Virginia Expands Restrictions on Noncompete Agreements to Protect Low-Wage Employees (7/1/25)

Virginia Gov. Glenn Youngkin has signed into law legislation that amends the threshold compensation level of a “low-wage employee” with whom the commonwealth restricts employers from entering into agreements not to compete. Virginia currently prohibits employers from entering into, enforcing, or threatening to enforce noncompete agreements against “low-wage employees,” who were previously defined under the state’s noncompete statute as individuals who earn less than the commonwealth’s average weekly wage. In 2025, that amount is $1,463.10 per week (which equates to an annual salary of $76,081). 

The new law amends the definition of “low-wage employee” to include employees who, regardless of their average weekly earnings, are entitled to overtime compensation under federal law for any hours worked in excess of 40 hours in any one workweek. In other words, this amendment now expands the definition of a “low-wage employee” to include those who are deemed “nonexempt” from the federal Fair Labor Standards Act. This new law will go into effect on July 1, 2025.
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Virginia Amends Threshold Compensation Level for Noncompete Ban
SHRM via Littler | Apr 2025

Read the text of the measure

Effective Date: 7/1/2025

SHRM Resources

Legal Viewpoint: Next Steps for Noncompete Agreements
Q&A: Can an employer make noncompete and confidentiality agreements a condition of employment for current employees?
Sample: Noncompete and Nonsolicitation Provisions

Key Considerations for HR Professionals

1. Know When Non-Competes Are Appropriate
   • Typically used for executives, sales staff with key client relationships, or employees with access to confidential information.
   • Not suitable for low-wage or entry-level workers in most states.
2. Stay Informed on State Laws
   • Enforceability varies widely by state. Some states (like California, Oklahoma, and North Dakota) ban them outright, while others impose limits based on income thresholds, duration, or business justification.
   • Many states now require notice, consideration, or advance disclosure of non-competes before the start of employment.
3. Use Alternatives to Non-Competes
   • Non-solicitation agreements (preventing poaching of clients/employees)
   • Confidentiality or trade secret agreements
   • Garden leave clauses (paying employees during restricted periods)
4. Review and Update Agreements Regularly
   • Ensure agreements are narrowly tailored, reasonable in scope, and legally compliant.
   • Work with legal counsel to audit and revise agreements proactively.

Law Articles

Effective July 1, the definition of “low-wage employee” will include employees entitled to receive overtime pay under the FLSA, otherwise known as “non-exempt employees.” The amendment will not affect employees who meet the requirements for an exemption as set forth by the FLSA and U.S. Department of Labor, such as executive, administrative, or professional employees.

In effect, employers will no longer be able to enter into non-compete agreements with non-exempt employees. The updated law will not affect existing non-compete agreements or those entered into before the July 1, 2025, effective date.

As amended, the law retains expressed exclusions for any employee who derives their earnings in whole or in predominant part from sales commissions, incentives, or bonuses paid. 
Expanded Definition of ‘Low-Wage’ Employees in Virginia Non-Compete Ban: Employers Need to Act Now
Jackson Lewis | Apr 2025

Employers that enter into, enforce, or threaten to enforce a covenant not to compete against a low-wage employee could be subject to injunctive relief, the payment of damages (including liquidated damages), attorneys’ fees, costs, and a civil penalty of $10,000 per violation.
Amendment to Virginia Law Prohibits Noncompetes Against Nonexempt Employees
Ogletree | Apr 2025

The other provisions of Virginia’s non-compete statute, Virginia Code § 40.1-28.7:8, were not modified, and contain several noteworthy features. The statute provides a private right of action for low-wage employees against any employer who attempts to enforce a non-compete in violation of the statute, and if they prevail, the statute authorizes a court to award liquidated damages, lost compensation, and attorneys’ fees. Employers may also be subject to a civil penalty of $10,000 for each violation of the statute. Also, employers must post a copy of the statute or a summary approved by the Virginia Department of Labor and Industry alongside other federal or state required notices, or risk civil penalties. 
Virginia Strengthens Ban on Non-Competes for “Low-Wage Employees”
Proskauer | Apr 2025

The amendment emphasizes the importance for Virginia employers to correctly classify their employees as exempt or non-exempt under the FLSA. Additionally, the amendment does not apply retroactively, so it will not affect any non-competes with non-exempt employees that are entered into or renewed prior to July 1, 2025. Nevertheless, enforcing non-compete agreements with non-exempt employees may be more challenging after this summer, so Virginia employers may wish to consider renewing such agreements without non-compete provisions to ensure other provisions can be properly enforced.
Virginia Expands Non-Compete Restrictions Beginning July 1, 2025
Epstein Becker | Apr 2025

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