2026 AMENDMENT TO VIRGINIA
RESTRICTIVE COVENANTS STATUTE
August 31, 2026
Seems like déjà vu. On June 30, 2025, our firm posted a blog about Virginia’s new law concerning covenants not to compete. See https://restonlaw.com/new-virginia-non-compete-law/. Virginia has now further curtailed the use of such clauses, joining a growing list of jurisdictions that have done the same, including California, Colorado, Connecticut, D.C., Illinois, Maine, Maryland, Minnesota, New Hampshire, North Dakota, Oklahoma, Oregon, Rhode Island, Washington and Wyoming.
This Client Alert focuses on the most recent changes in Virginia. However, there also have been recent changes enacted in Maryland, D.C. and other jurisdictions.
Effective July 1, 2026, new legislation codified in Virginia Code Section 40.1-28.7.8 further restricts an employer’s ability to impose restrictive covenants in Virginia on employees by (a) prohibiting their use for employees who are not exempt under the FLSA, who are low wage workers (i.e., those making less than an indexed amount, which is currently $78,365 and presumably will increase every year), health care professionals and certain other workers, and (b) restricting their use for other employees terminated without cause unless the employee is provided severance benefits or other monetary payment upon discharge.
Employers can be fined $10,000 per violation by the Virginia Employment Commissioner and employees can recover attorney fees, liquidated damages and lost compensation when an employer attempts to enforce a restrictive covenant that is unenforceable under the new provisions. Employees are also required to post a copy of the new provisions or summary approved by Virginia and can be assessed civil penalties for violating the posting requirements. Exceptions to the new provisions include narrowly tailored non-disclosure agreements and reasonable covenants in the context of a business sale.
The current landscape in Virginia can be summarized as follows beginning July 1:
(1) For Non-Exempt Employees Under the FLSA and Low-Wage Employees–non-compete provisions are not permitted regardless of severance offered. A recent case, Sentry Force Security, LLC v. Barrera (Va. Court of Appeals 1/27/2026), held further that any restriction on the solicitation or hiring of a former employer’s employees is invalid.
(2) For High-Wage and Exempt Employees–a non-compete may still be enforceable, but for agreements entered into, amended, or renewed, on or after July 1, 2026, the employer must provide severance or other monetary payment disclosed at signing if the employee is discharged without cause (which is not defined in the new law). An important point to note here is that the new law does not apply to employees who resign or who are discharged for cause.
(3) Non-solicitation of employee clauses are only permitted against high-wage and exempt employees who are not health care professionals, when the employee quits, is terminated for cause, or is terminated without cause and provided severance or other monetary payment disclosed at signing as long as the non-solicitation restrictions are narrowly tailored to protect the legitimate business interests of the company.
(4) Non-solicitation of customer clauses:
(a) Broad version where clause includes restrictions on employees providing services to customers/clients of the employer even if the employee doesn’t initiate contact with or solicit the customer or client–such clauses may still be valid but only for high-wage and exempt employees subject to the severance/payment obligations noted above.
(b) Narrow version only restricting an employee from soliciting clients where the employee initiates contact–still permitted and don’t appear to be subject to the new requirements.
(5) Special additional rules apply with respect to health care professionals. Non-competes are generally not permitted with certain exceptions including as part of a business sale. Another exception is that an employer of a health care professional may restrict that employee for a stated period following termination from soliciting any business from any of such employer’s customers, including actively seeking prospective customers, with whom the employee had material contact during the employee’s employment, for purposes of providing products or services that are the same or substantially similar to those provided by the employer.
(6) Other States. Numerous other states have adopted restrictions that may apply to Virginia employers having employees in such other states.
Action Items for Employers
- Evaluate Applicability: Before imposing or amending a non-compete agreement on any employee—whether new or existing—determine whether the employee qualifies as a “low-wage employee” under Virginia law or a “non-exempt employee” under the FLSA.
- Strengthen Confidentiality Protections: Ensure all employees are bound by robust nondisclosure agreements. These should include provisions for the return or destruction of company confidential information upon termination and clear prohibitions on the post-employment use of such information (in particular information about the company’s employees and customers).
- Review Multi-State Employment Practices: Determine what state law should govern a Virginia employer hiring an employee operating in another state. Should the laws of another state be chosen to govern certain out-of-state employment agreements so as to add better protection for a Virginia employer?
- Comply with Posting Requirements: Post a copy of the new provisions or summary approved by Virginia in the same location where other employee notices required by state or federal law are posted.
DISCLAIMER. This Client Alert does not provide legal advice. We are providing it for general informational purposes only. For further information, please contact the Reston Law Group, LLP or your other advisors.
