Virginia’s Non-Compete Law After the 2020 Reforms: What Employers Can (and Can’t) Still Enforce

Virginia’s non-compete landscape looks almost nothing like it did six years ago. What started as a modest 2020 statute restricting non-competes for the lowest-paid workers has expanded twice since, with a third significant change taking effect July 1, 2026. Most of the form non-compete agreements still circulating in Virginia employee handbooks were drafted before any of this happened, and many are now unenforceable in ways the employers using them have not realized. Talking to a Virginia business law attorney before you hand a new hire a restrictive covenant has become a standard step rather than an optional one.

Here is where the law actually stands, and where it is heading.

What the 2020 Law Did

Virginia Code § 40.1-28.7:8 took effect July 1, 2020, prohibiting employers from entering into, enforcing, or threatening to enforce a non-compete against any “low-wage employee.” The original definition tied “low-wage” to the Commonwealth’s average weekly wage, set at $1,137 per week ($59,124 annually) when the statute was first adopted.

The mechanics of enforcement caught a lot of employers off guard:

• A private right of action allowing employees to sue for lost compensation, liquidated damages, and reasonable attorneys’ fees
• A $10,000 civil penalty per violation, assessed by the Commissioner of Labor
• A workplace posting requirement, with fines up to $1,000 for non-compliance
• A two-year window to bring suit, running from various trigger dates including when the employee learns about the covenant

The statute carved out non-disclosure agreements protecting trade secrets and confidential information, so traditional NDAs remained available. It also allowed employers to prohibit former low-wage employees from soliciting the employer’s customers, but it did not prevent those employees from servicing customers who came to them on their own.

The 2025 Expansion: Non-Exempt Workers

Effective July 1, 2025, the General Assembly amended the “low-wage employee” definition to include any employee entitled to overtime pay under the Fair Labor Standards Act, regardless of how much they earn. This change matters more than the headline suggests.

Before the amendment, an employer could enforce a non-compete against a worker earning above the average weekly wage threshold. After the amendment, that worker also has to be properly classified as exempt under the FLSA. A salaried employee paid $90,000 a year who fails the FLSA’s duties test for exemption is now a “low-wage employee” for purposes of the non-compete statute. The salary figure is irrelevant.

The current 2026 threshold for the underlying wage prong is $1,507.01 per week, or roughly $78,364 annually. To enforce a non-compete in Virginia today, an employer needs the worker to be both (1) earning above that threshold and (2) genuinely exempt under federal overtime rules.

Sales-driven roles get one significant exception. Employees whose earnings come predominantly from commissions, incentives, or bonuses are excluded from the “low-wage” definition entirely, which means commission-based salespeople can still be subject to enforceable non-competes even if their base salary is modest.

What a Virginia Business Law Attorney Watches in 2026

Two recent developments have changed the analysis again.

In Sentry Force Security, LLC v. Barrera, decided by the Virginia Court of Appeals in January 2026, the court held that employee non-solicitation provisions fall within the statutory definition of “covenant not to compete.” The practical effect is that an employer cannot enforce a clause prohibiting a former low-wage employee from recruiting current employees away. Many employers had assumed these “no-poach” provisions sat in a separate category. They no longer do.

Then in April 2026, Governor Abigail Spanberger signed Senate Bill 170, which takes effect July 1, 2026. SB 170 voids any non-compete against any employee, regardless of wage level, who is discharged without cause unless the employer provides a severance benefit or other monetary payment. The amount and form of that payment must be disclosed in the non-compete agreement itself when the employee signs.

Several important details remain unsettled:

• The statute does not define “cause,” leaving that to the courts
• The statute does not specify a minimum severance amount, which will likely be litigated
• SB 170 applies prospectively to agreements entered into, amended, or renewed on or after July 1, 2026

Existing non-competes signed before that date are not retroactively voided by SB 170, but they remain subject to the existing low-wage and non-exempt restrictions.

What Employers Can Still Enforce

Despite the layered restrictions, a properly drafted restrictive covenant in Virginia is still possible for the right employee. Enforceable agreements generally share these features:

The employee earns above the current wage threshold and is genuinely exempt under the FLSA, or earns predominantly from sales commissions. The covenant is reasonably tailored in geographic scope, duration, and restricted activities under the standards Virginia courts have applied for decades. Confidential information and trade secret protections are drafted as separate covenants, which the statute expressly preserves. Customer non-solicitation language is calibrated to permit the former employee to accept business from clients who initiate contact on their own. For agreements signed on or after July 1, 2026, the document specifies the severance benefit triggered by a termination without cause.

Form agreements pulled from old templates almost never check all of these boxes.

Practical Steps for Virginia Employers

The Department of Labor and Industry’s required workplace posting needs to be current, and many employers have not updated theirs since 2020. Existing employee classifications should be audited against FLSA exemption standards rather than assumed. Form restrictive covenants should be revised before any new hire, transfer, or promotion triggers a fresh agreement. Severance practices should be aligned with the new SB 170 framework if the employer intends to maintain enforceable non-competes against any terminated employee.

The cost of getting this wrong is not abstract. Beyond the $10,000 civil penalties and attorneys’ fees that follow a successful employee suit, an unenforceable covenant gives the employer no protection at all when a key employee leaves for a competitor.

When to Bring in a Virginia Business Law Attorney

Restrictive covenants in the Commonwealth have become a moving target. The combination of statutory expansions, new appellate decisions, and the SB 170 changes effective July 2026 means that a non-compete drafted three years ago likely needs to be replaced rather than renewed. A Virginia business law attorney who tracks this area can audit existing agreements, classify your workforce against the current standards, and produce documents that will actually hold up.

The Mundaca Law Firm advises Virginia employers on restrictive covenants, employee classification, and the broader employment compliance issues that surface alongside them. If you have non-compete or non-solicitation agreements in circulation that have not been reviewed since 2020, a compliance review now is considerably less expensive than litigating an unenforceable covenant later.