One statute carries most of the weight here. Va. Code § 40.1-28.7:8 was enacted in 2020 and expanded by amendments in 2025 and 2026, and it now sets out who cannot be bound, what employers may still restrict, and what an employee can recover. This article covers the statutory rules; the wider set of Virginia labor laws governing wages, leave, and termination sits alongside them.
Who a Virginia non-compete cannot bind
Virginia does not ban non-competes across the board. It removes two categories of worker from their reach.
The first is low-wage employees. The second, added by the 2026 amendments, is health care professionals, defined in Va. Code § 40.1-28.7:8(A) as anyone licensed, registered, or certified by the Board of Medicine, Nursing, Counseling, Optometry, Psychology, or Social Work. For both groups, subsection B bars an employer from entering into a non-compete, enforcing one, or threatening to enforce one.
The statute also defines what it is regulating. A covenant not to compete is any agreement between an employer and an employee that restrains the employee’s ability to compete with the former employer after the employment ends. That definition carries a built-in limit: a covenant cannot stop a former employee from serving a customer or client of the employer so long as the employee did not initiate the contact or solicit that customer. An employee who is approached by a former client is outside the restriction by operation of the statute, whatever the contract says.
How Virginia defines a low-wage employee
“Low-wage employee” is a defined term, and it is broader than the phrase suggests. Two independent tests appear in subsection A of Va. Code § 40.1-28.7:8, and meeting either one is enough.
The earnings test looks at average weekly earnings over the 52 weeks before the employment ended. Earnings during that period are divided by 52, or by the number of weeks actually paid if the worker was there less than a year. If the result falls below the average weekly wage of the Commonwealth, the worker is a low-wage employee. That benchmark is not a fixed number. Under Va. Code § 65.2-500(B), the Workers’ Compensation Commission recalculates it on or before January 1 each year from wages reported to the Virginia Employment Commission, and the figure applies for the year beginning the following July 1.
The overtime test is the one that reaches further. A worker entitled to overtime pay under 29 U.S.C. § 207 for hours worked beyond 40 in a workweek is a low-wage employee regardless of earnings. Overtime eligibility turns on the federal white-collar exemptions, and one component of those is a salary floor: as of 2026, 29 C.F.R. § 541.600 requires at least $684 per week on a salary basis before the executive, administrative, or professional exemption can apply. A salaried worker below that line is entitled to overtime, and therefore cannot be bound by a Virginia non-compete.
The definition sweeps in interns, students, apprentices, and trainees, paid or unpaid. It also covers independent contractors paid at an hourly rate below the Commonwealth’s median hourly wage for all occupations, as reported for the preceding year by the Bureau of Labor Statistics.
A discharge without severance voids the covenant
The 2026 amendments added a rule that applies to every employee, not only the protected categories. Under subsection C of Va. Code § 40.1-28.7:8, no covenant not to compete is enforceable if the employer discharges the employee without providing severance benefits or another monetary payment, unless the discharge is for cause.
This is a meaningful limit in a state where most employment ends without any stated reason at all. Virginia follows the default rule of Virginia at-will employment, under which either side can end the relationship at any time, so a great many separations are discharges without cause. Under subsection C, each of those discharges strips the non-compete of effect unless the employer pays something.
The statute attaches a disclosure requirement to that payment. The severance benefits or other monetary payment have to be disclosed when the covenant is signed, not negotiated at the exit interview. An agreement that is silent on the point at signing does not satisfy the subsection. Severance is separate from wages already earned, which are governed by Virginia final paycheck law and are owed regardless of what the covenant says.
What Virginia employers can still enforce
The statute is narrower than a general ban on post-employment restrictions, and subsections H and I list what survives.
Nondisclosure agreements are untouched. An employer may still prohibit a departing employee from taking, misappropriating, or sharing trade secrets and proprietary or confidential information. Trade secret status is defined separately in Virginia’s Uniform Trade Secrets Act.
Sale-of-business covenants involving health care professionals also survive, but only within limits. When a transaction includes the sale of all or substantially all of the operating assets and goodwill of a health care professional’s business entity, or of a division, subsidiary, or ownership interest in it, buyer and seller may agree to a restrictive covenant provided it is reasonable in scope, duration, and geographic area.
Employers of health care professionals keep two further tools. They may require repayment of recruitment-related costs, including relocation expenses, signing or retention bonuses, and training expenses, from a professional who leaves after fewer than five years. They may also impose a customer non-solicitation clause, which the statute directs courts to construe narrowly: it reaches only customers the professional had material contact with during employment, and only products or services substantially similar to the employer’s. Such a clause cannot stop a departing professional from telling a patient that the professional is still practicing, where, and that the patient may choose their own provider.
