In April of this year, the Virginia General Assembly passed Senate Bill 170, which will amend the Virginia statute which lists the restrictions on noncompete provisions and agreements (§ 40.1-28.7:8 of the Code of Virginia). This Bill’s greatest change to the law adds a new requirement employers must include in noncompete agreements and clauses to be enforceable. These changes went into effect on July 1, 2026, and will only effect noncompete agreements renewed, amended or entered into after that date.
The major addition to the statute, listed as Subsection C, states that a noncompete agreement will not be enforceable unless the employer provides “severance benefits or other monetary payment to such employee,” if the employee is terminated without cause. While the benefits or compensation would not need to be paid if an employee were to be discharged for cause, those benefits or monetary payment must be disclosed to the employee at the time the noncompete agreement is signed. If an employer violates this new Subsection C, they will be subject to a $10,000 civil penalty for each violation. This is the same penalty for employers if they violate the existing requirement that employers cannot enforce a noncompete agreement on a low-wage employee.
Another minor change from Senate Bill 170 allows for any employee, not just low-wage employees to file a civil action against their former employer for violating the statute.
All other provisions of Virginia’s noncompete statute remain the same, including that employers cannot enforce noncompete agreements for “low-wage workers.” This is defined in the statute, but generally includes employees earning less than $78,364.52 per year (as of January 1, 2026), but this amount may be adjusted over time. Other than the changes described above, the process of filing and partaking in a civil action are the same, including the penalty amounts. The requirement that this section of the statute is displayed “where other employee notices required by state or federal law are posted” is also still present in the statute.
While the changes only impact the noncompete agreements and clauses on or after July 1, 2026, employers should still take a look at their agreements that include noncompete language to make sure that going forward the required compensation or benefits are communicated to employees. Additionally, the required notice should be updated to include the new language.
How does this compare to noncompete laws in Maryland and in Washington, DC? Neither Maryland or Washington, DC have this severance benefits or monetary payment requirement, but there is a common trend nationwide to restrict noncompete agreements and clauses in similar ways. For example, just as Virginia has a salary restriction on noncompete agreements, Maryland does not allow these to be enforced for employees that earn less than 150% the minimum wage (which is currently $46,800 per year), and Washington, DC does not enforce noncompete agreements for those employees earning less than $162,164 per year and for medical specialists earning less than $270,274 per year (with those numbers subject to annually).
The noncompete requirements are changing quickly and vary by jurisdiction. Employers must keep these requirements, and any others, in mind when determining whether an employee or role requires these restrictions. If your business uses noncompete agreements for employees in Virginia, now is the time to review your agreements. For guidance on complying with Virginia’s updated noncompete law, contact our attorney, Aaron D. Neal.
