Virginia Approves SB170: Expanded Restrictions on Enforcement of Noncompetes Take Effect July 1, 2026

As we reported last month, Virginia lawmakers passed Senate Bill 170 imposing additional restrictions on employee noncompetes in the Commonwealth.

On April 13, 2026, Governor Abigail D. Spanberger signed Senate Bill 170 (“the Act”) into law. The Act will take effect July 1, 2026 and will prohibit enforcement of a noncompete if the employer discharges the employee without cause and does not provide the employee with severance benefits or other monetary payment. The Act applies to agreements entered into, amended, or renewed on or after July 1, 2026.

Overview of the Act

The Act builds on Virginia’s existing limitations on noncompetes that prohibits employers from entering into or enforcing noncompetes against “low-wage employees.” Thus, current Virginia law prohibits enforcement of noncompetes against (i) employees whose average weekly earnings falls below the Commonwealth’s average weekly wage, (ii) certain employees, such as interns, whose hourly rate is less than Virginia’s median hourly wage for all occupations for the preceding year, as reported by the U.S. Bureau of Labor Statistics, and (iii) non-exempt employees. 

Although Virginia’s non-compete law does not expressly address non-solicitation agreements, in January 2026, the Court of Appeals held that the Commonwealth’s restrictions extend to employee non-solicitation clauses and provisions barring workers from accepting unsolicited customer business—but employers may enforce agreements prohibiting low-wage workers from directly soliciting customers. Because SB 170 leaves the definition of “covenant not to compete” unchanged, this distinction by the Court of Appeals should carry forward under the amended Act.

Beginning July 1, 2026, in addition to the restrictions for “low-wage employees,” the Act renders noncompete agreements void and unenforceable against an employee who was discharged from employment without cause, unless the employer provides the employee a severance benefit or other monetary payment. Employers are required to disclose the severance benefit or monetary payment upon execution of the noncompete agreement. Therefore, noncompete agreements will remain enforceable against (1) employees who were discharged for cause so long as the employee was not a “low-wage” employee, and (2) employees who were discharged without cause so long as the employee was not a “low-wage” employee and the employee receives severance benefits or other monetary payment that is disclosed in the noncompete agreement.

The Act does not define a minimum severance amount or clear standards for what qualifies as sufficient severance, leaving this issue open to future guidance from the Virginia Department of Labor or case law. Additionally, employers will now face liability for attempting to enforce noncompete agreements against “low-wage” employees or against employees terminated without cause who did not receive severance or other compensation. The Act allows employees to bring civil actions, and courts may void unlawful agreements, issue injunctions, and award damages, attorneys’ fees, and up to $10,000 per violation.

Employer Takeaways

With the July 1, 2026 effective date quickly approaching, employers should take proactive steps now to mitigate risk:

1. Revise Noncompete and Non-Solicitation Agreements & Severance Practices: Employers should revise their noncompete and non-solicitation agreements for employees located in Virginia for compliance with the Act, including specifying the payment of severance or other monetary payment if the employee is discharged without cause. Employers should provide clear severance benefits or similar compensation where appropriate, as enforceability of those restrictions after termination will depend on it if an employee is discharged without cause.  Employers should also consider defining termination “for Cause” within their noncompete and covered non-solicitation agreements.
2. Review Employee Classifications: Employers should ensure employees are properly classified, as noncompetes and covered non-solicitation provisions cannot be used for overtime-eligible (low-wage) employees.
3. Update Workplace Posters: Employers should update their workplace postings to include a copy or approved summary of the Act with their other workplace notices to avoid fines of up to $1,000.

The Act reflects a continued trend in Virginia—and nationally—toward restricting the enforceability of noncompetes. Employers operating in Virginia should act now to align their agreements and practices with this new legal landscape before the July 1, 2026 deadline.

Employers with employees located in multiple jurisdictions should also consider discussing with counsel implementing a restrictive covenant agreement that complies with the applicable law where each employee works.