Stricter Virginia Noncompete Law Effective July 1, 2026

In April 2026, several new noncompete restrictions were signed into law by Virginia Governor Abigal Spanberger. Virginia Code Section 40.1-28.7:8 already prohibited noncompete agreements with low-wage employees, primarily meaning workers who earn less than the average weekly wage in the Commonwealth, and the new restrictions will protect certain higher wage individuals in the health professions. Effective July 1, 2026, Va. Code § 40.1-28.7:8 has been extended to protect healthcare professionals from noncompete agreements without regard to their income. Additionally, noncompete agreements procured without the payment of severance benefits are now unenforceable when an employee is terminated not for cause.

Senate Bill 170 

Senate Bill 170 provides that no noncompete between employer and employee is enforceable if the employer discharges the employee without cause, unless the employer has paid a severance or other monetary benefit. Further, the employee must be informed of the severance terms at the time that they are provided the noncompete agreement. If an employee is fired for cause or resigns, the employer is not required to pay a severance, and the noncompete would be enforceable. This may create an incentive for terminated employees to litigate whether their termination was for cause or not, in the hope of either defeating enforcement of their noncompete or procuring a severance.

House Bill 627  

House Bill 627 furnished the other leading change to Virginia Code Section 40.1-28.7:8. House Bill 627 expanded the protections of Section 40.1-28.7:8 to ban noncompete agreements for healthcare workers almost entirely. The amendment does not affect agreements that prohibit disclosure of trade secrets and proprietary or confidential information. Similarly, employers may still enter agreements with health care professionals enjoining them from soliciting the employer’s customers to offer the same or similar services as their former employer. Nonsolicitation agreements notwithstanding, under Section 40.1-28.7:8 as amended by HB 627, a health care provider expressly may still contact his former employer’s patients to whom they were personally providing consultation or treatment and inform them of the fact of their continued practice, new contact information, and the patient’s right to choose a health care professional. Like low-wage employees, health care professionals may challenge their former employer’s attempt at enforcing unlawful non-competes against them and recover damages.  

Penalties for Non-Compliance 

These bills only affect noncompete agreements entered on or after July 1, 2026. Thereafter, noncompete agreements are prohibited with employees earning less than the average wage of the Commonwealth, employees who are paid hourly and are entitled to overtime pay under the federal Fair Labor Standards Act, students, interns, apprentices, healthcare professionals, and employees fired without cause who do not receive severance benefits. Aggrieved former employees may bring an action in civil court and recover all appropriate relief, including enjoining the conduct of any person or employer, ordering payment of liquidated damages, and awarding lost compensation, damages, and reasonable attorney fees and costs. Additionally, the commissioner of the Virginia Department of Labor and Industry may impose a civil penalty of up $10,000 on the employer for each violation. The victorious former employee will also be entitled to costs and attorney fees. Employers must post a copy of Section 40.1-28.7:8 or an approved summary of it where other notices required by state or federal law are posted, subject to a warning and then fines of $250 and $1,000 for second and third violations.

Written with assistance from Karina Altynbek, a Fourth Year student at the University of Virginia.

This article is not legal advice.