Virginia’s Noncompete Ban Just Got Bigger: A Virginia Business Law Attorney’s Guide to Fixing Your Agreements

Employers who bring their restrictive covenants to a Virginia business law attorney tend to be surprised by the same thing: the agreement drafted a few years ago may now be void, and using it can trigger a civil penalty. Virginia’s ban on noncompetes for low-wage employees took effect July 1, 2020, and an amendment effective July 1, 2025 widened it substantially. The new dividing line has little to do with what most owners picture when they hear “low-wage.”

What changed in Virginia’s noncompete law?

Under Va. Code § 40.1-28.7:8 as amended, any employee who is entitled to overtime pay under the federal Fair Labor Standards Act is treated as a low-wage employee, regardless of how much that person earns. Before the amendment, the analysis turned almost entirely on average weekly earnings.

A nonexempt operations coordinator earning $92,000 a year who receives overtime for hours past 40 now sits inside the protected class, as does a nonexempt technician or dispatcher whose pay would have cleared the old threshold easily. The amendment applies to covenants entered into on or after July 1, 2025, so earlier agreements are measured against the prior version of the statute, though they still must survive the wage test and Virginia common law.

Who counts as a low-wage employee now?

Two separate tests apply, and an employee only has to meet one to be protected.

The earnings test asks whether average weekly earnings over the preceding 52 weeks fall below Virginia’s average weekly wage, a figure recalculated annually under Va. Code § 65.2-500(B). It has been running near $1,460 per week, roughly $76,000 annualized, and rises most years, so confirm the current published number before relying on it.

The overtime test asks only whether the person is nonexempt under the FLSA. Interns, students, apprentices, and trainees are covered as well, along with independent contractors paid below the median hourly wage for all Virginia occupations as reported by the U.S. Bureau of Labor Statistics.

One carve-out survives: employees whose earnings come in whole or predominant part from sales commissions, incentives, or bonuses fall outside the definition. Read that narrowly. A salesperson on a $70,000 base with a $30,000 bonus opportunity is not obviously excluded.

Misclassification is where this gets expensive. Labeling a position exempt in a handbook does not make it exempt. If the duties do not satisfy an FLSA exemption, the employee is owed overtime and the noncompete is void by operation of statute.

What happens if a Virginia business law attorney finds a void covenant in your files?

The exposure runs in two directions. The Commissioner of Labor and Industry may assess a civil penalty of $10,000 per violation. The employee may also sue within two years, and a court can void the covenant, enjoin enforcement, and award damages, lost compensation, liquidated damages, and reasonable attorney fees and costs, meaning the employer can end up funding the departing employee’s litigation.

A separate notice obligation quietly generates penalties of its own. Employers must post the statute or a summary approved by the Virginia Department of Labor and Industry with other required workplace notices. A first failure draws a written warning, a second a $250 penalty, and subsequent violations $1,000 each.

What can you still enforce against a protected employee?

Confidentiality agreements remain available, and the statute does not disturb claims under the Virginia Uniform Trade Secrets Act, Va. Code § 59.1-336 et seq. That is often the more useful tool anyway, since it protects the thing you actually care about rather than the employee’s ability to earn a living.

Customer relationships get partial protection. The statute provides that a covenant may not stop an employee from serving a customer of the employer so long as the employee does not initiate contact with or solicit that customer, which leaves room for a nonsolicitation provision aimed at active outreach. Agreements barring recruitment of former coworkers are not addressed by the statute and are judged under ordinary common law reasonableness.

Would your noncompete hold up even for a high earner?

Clearing the statute is only the first hurdle. Virginia courts construe restraints strictly against the employer, put the burden of proof on the employer, and require reasonableness in duration, geographic reach, and scope of restricted activity. Judges here also decline to rewrite an overbroad covenant into an enforceable one, so a single defective clause can sink the whole provision.

In Home Paramount Pest Control v. Shaffer (2011), the Supreme Court of Virginia struck down a one-year covenant because its functional scope barred the former employee from working for a competitor in any capacity, even in an unrelated role. Assurance Data, Inc. v. Malyevac (2013) held that enforceability is too fact-dependent to resolve on a demurrer, so an employer defending its own agreement should expect discovery and real legal fees.

Federal law matters less than it appeared in 2024. The FTC’s nationwide noncompete rule was set aside in Ryan LLC v. FTC, and the agency dropped its appeals in September 2025 in favor of case-by-case enforcement, leaving Virginia law to control the question.

Where to start an audit

Sort your workforce by FLSA classification, then pull every agreement with a restrictive covenant and note its signing date. Nonexempt roles need the noncompete language replaced with confidentiality and narrowly drawn nonsolicitation terms. Since Virginia courts will not trim an overbroad clause for you, separate agreements by role tier beat one template with a severability clause bolted on. Confirm the posting is up, update offer letter templates, and weigh whether garden leave or stronger trade secret hygiene protects the business better than a covenant a court may never enforce.

Virginia has narrowed employer noncompete rights steadily since 2020, and the 2025 amendment moved the line far enough that most pre-2025 templates need revision rather than review. If your agreements have not been examined since the overtime standard took effect, having a Virginia business law attorney audit your covenants and posting compliance costs a fraction of defending a void provision later. Reach out through the firm’s website to schedule a review of your employment agreements.