Virginia has expanded its restrictions on employee non-compete agreements. Senate Bill 170, signed into law on April 13, 2026, amends Virginia Code § 40.1-28.7:8 in two significant respects:

1. It limits enforcement of non-competes against employees discharged without cause unless the employer provides severance or another monetary payment.
2. It extends civil-action rights and anti-retaliation protections to employees at all wage levels.

The amendments took effect July 1, 2026, and apply only to agreements entered into, amended, or renewed on or after that date.

Existing Restrictions for Low-Wage Employees

Virginia law already prohibits employers from entering into, enforcing, or threatening to enforce a non-compete agreement with a “low-wage employee.”

A low-wage employee generally includes:

• An employee whose average weekly earnings are below the Commonwealth’s average weekly wage, which is $1,507.01 per week, or $78,364.52 annually, for 2026;
• A non-exempt employee entitled to overtime compensation under federal law, regardless of earnings;
• Certain interns, students, apprentices, and trainees; and
• An independent contractor paid at an hourly rate below the Commonwealth’s median hourly wage, which is $37.68 for 2026.

The definition excludes employees whose earnings are derived wholly or predominantly from commissions, incentives, or bonuses.

The existing statute also provides civil remedies, anti-retaliation protections, a workplace posting requirement, and a civil penalty of up to $10,000 per violation.

New Severance Requirement for Discharged Employees

SB 170 adds a restriction that applies to all employees, regardless of compensation.

Under the amended statute, a non-compete is unenforceable if the employer:

• Discharges the employee without cause; and
• Does not provide severance benefits or another monetary payment.

The restriction does not apply when an employee is discharged for cause. It also does not appear to apply when an employee resigns voluntarily.

The statute further requires the severance benefits or other monetary payment to be disclosed when the non-compete is executed. Employers using non-compete provisions in offer letters, employment agreements, or similar documents should therefore address the payment that will be provided if the employee is later discharged without cause.

The statute does not specify a minimum payment amount. Nevertheless, agreements that do not address the required payment may create enforceability and compliance issues.

Expanded Civil Remedies and Anti-Retaliation Protections

Before SB 170, the statute authorized civil actions primarily for violations involving low-wage employees. The amended law permits any employee to bring a civil action when an employer attempts to enforce a non-compete in violation of the statute.

Available remedies remain unchanged and may include:

• An order voiding the non-compete;
• Injunctive relief;
• Liquidated damages;
• Lost compensation; and
• Reasonable attorneys’ fees and costs.

The two-year statute of limitations runs from the latest of:

1. The date the agreement was signed;
2. The date the employee learned of the agreement;
3. The date the employment relationship ended; or
4. The date the employer took steps to enforce the agreement.

SB 170 also extends the statute’s anti-retaliation protection to all employees who bring an action under the statute.

Expanded Civil Penalties

The Commissioner of Labor and Industry may assess a civil penalty of up to $10,000 per violation.

SB 170 expands that penalty provision to cover violations of the new discharge-and-severance restriction. An employer that attempts to enforce a non-compete after discharging an employee without cause and without providing the required payment may therefore face both civil liability and an administrative penalty.

What Remains Unchanged

SB 170 does not change several important features of Virginia law:

• The prohibition on non-competes for low-wage employees remains in effect.
• The definition of “low-wage employee,” including the exclusion for employees paid predominantly through commissions, incentives, or bonuses, remains unchanged.
• Nondisclosure agreements and protections for trade secrets, proprietary information, and confidential information remain permissible.
• Employers must continue to post the statute, or an approved summary, with other required workplace notices.
• Agreements entered into before July 1, 2026, are not affected unless they are later amended or renewed.

Higher-wage employees also remain subject to Virginia’s common-law requirements that non-competes be reasonable in function, geographic scope, and duration.

Practical Steps for Employers

Employers that use non-compete agreements should consider the following steps:

Review Agreement Templates

Review offer letters, employment agreements, and other documents containing non-compete provisions. Agreements executed, amended, or renewed on or after July 1, 2026, should disclose the severance benefits or other monetary payment that will be provided following a discharge without cause.

Coordinate Termination and Severance Practices

Employers that terminate employees without cause and without severance should evaluate whether their non-competes will remain useful. Under the amended statute, an employer cannot enforce a covered non-compete following a no-cause termination unless the required payment is provided.

Strengthen Confidentiality Protections

Because the statute preserves nondisclosure agreements and trade-secret protections, employers should confirm that their confidentiality provisions are appropriately tailored to the information they need to protect.

Evaluate Agreements with Higher-Wage Employees

The new discharge-and-severance restriction applies regardless of wage level. Employers should therefore review non-compete agreements with executives, managers, sales personnel, and other higher-wage employees, not only agreements involving workers covered by the low-wage threshold.

Conclusion

Effective July 1, 2026, Virginia employers generally may not enforce a non-compete against an employee discharged without cause unless the employer provides severance benefits or another monetary payment disclosed when the agreement is executed.

The amendments also extend civil-action rights, anti-retaliation protections, and potential civil penalties beyond the low-wage employee context. Employers should review their non-compete templates and align their termination and severance practices with the new requirements.

For more information or assistance reviewing non-compete agreements or other employment-law matters, please contact Maureen Carr at 703.526.5597 or mcarr@beankinney.com.

This article is for informational purposes only and does not constitute legal advice. Consult a lawyer regarding specific circumstances. The views expressed are those of the authors and are not necessarily the views of any client.