Virginia’s Shifting Landscape: What the New Noncompete Laws Mean for You

For decades, Virginia was considered one of the more employer-friendly states in the country. Courts enforced noncompete agreements with relatively few restrictions, and businesses could count on those agreements to protect their competitive interests when employees moved on. That era is coming to an end.

Over the past six years, the Virginia General Assembly has systematically dismantled the traditional noncompete landscape and the pace of change is accelerating. Whether you are an employer trying to protect your business, or an employee wondering whether the agreement you signed years ago still binds you, the law has almost certainly shifted since you last looked.

How We Got Here: A Six-Year Arc of Reform

2020: The First Crack

Virginia’s transformation began in July 2020 when the General Assembly enacted Virginia Code § 40.1-28.7:8, making the Commonwealth one of the first states in the South to outright ban noncompete agreements for a defined class of workers. The initial law prohibited employers from entering into or enforcing noncompetes with “low-wage employees,” defined as workers whose average weekly earnings fell below Virginia’s average weekly wage. It also created a private right of action and exposed employers to civil penalties for violations.

At the time, this was a significant but narrow restriction. Employers could still negotiate noncompete agreements with high earners, salaried professionals, and most white-collar workers.

2025: The Net Widens

In March 2025, Governor Glenn Youngkin signed Senate Bill 1218, expanding the definition of “low-wage employee” as it applies to noncompetes in a meaningful way. Effective July 1, 2025, the ban now covers all employees who are classified as non-exempt under the federal Fair Labor Standards Act (FLSA) regardless of their actual earnings. In practical terms, this means any hourly worker entitled to overtime pay cannot be subject to a noncompete agreement, even if that worker earns well above the income threshold that defined the original law.

For 2025, the wage threshold for the separate earnings-based ban sits at approximately $78,364 per year (based on Virginia’s average weekly wage of $1,507.01 per week as of 2026). Workers earning below that amount, and all non-exempt workers regardless of earnings, cannot be bound by a noncompete in Virginia.

Also notable from 2025: a January 2026 ruling from the Court of Appeals of Virginia in Sentry Force Security, LLC v. Barrera clarified that the restrictions in § 40.1-28.7:8 extend beyond traditional noncompetes. The court held that covenants barring employees from accepting unsolicited business from a customer and employee non-solicitation clauses also fall within the statute’s restrictions. However, agreements that only prevent a worker from directly soliciting customers remain permissible.

2026: The Most Sweeping Changes Yet

On April 13, 2026, Governor Abigail Spanberger signed two bills that represent the most significant restructuring of Virginia’s noncompete law to date. Both take effect July 1, 2026.

Senate Bill 170 — The Severance Requirement

For the first time, Virginia now ties noncompete enforceability to what happens at the end of the employment relationship. Under SB 170, a noncompete is unenforceable if an employer discharges an employee without cause and does not provide severance benefits or other monetary compensation. Put simply: if you fire someone without cause and without paying them severance, any noncompete they signed is void.

This rule applies to all Virginia employees, not just low-wage workers, for agreements entered into or amended on or after July 1, 2026. Employers who want enforceable noncompetes must now be prepared to either: (1) terminate only for documented cause, or (2) offer severance when letting someone go without cause.

The law intentionally leaves several key terms undefined. “Cause,” “severance benefits,” and “other monetary payment” are not defined by the statute, and there is no minimum severance amount required. Employers and their counsel will need to carefully draft employment agreements to address these ambiguities.

Senate Bill 240 — Franchisees

Virginia also moved to restrict noncompetes in the franchising context. Under SB 240, franchisors may no longer impose blanket noncompete agreements on franchisees. A narrow exception exists: if a franchisee sells the franchise at a mutually agreed-upon price, the sale may include a noncompete clause lasting no more than two years.

House Bill 627 — Healthcare Professionals

HB 627 was signed by Governor Spanberger on May 14, 2026, and takes effect July 1, 2026, along with SB 170 and SB 240. It bans noncompetes for virtually all healthcare professionals licensed, registered, or certified by the Boards of Medicine, Nursing, Counseling, Optometry, Psychology, or Social Work. Limited exceptions apply to noncompetes entered in connection with the sale of a healthcare business. The law also includes explicit patient notification rights: departing healthcare professionals may inform their patients that they are continuing their practice elsewhere, advise patients of their right to choose their own provider, and share their new contact information.

