Virginia Amends Threshold Compensation Level for Noncompete Ban

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.

Employers in Virginia that use or are considering using noncompete agreements with their workforce should evaluate their existing agreements and assess whether employees now fall within the definition of a “low-wage employee.” Employers should also remain aware of the parameters of Virginia’s ban on noncompete law that have not changed, including that:

• Employees have the right to file suit to invalidate a legally prohibited restrictive covenant, and if they prevail, the employee is entitled to be paid liquidated damages as well as lost wages, benefits, and attorney fees. Additionally, employers can be assessed a civil monetary penalty of up to $10,000 per violation.
• Virginia does not prevent employers from using nondisclosure agreements that are “intended to prohibit the taking, misappropriating, threating to misappropriate, or sharing of certain information, including trade secrets ... and proprietary or confidential information.” (See Va. Code Section 40.1-28.7:8(C).) Employers should thoroughly assess the necessary protections when creating and implementing confidentiality, nondisclosure, and proprietary information protection agreements with employees.
• Unlike some other states (for example, Colorado and California), Virginia does not require employers to notify individual employees about the validity or enforceability of their noncompete agreements. However, Virginia employers must display a general notice that includes either a copy of Virginia Code Section 40.1-28.7:8 (which outlines the noncompete ban for “low-wage” employees) or an approved summary of this code section provided by the Virginia Department of Labor and Industry. This notice must be posted alongside other mandatory federal and state employment law postings.

In light of this new legislation, Virginia employers should promptly review and update their noncompete agreements to ensure compliance and consider consulting legal counsel to navigate these changes effectively.

Paul Kennedy is an attorney with Littler in Washington, D.C., and Tysons Corner, Va. Bradley Tobias is an attorney with Littler in Washington, D.C. © 2025 Littler. All rights reserved. Reposted with permission.