Part 4: Virginia Further Tightens the Rules on Non-Compete Agreements

Written by: Kristina Keech Spitler

Virginia employers that use restrictive covenants should take a fresh look at their agreements due to two new laws that are effective July 1, 2026.

Severance Payment Required for Non-Competes

This new law, effective July 1, 2026, adds another limitation on the use of non-compete agreements by requiring the employer to pay a “severance benefit or other monetary payment” in order to have an enforceable non-compete agreement, except where the employee is terminated for cause. The payment/benefit must be disclosed at the time the agreement is executed. However, note that the law does not affect agreements entered into, amended, or renewed prior to July 1, 2026.

Importantly, because “cause” is not defined in the statute, employers should carefully document the basis for any “for cause” termination involving an employee with a non-compete agreement. If the employee later disputes whether the termination was truly for cause, the employer could face liability if it attempts to enforce the non-compete without providing the required severance or monetary payment.

Virginia’s existing restrictions still remain in place as well. Employers should remember that Virginia already prohibits non-competes for “low-wage employees,” which includes employees earning less than the Commonwealth’s average weekly wage (for year 2026: $1,507.01 per week ($78,364.52 annually)) and all non-exempt employees, with certain exceptions for employees whose earnings are predominantly from commissions, incentives, or bonuses.

Violating this statute by entering into, enforcing, or threatening to enforce prohibited non-competes can expose employers to significant risk. This new law also requires employers to post notice of the law with workplace posters and that the Commissioner may impose a $10,000 penalty for each violation. Employees may also bring private lawsuits and, if successful, may recover appropriate relief, including injunctive relief, liquidated damages, lost compensation, damages, and reasonable attorneys’ fees and costs.

No Noncompetes for Medical Providers

Effective July 1, 2026, Virginia adds “health care professionals” to the category of workers who cannot be subject to non-competes, with a limited exception when the restriction is part of the sale of a business and includes all or substantially all assets, goodwill, or ownership interests. Employers of health care professionals may still require repayment of certain recruitment-related costs if the professional leaves within five years and may enforce narrow customer non-solicitation restrictions for a limited period after employment ends. In addition, medical employers must also allow departing professionals to tell patients they are continuing to practice, share new contact information, and remind patients they may choose their provider.

Recent Virginia Court of Appeals Decision on Employee Non-Solicit Agreement

Virginia’s two new laws on non-competes should also be examined in light of Virginia case law. Recently, in the Sentry Force Security, LLC v. Barrera case, the Virginia Court of Appeals held that a client non-solicitation provision was allowed (i.e., did not violate Virginia statute), but that a post-employment employee non-solicitation provision fell within the statute’s definition of a non-compete and violated the law as applied there. However, this case is on appeal to the Virginia Supreme Court, so it is even more critical that Virginia employers stay abreast of both changes to legislation and of this ongoing litigation.

Accordingly, employers should not assume that legacy restrictive covenant language still works. Virginia law in this area is changing, and agreements should be reviewed in light of both statutory developments and new case law.

Contact Kristina Keech Spitler, Esq. or Meghan M. Phillips, Esq. to make sure your organization is prepared for these non-compete law changes and case decisions affecting restrictive covenants, review your employment practices, and assist with other employment-related legal issues at 703-369-4738 or kspitler@vfnlaw.com or mphillips@vfnlaw.com.

This blog post is not intended to provide legal advice or substitute for the advice of legal counsel with respect to specific facts and situations. See disclaimer