Virginia to ban non-competes for non-exempt employees, effective July 1, 2025

Key changes

Under existing law, Virginia prohibits employers from entering into, enforcing, or threatening to enforce a “covenant not to compete” with any “low-wage employee.” “Covenant not to compete” means a “covenant or agreement […] between an employer and employee that restrains, prohibits, or otherwise restricts an individual's ability, following the termination of the individual's employment, to compete with his former employer.” “Low-wage employee” generally refers to an employee who earns less than the Commonwealth’s average weekly wage. In 2025, this amount is $1,463.10 per week, or approximately $76,081 annually.

Under the amended law, the definition of “low-wage employee” is expanded to include employees who are eligible for overtime pay under the FLSA—i.e., “nonexempt” employees. Employees are considered “non-exempt” unless they qualify for one of the FLSA’s exemptions, such as the so-called “white-collar” exemptions for executive, administrative, professional, outside sales, and computer employees. 

The practical effect of the amended law is to narrow the group of employees with whom non-competition agreements may lawfully be entered into or enforced in Virginia. In particular, employees who do not qualify for one of the FLSA overtime exemptions will now fall squarely within the ban, regardless of how much they earn. 

The amended law applies to non-competition agreements entered into or renewed on or after July 1, 2025. Agreements entered into prior to that date are unaffected.

Enforcement and penalties

The law’s enforcement provisions remain unchanged.

Low-wage employees are entitled to bring a civil action against an employer that attempts to enforce an unlawful non-competition agreement. If they prevail, the court may void the non-compete agreement and order appropriate relief, including requiring payment of liquidated damages and awarding lost compensation, damages, and attorneys’ fees and costs. Employers that violate the law may also be subject to a civil penalty of US$10,000 for each violation. 

Required posting

Employers are required to post a copy of the law (or a summary approved by the Virginia Department of Labor and Industry (DOLI)) in the same location where other employee notices required by state or federal law are posted. Failure to comply with this requirement may result in civil penalties, up to US$250 for a second violation, and up to US$1,000 for a third and each subsequent violation. Absent issuance of a DOLI-approved summary, employers may post this version of the amended law beginning July 1, 2025. 

Takeaways for employers

With the July 1 effective date quickly approaching, Virginia employers should take the following steps:

• Assess template non-competition agreements to ensure compliance with the amended law, including the 2025 low-wage threshold, for agreements entered into or renewed on or after July 1, 2025.
• Consider whether to conduct a privileged audit to evaluate existing FLSA classifications. Notably, employees classified as exempt may attempt to avoid application of their non-competition agreements in litigation by arguing that they were misclassified (and potentially may bring a counterclaim under wage and hour or other laws based on alleged misclassification). Employers would be wise to firm up classification status to push back on such arguments and counterclaims.
• Train HR and business teams on the new requirements.
• Ensure that the required notice is properly posted. 

For more information regarding Virginia or other state non-competition statutes, please contact one of the authors of this article or the Hogan Lovells lawyer with whom you work.

Authored by George W. Ingham, Amy Folsom Kett, and Saydee Schnider.