New Virginia Noncompete Law Passed, Goes to Governor
The Virginia Assembly passed Senate Bill 170, which adds new limits on the enforceability of noncompetes against terminated employees. Governor Spanberger is expected to sign this into law. The employer cannot enforce a noncompete unless it pays "severance benefits or other monetary payment" to the employee. Moreover, the employer must notify an employee of the benefit or payment to trigger the enforcement of the noncompete upon termination. This applies to all employees regardless of salary. Any noncompete agreed, amended, or renewed after July 1, 2026 is affected.
There is an exception of the employee is terminated for “cause.” No specific amount of money is prescribed. Obviously this does not apply if the employee leaves the job voluntarily. Virginia already bans noncompetes against employees who make less than the state's average weekly wage, which is $1501 per week or $78,052 per year, as well as hourly non-exempt employees.
Failure to follow this law allows an employee to sue an employer for trying to enforce an unenforceable noncompete. If the court finds a violation of the statute, employees may be entitled to attorneys’ fees, damages and costs. Moreover, for violating the new severance rule, an employer “shall be subject to a civil penalty of $10,000” to pay the Labor Department.
Employers with employees in Virginia should take note of this for any new hires requiring restrictive covenants, or existing employees with expiring noncompete terms.
If you have questions about this Client Alert or are interested in additional details or guidance, please reach out to David L. Pardue (david.pardue@pierferd.com) or your regular PierFerd contact for assistance.
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