Your Most Important Questions, Answered

Does this affect contracts signed years ago?

Generally, no, but with an important caveat. Both SB 170 and the 2025 FLSA expansion apply only to noncompete agreements entered into, amended, or renewed on or after their respective effective dates. An agreement signed in 2019 and never modified is governed by the law that was in effect when it was signed.

However, “amended” and “renewed” are operative words. If you update an employment agreement—even to change compensation or job title—and do not address the noncompete, you may inadvertently trigger the new requirements. Employers should be cautious about any modifications to existing agreements and consult counsel before doing so.

What is still permitted?

Virginia has not banned noncompetes wholesale. For employees who are exempt under the FLSA and earn above the wage threshold, noncompetes remain enforceable provided they satisfy both common law reasonableness requirements and the new statutory conditions. Employers can still:

• Enforce noncompetes against qualifying high-earning, exempt employees
• Prohibit employees from directly soliciting customers or clients
• Enter into valid nondisclosure and confidentiality agreements (the new laws do not affect NDAs)
• Include noncompetes in connection with the sale of a business
• Use appropriately tailored non-solicitation agreements that do not prevent workers from accepting unsolicited business

What does “reasonable” still mean under Virginia common law?

Even for employees who can lawfully be subject to a noncompete, Virginia courts have always applied a reasonableness test. A valid noncompete must be (1) narrowly tailored to protect a legitimate business interest, (2) reasonable in geographic scope, (3) reasonable in duration, and (4) not unduly burdensome on the employee’s ability to earn a living. Unlike some states, Virginia judges will not fix an overreaching noncompete by trimming it down to something enforceable. If the agreement goes too far, the entire clause is thrown out. Drafting it correctly the first time is the only option.

What This Means If You’re an Employer

The practical implications of these changes are significant. Employers should:

• Audit all existing noncompete agreements to identify which employees are now categorically exempt from coverage
• Update templates for agreements signed on or after July 1, 2026 to include severance provisions and/or clear definitions of “cause”
• Decide your severance strategy: Are you willing to pay severance to preserve enforceable noncompetes? If not, you need a plan for protecting confidential information and customer relationships through other means
• Revisit non-solicitation and confidentiality agreements as partial substitutes for broad noncompetes, keeping in mind the Sentry Force ruling on what constitutes an impermissible restriction
• Consult counsel before any termination where a noncompete is in play, particularly as the definition of “cause” remains unsettled

Employers operating in multiple states should also note that Virginia’s law governs employees who work in Virginia—choice-of-law provisions selecting another state’s law may not protect you.

What This Means If You’re an Employee

Have you signed a noncompete or an employment contract with a noncompete clause?

• If you are paid hourly and entitled to overtime, Virginia law likely already protects you from enforcement of that agreement.
• If you earn less than approximately $78,364 per year, you are protected.
• If you were terminated without cause and without severance after July 1, 2026, any noncompete you signed at that employer is almost certainly unenforceable.
• If you are a healthcare professional, the noncompete ban that applies to you is now law.

Even for employees outside these categories, the enforceability of any specific noncompete depends on whether it satisfies Virginia’s reasonableness requirements. An agreement that was overbroad to begin with may be unenforceable regardless of the new statutes.

The Bigger Picture

Virginia’s shift is part of a broader national trend. The Federal Trade Commission attempted a sweeping nationwide noncompete ban in 2024 that would have overridden Virginia’s own laws entirely but it was blocked by the courts before it could take effect. With this federal reform off the table, states have moved aggressively to fill the void, and Virginia has been among the most active.

For employers and employees alike, the law has moved faster than most employment agreements have. Whether you are trying to protect your business or understand your own obligations, the rules you were operating under may no longer apply. An attorney familiar with Virginia’s evolving noncompete landscape can help you assess where your agreements stand, what exposure you may have, and what steps to take now.

Simms Showers represents employers and businesses navigating Virginia’s employment laws. If you have questions about the new laws, what you need to do to prepare, or how to update your employee agreements, contact Simms Showers today for a confidential consultation.

This article is provided for general informational purposes only and does not constitute legal advice. Every situation is different, and you should not act or refrain from acting based on this article without consulting an attorney about the specific facts of your matter. If you have questions about noncompete agreements under Virginia law, we invite you to contact our office.