Virginia Expands Non-Compete Restrictions in 2026

Enforcing non-compete agreements became more complex in Virginia as two amendments to Virginia’s non-compete statute took effect July 1, 2026. One requires severance or other pay for a non-compete to be enforceable when the employee’s employment is terminated without cause. The second prohibits employment non-competes with certain health care professionals. Both changes operate alongside the 2025 expansion of Virginia’s protections for “low-wage employees.” Virginia employers using non-competes will need to review their agreements to ensure compliance with these new requirements.

Severance and Disclosure Requirements

Under Senate Bill 170, an employer cannot enforce a non-compete against an employee whose employment is terminated without cause unless the employer provides severance benefits or another monetary payment to the employee. The employer must disclose the severance or other payment obligation to the employee when the non-compete is signed. Without that disclosure, an employer may not be able to make the existing non-compete enforceable by providing a payment or negotiating severance at the time of termination. The change applies across industries and is not limited to lower-paid employees.

The statute does not define “cause,” establish a minimum payment amount, or expressly require “garden leave”-type payments throughout the restricted period. As a result, the text leaves questions about the payment terms that would be sufficient to satisfy the condition and the circumstances qualifying as a discharge for cause. The amendment likewise does not create a general severance entitlement for every departing employee. However, employers will need to carefully draft these provisions to avoid creating unintended or insufficient payment obligations.

SB 170 preserves agreements entered into, amended or renewed before July 1, 2026. Amendments and renewals on or after that date can bring an existing agreement within the new requirements. An agreement’s original execution date therefore may not resolve the coverage question to the extent there is a change to the terms of employment that is deemed to be an amendment.

Restrictions for Health Care Professionals

Separate 2026 amendments prohibit employment non-competes with professionals licensed, registered or certified by Virginia’s Boards of Medicine, Nursing, Counseling, Optometry, Psychology or Social Work. The health-profession restriction is distinct from the generally applicable discharge-and-severance rule: providing severance does not override a statutory prohibition applicable to a protected health care worker.

The 2026 amendments preserve specified provisions involving qualifying business sales, recruitment-related repayment obligations and narrowly defined customer non-solicitation restrictions. These types of covenants are not subject to the prohibition.

A Reminder: The 2025 Expansion of “Low-Wage Employees”

The two amendments join Virginia’s existing prohibition on entering into, enforcing or threatening to enforce non-competes with “low-wage employees.” Since July 1, 2025, the prohibition has extended to employees entitled to overtime under the Fair Labor Standards Act, regardless of earnings, in addition to employees whose average weekly earnings fall below the Commonwealth’s average weekly wage (currently over $70,000). The definition excludes employees whose earnings come wholly or predominantly from sales commissions, incentives or bonuses. Compensation structure and overtime eligibility therefore remain relevant even for higher-paid employees.

Implications for Employers

With these new amendments, the threshold inquiry employers must ask now is whether Virginia law permits the employee to be subject to a non-compete at all and whether applicable enforcement conditions are satisfied. Only then does the traditional and more familiar reasonableness analysis come into play.

The consequences of unlawful enforcement extend beyond losing the restriction. The statute provides for a $10,000 civil penalty per violation of its non-compete prohibitions, as determined by the labor commissioner. Private claims can also result in injunctive relief, damages, lost compensation and attorneys’ fees. Employers also remain subject to a separate requirement to post the statute or an approved summary with other required workplace notices.

For questions about Virginia’s non-compete restrictions or other restrictive covenant issues, please contact your Polsinelli attorney.