion of Virginia’s limitations on the use of non-compete agreements.

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