June 30, 2025

Effective July 1, 2025, new legislation in Virginia further restricts employers’ ability to impose covenants not to compete on employees.  Previously, Virginia law prohibited employers from enforcing non-compete agreements against employees earning below a defined compensation threshold.  For 2025, employees earning below $76,081 are considered low wage employees. Beginning July 1, 2025, the law expands these restrictions to include employees entitled to overtime compensation under the Fair Labor Standards Act (FLSA) – that is, non-exempt employees who receive overtime pay for hours worked in excess of 40 in a workweek. 

This marks a significant expansion of Virginia’s limitations on the use of non-compete agreements. Importantly, the new statute does not apply retroactively and will not invalidate, alter, or otherwise affect any agreements entered into or renewed prior to July 1, 2025. 

Under Virginia law, a “covenant not to compete” is defined as any agreement between an employer and an employee that restrains, prohibits, or otherwise restricts the individual’s ability, following the termination of employment, to compete with their former employer. The restriction also applies to provisions that prohibit an employee from providing services to a customer or client of the employer unless the employee initiates contact or solicitation of the client or customer. 

If an employer attempts to enforce a non-compete agreement in violation of the statute, the affected employee may bring a civil action. If successful, the employee may recover reasonable costs, including attorney’s fees and fees for expert witnesses, from the employer that attempted to enforce the unlawful agreement. 

Action Items for Employers 

1. Evaluate Applicability: Before imposing a non-compete agreement on any employee—whether new or existing—determine whether the employee qualifies as a “low-wage employee” under Virginia law. This includes assessing whether the employee is non-exempt under the FLSA and therefore entitled to overtime compensation.   
2. 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. 

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