Virginia Further Limits Noncompete Agreements

Quick Hits

• Virginia Governor Abigail Spanberger recently signed SB 170, which prohibits an employer from enforcing a noncompete covenant with an employee who is discharged and not offered severance, unless the employer discharged the employee for cause.
• The Virginia General Assembly passed a different bill to ban noncompete covenants with healthcare professionals, but the governor has not signed it yet.
• Virginia continues to limit the use of noncompete covenants with “low-wage” workers.

Senate Bill (SB) 170, which Governor Abigail Spanberger signed on April 13, 2026, amended Virginia’s law on noncompete covenants. SB 170 does not apply to covenants entered into before July 1, 2026.

Under the amended law, noncompete covenants will be unenforceable if an employer discharged an employee without providing severance pay, unless the employer discharged the employee for cause. As of July 1, 2026, any severance benefits or other monetary payments that will support enforcement of a noncompete covenant must be disclosed to the employee at the time the covenant is executed. The law is silent as to the amount of the severance benefits or other monetary payments that will be required.

The amended law does not change the statutory definition of a noncompete covenant. In January 2026, the Court of Appeals of Virginia addressed the extent to which that definition includes customer and employee nonsolicitation covenants, holding (i) a customer nonsolicitation covenant that restrains an employee from directly soliciting a customer does not fall within the scope of the law’s restrictions, but (ii) a customer nonsolicitation covenant that prevents employees from accepting unsolicited business from a customer does fall within the scope of the law’s restrictions, and likewise, (iii) an employee nonsolicitation covenant also falls within the scope of the law’s restrictions.

The amended law does not define the term “cause,” which is subject to varying legal interpretations. It is unclear how courts will interpret “cause” under the amended law. Employers should consider how the manner in which an employee is separated from employment will affect enforceability of the employee’s noncompete covenants. Employers also may wish to consider defining “cause” in agreements, although it is not clear what weight courts will give such a definition.

The new severance requirement will layer on top of—and will not replace—Virginia’s existing ban on noncompete covenants for “low-wage” employees. “Low-wage” employees under Virginia law are those (i) who earn less than the average weekly wage in Virginia, currently $1,507.01 per week or $78,364.52 per year, or (ii) who are classified as nonexempt under the Fair Labor Standards Act (FLSA).

Meanwhile, the Virginia General Assembly also passed SB 128, which would ban noncompete covenants for healthcare professionals, including any person licensed, registered, or certified by the Board of Medicine, Nursing, Counseling, Optometry, Psychology, or Social Work. The governor recommended certain amendments to this bill, which the General Assembly will consider when it reconvenes on April 22, 2026, to consider vetoes and proposed amendments from the governor.

Next Steps

Employers should review their restrictive covenant terms and practices for employees in Virginia, both to modify their agreements to comply with existing law and to realign their practices consistent with the amended law’s requirements. The amended law is likely to require changes in current agreements for those forms to be enforceable (when executed on or after July 1, 2026). Employers may choose to replace existing noncompete covenants with new ones for the purpose of ensuring consistent treatment of employees, and potentially also to gain greater confidence that the clauses are enforceable because they meet the specific requirements contained in the amended law.

The amended law does not affect the enforceability of nondisclosure agreements. But these changes in the law are always good opportunities for employers to reevaluate their overall approach to protecting their trade secrets, other confidential information, and goodwill.

It is now more critical than ever to carefully draft restrictive covenants in Virginia. Virginia courts already decline to selectively remove the unenforceable parts of restrictive covenants, and as of July 1, 2026, an employee will be entitled to bring a civil action against an employer that attempted to enforce a noncompete clause in violation of the law.

Ogletree Deakins’ Washington, D.C., and Richmond offices will continue to monitor developments and will post updates on the Healthcare, Unfair Competition and Trade Secrets, and Virginia blogs as additional information becomes available.

In addition, information is available on the Ogletree Deakins Client Portal, including the Virginia jurisdiction page. Snapshots and updates are available for all registered client users. Detailed information and updated policies are available for Premium and Advanced subscribers. For more information on the Client Portal or a Client Portal subscription, please reach out to clientportal@ogletree.com.

Caroline H. Cheng is a shareholder in Ogletree Deakins’ Washington, D.C., office.

This article was co-authored by Leah J. Shepherd, who is a writer in Ogletree Deakins’ Washington, D.C., office.

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