Important Updates to Virginia Non-Compete Laws in 2026

Recent legislative action and a state court ruling have significantly shifted the landscape for non-compete agreements in Virginia. Here are the key updates employers need to know:

1. The “No Severance, No Non-Compete” Rule

Effective July 1, 2026, Virginia expanded its non-compete restrictions beyond just low- wage workers.

A non-compete agreement is now unenforceable if an employee is terminated without cause, unless the employer provides severance benefits or other monetary compensation. The severance or monetary terms must be clearly disclosed upon execution of the non-compete.

This requirement applies to any non-compete agreement entered into, amended, or renewed on or after July 1, 2026.
Exceptions: The law does not apply to:

• Covenants not to compete entered into prior to July 1, 2026.
• Employees who resign or are terminated “for cause”.
• Enforceable customer non-solicitation agreements.
• Non-disclosure agreements (NDAs) or other enforceable confidentiality agreements.
• Non-compete agreements in the sale-of-business context.

The law does not define “cause” or provide guidance on the amount of severance required. Employers should consult with legal counsel on any non-compete agreements entered into after July 1.

2. Ban on Health Care Worker Non-Competes

Under a companion bill, also effective July 1, 2026, employers are prohibited from entering into, enforcing, or threatening to enforce non-compete agreements with covered “health care professionals”. This ban applies broadly to any healthcare employee licensed, registered, or certified by the Board of Medicine, Nursing, Counseling, Optometry, Psychology, or Social Work.

3. Clarification on Low-Wage Workers and Non-Solicitation

Virginia law already bans non-competes for “low-wage workers”—generally defined as those earning under $78,364.52 annually in 2026 or who are non-exempt under the FLSA. A recent Virginia Court of Appeals ruling (Sentry Force Security, LLC v. Barrera)
clarified how this ban applies to non-solicitation clauses:

• Customer Non-Solicits: Employers can prohibit low-wage workers from
  proactively soliciting customers. However, they cannot stop a former low-wage employee from accepting unsolicited business if the customer reaches out to them first.
• Employee Non-Solicits: The court ruled that agreements preventing former employees from poaching current coworkers fall under the statutory definition of a non-compete. Therefore, employee non-solicitation clauses cannot be enforced against covered low-wage workers.

Action Items for Employers:

Employers should review their standard non-compete agreements with legal counsel to determine if they should include severance or monetary compensation disclosures and clear definitions of “cause” for any contracts signed, amended, or renewed after July 1, 2026. Non-solicitation clauses given to low-wage workers must be narrowly drafted so they only restrict active, direct solicitation, and remove employee non-solicitation restrictions for these workers.