Virginia’s steady march away from employer-friendly noncompete law continues. What began in 2020 as a targeted prohibition on noncompetes for “low-wage” workers has now expanded into a far broader restriction that reaches employees at every level of the organization. With the General Assembly’s passage of Senate Bill 170 (SB 170), Virginia employers must now confront a new reality: a noncompete is unenforceable if an employee is laid off without severance or other disclosed compensation.
For employers that have relied on noncompetes as a core tool to protect customer relationships, confidential information, and competitive advantage, SB 170 represents another significant recalibration of risk. It adds yet another compliance obligation to an already complex and fast-changing restrictive covenant landscape.
From 2020 to Today: How Virginia Got Here
Historically, Virginia courts have viewed noncompetes skeptically but have enforced them when narrowly drafted to protect legitimate business interests. That changed dramatically in 2020, when the General Assembly enacted legislation prohibiting noncompete agreements for “low-wage employees.” That law barred employers from entering into, enforcing, or threatening to enforce noncompetes against employees earning less than the Commonwealth’s average weekly wage, as well as non-exempt employees, interns, and certain independent contractors.
Since then, the General Assembly has repeatedly expanded employee protections, while Virginia courts, operating under the Commonwealth’s strict “red pencil” rule, have continued to invalidate overbroad restrictive covenants without the ability to modify them.
If signed by Governor Spanberger as expected, SB 170 will mark the next step in that evolution, extending noncompete restrictions beyond compensation thresholds and focusing instead on how the employment relationship ends.
What SB 170 Does — And Why It Matters
SB 170 amends § 40.1-28.7:8 of the Code of Virginia to provide that a covenant not to compete is unenforceable if an employer discharges an employee without providing severance benefits or other monetary payment, unless the employee terminated is for cause.
Unlike prior Virginia restrictions, SB 170 applies to all employees, regardless of compensation level or job title. To preserve enforceability, the employer must disclose the severance or other compensation at the time the noncompete is executed. The statute leaves open some key terms. It does not define “cause,” “severance,” or a minimum payment amount, leaving these questions to be sorted out by employers and, ultimately, the courts.
SB170 applies to noncompetes entered into, amended, or renewed on or after July 1, 2026. Violations may result in civil penalties of up to $10,000 per violation, as well as private lawsuits seeking injunctive relief, damages, and attorney fees.
Comparison to Other States
Virginia is not alone in tightening noncompete restrictions, but SB 170 takes a distinct approach. Massachusetts, for example, requires garden leave or other agreed-upon consideration for many noncompetes, along with strict notice requirements. Other states, such as California and Minnesota, broadly prohibit employee noncompetes altogether, while jurisdictions like Florida remain comparatively employer-friendly.
SB 170 places Virginia squarely among states that are actively discouraging post-employment restraints, even for highly compensated employees and senior executives.
What Restrictions the Law Still Allows
Importantly, SB 170 does not ban nondisclosure agreements or other protections for business trade secrets and confidential information. Agreements entered into before July 1, 2026, are not retroactively invalidated. However, employers should expect courts and regulators to scrutinize restrictive covenants more closely than ever, particularly where severance is absent or unclear.
Best Practices for Virginia Employers
SB 170 is the latest chapter in Virginia’s deliberate shift toward limiting employee noncompete agreements. For employers, the message is clear: noncompetes are no longer a default option, particularly in the context of layoffs. Careful planning and thoughtful drafting will be essential to managing risk in this new environment. Virginia employers should consider acting now to mitigate risk. Recommended steps include auditing existing noncompete agreements, updating templates to expressly include severance or compensation, aligning severance policies with restrictive covenant strategy, training HR and management personnel, and considering alternatives such as narrowly tailored confidentiality and nonsolicitation agreements.
If you have questions concerning your business’s noncompete, nonsolicitation, or nondisclosure agreements or need help with a specific employment law issue in Virginia, Maryland, or the District of Columbia, please contact Doug Taylor at (703) 526-5586 or rdougtaylor@beankinney.com.
This article is for informational purposes only and does not contain or convey legal advice. Consult a lawyer. Any views or opinions expressed herein are those of the authors and are not necessarily the views of any client.