Virginia’s Expanded Noncompete Ban Now in Effect

If you’ve been paying any attention to labor market trends lately, you’ll likely have heard of noncompete agreements — a type of employment contract that generally prohibits the covered party from accepting employment with a competitor or starting a competing company for a certain amount of time after their employment ends. You’ll also know that such agreements have become increasingly disfavored in both law and policy, with many states, including Virginia, working to curtail or outright ban them. Virginia took another step toward that goal earlier this year when Governor Youngkin signed into law an expansion to the original 2020 ban. Here, our Norfolk noncompete lawyers explain everything you need to know about the expanded ban, which is now in effect.

The Basics of Noncompete Agreements

Generally, noncompete agreements (or noncompete clauses within larger contracts) place limits on how and where a former employee can work after their employment relationship with their current employer comes to an end. They typically apply only to companies in the former employer’s industry within a certain geographic area for a limited amount of time. For example, a noncompete clause for a veterinarian in Richmond might prohibit her from working for any other veterinarian within 100 miles of Richmond for one year after termination or resignation.

Virginia courts traditionally have enforced noncompete agreements provided that they are:

Narrowly drafted to protect a legitimate business interest
Not unduly harsh or burdensome in curtailing the employee’s ability to earn a living
Reasonable in light of public policy

Assurance Data, Inc. v. Malyevac, 286 Va. 137 (2013)

Courts evaluate the reasonableness of noncompete agreements on a case-by-case basis, taking into account all relevant considerations and balancing the interests of both the employer and employee. As such, it’s difficult to make blanket statements about their enforceability. For more specific questions about a noncompete agreement, please contact a Norfolk noncompete lawyer.

Virginia’s Existing Noncompete Ban

In 2020, Virginia enacted Virginia Code § 40.1-28.7:8, which prohibits the use of “covenants not to compete” for low-wage employees. A “low-wage employee” under the statute is one whose average weekly earnings are less than the average weekly wage in the Commonwealth as a whole. (The average weekly wage is recalculated each year, but as of the date of publication, it is $1,463.10.) Low-wage employees also include interns, students, apprentices, or trainees employed, with or without pay, in a trade or occupation to gain work or educational experience.

Covered employees are entitled to bring civil actions against employers who attempt to enforce unlawful noncompete agreements. Successful plaintiffs are entitled to all appropriate relief, including liquidated damages, lost compensation, damages, and reasonable attorney fees and costs. Employers who are found to be in violation may also be assessed a civil penalty of $10,000 per violation.

For more information about pursuing or defending a civil action under § 40.1-28.7:8, please speak to a Norfolk noncompete lawyer.

Virginia’s Expanded Noncompete Ban

In March 2025, Governor Youngkin signed into law an expansion of § 40.1-28.7:8. In addition to “low-wage employees” as described above, the ban now applies to any employee — regardless of their compensation — who is entitled to overtime pay under the Fair Labor Standards Act (FLSA) for any hours worked in excess of 40 per week. In common parlance, such employees are typically referred to as “non-exempt employees.” The updated noncompete ban took effect on July 1, 2025.

What’s a “Non-Exempt” Employee?

The FLSA is the federal law that requires most employers to pay their employees overtime (i.e., time and a half) for any hours worked in excess of 40 per week. Most employees in the U.S. fall into one of two categories for FLSA purposes:

Non-exempt employees generally are those who are engaged in non-managerial positions and are paid hourly.
Exempt employees generally are those who are engaged in executive, administrative, or outside sales positions, or in learned professions, and are paid salaries.

Readers should note that these are not rigid categories, and the line between exempt and non-exempt can often become blurred. The best way to determine whether you are correctly classified as exempt or non-exempt is to consult with a Norfolk noncompete lawyer.

Guidance for Employers and Employees

With all non-exempt employees now covered by Virginia’s noncompete ban, the landscape has shifted for both employers and employees.

Perhaps most importantly for employers, the updated provisions of § 40.1-28.7:8 do not apply retroactively; any noncompete agreements entered into prior to July 1 remain valid and enforceable so long as they otherwise are in compliance with the pre-2025 statute. However, new hires and renewed noncompete agreements after July 1, 2025, are subject to them. The statute also requires employers to post a copy of § 40.1-28.7:8 or an approved summary thereof as part of their required legal notices, so employers should update such postings to reflect the change in law.

Employees — especially those in the hiring process — should carefully scrutinize their employment documents for noncompete-type language. Remember, § 40.1-28.7:8 does not require the prohibited terms to be called “noncompete” clauses; it applies to any language that “restrains, prohibits, or otherwise restricts” an employee’s ability to compete with former employers. Employees should also assess whether the role for which they are being hired truly is exempt or non-exempt. It is not uncommon for employers to misclassify non-exempt employees as exempt employees to attempt to circumvent FLSA overtime requirements. With Virginia now prohibiting noncompete agreements for non-exempt employees, the temptation to misclassify may be even greater.

Make Your Next Move With the Help of a Norfolk Noncompete Lawyer

The law surrounding noncompete agreements is changing rapidly. Employers need to ensure that their employment contracts are in compliance with the latest updates to minimize their litigation risk, while employees should be aware of their rights under the updated laws. The best way to stay up to speed is to work with an experienced attorney. To get started, please contact a Norfolk noncompete lawyer at Pierce / Jewett by calling 757-624-9323 or using our online contact form.