For employees outside the protected categories, the statute leaves the older common-law framework in place. Virginia courts treat a covenant not to compete as a restraint on trade, construe it against the employer who drafted it, and enforce it only where the restriction is no broader than necessary to protect a legitimate business interest, does not unduly burden the employee’s ability to earn a living, and does not offend public policy. The reasonableness vocabulary the General Assembly used in subsection H of Va. Code § 40.1-28.7:8 reflects the same standard.
Penalties, the posting rule, and the deadline to sue
Enforcement runs on two tracks. The Commissioner of Labor and Industry can assess civil penalties, and the affected worker can sue.
Under subsection E of Va. Code § 40.1-28.7:8, an employer that violates the ban in subsection B or the severance rule in subsection C is subject to a civil penalty of $10,000 for each violation, paid to the Commissioner for deposit in the general fund.
A separate penalty covers notice. Subsection G requires every employer to post either a copy of the section or a Department-approved summary of it, in the same place other required state and federal employee notices appear. A first failure draws a written warning. A second draws a civil penalty of up to $250, and a third or later violation draws up to $1,000.
Bringing a claim over an unlawful non-compete
Subsection D gives the employee or health care professional a private right of action against a former employer, or against any other person, that attempts to enforce a prohibited covenant.
Identify which prohibition applies
The claim rests on a specific subsection. Low-wage status and health care professional status both trigger subsection B. A discharge without disclosed severance triggers subsection C. Each has different facts to establish, and the earnings calculation for low-wage status uses the 52 weeks before termination.
Fix the date the two-year clock started
The limitation period runs from the latest of the four dates listed in subsection D, so an enforcement attempt years after signing can restart the practical deadline. Documenting when the employer first threatened enforcement matters as much as documenting when the agreement was signed.
File in a court of competent jurisdiction
The statute does not create an administrative complaint process for the private claim. The action is filed in court. The Commissioner’s civil penalty track under subsections E and G runs separately and does not substitute for a private suit.
Identify the relief sought
A court that finds a violation has authority to void the covenant, enjoin the employer’s conduct, order liquidated damages, and award lost compensation and other damages. Subsection F entitles a prevailing plaintiff to reasonable costs, expert witness fees, and attorney fees.
Retaliation is addressed directly. An employer may not discharge, threaten, discriminate against, or retaliate against a low-wage employee or health care professional for bringing an action under the section.
Frequently asked questions
Does the Virginia ban apply to a non-compete signed before the law changed?
The prohibitions in subsection B reach conduct, not just signatures. An employer that enforces or threatens to enforce a covenant against a protected worker is acting in violation of the statute as it stands when the enforcement occurs. The limitation period in subsection D also runs from enforcement steps, not only from the signing date. The original ban took effect under the 2020 enactment, with the health care professional and severance provisions added by the 2025 and 2026 amendments.
Is a non-solicitation agreement the same thing as a non-compete?
Not under this statute. The definition covers agreements that restrain competition with a former employer generally. A clause limited to soliciting customers is treated separately, and for health care professionals subsection I expressly permits a narrowly drawn customer non-solicitation provision. A clause labeled a non-solicit but written broadly enough to bar competition can still fall within the definition, which looks at what the agreement does rather than its heading.
What happens to the rest of the contract if the non-compete is void?
The statute gives courts authority to void the covenant not to compete, and it leaves nondisclosure obligations intact under subsection H. Whether other terms of the same agreement survive depends on the contract’s own severability language and on ordinary contract principles, which the statute does not displace.
Does the Virginia law cover someone who works remotely for an out-of-state employer?
Coverage questions turn on which state’s law governs the agreement and where the work is performed. Employment agreements frequently contain a choice-of-law clause selecting another state. Whether that clause controls is decided by a court applying Virginia conflict-of-laws rules, which weigh the state’s public policy against enforcing restraints the General Assembly has prohibited.
Can an employer be penalized for a non-compete it never tried to enforce?
Yes. Subsection B prohibits entering into a covenant with a low-wage employee or health care professional, separately from enforcing or threatening to enforce one. Under Va. Code § 40.1-28.7:8(E), the $10,000 civil penalty applies to violations of subsection B, and the posting penalties in subsection G apply whether or not any covenant exists at the workplace.