Virginia Tightens the Screws on Non-Competes – Again

Why It Matters

The change raises litigation risk and compliance complexity, aligning Virginia with a growing national trend restricting non‑competes.

Key Takeaways

• Non‑competes unenforceable without severance for terminated employees
• Severance disclosure required at agreement execution
• Applies to all employees, no low‑wage exemption
• No retroactive effect; July 1 2026 start date
• Employees gain two‑year private right of action

Pulse Analysis

Virginia has long been a outlier in the United States for its stringent stance on post‑employment covenants, and Senate Bill 170 pushes that trajectory even further. By tying enforceability to the provision of severance—or a clear disclosure thereof—the legislation mirrors recent reforms in Massachusetts, Nevada, and Washington that protect workers dismissed without cause. The bill’s language is deliberately broad, covering every employee regardless of salary level and omitting any carve‑out for business‑sale transactions. This alignment with a national wave signals that employers can no longer rely on traditional non‑compete templates in the Commonwealth.

The practical fallout for Virginia companies is immediate. Any non‑compete signed after July 1, 2026 must contain an explicit severance clause, and the definition of ‘for‑cause’ termination will become a critical drafting battleground. Failure to meet these conditions opens the door to a private right of action, allowing employees to sue within two years and potentially secure injunctive relief and liquidated damages. Consequently, legal teams must audit existing agreements, adjust severance policies, and prepare for heightened litigation exposure, especially in industries with frequent turnover.

To navigate this evolving landscape, employers should engage experienced employment counsel before revising any restrictive covenant. Proactive steps include tightening the ‘cause’ definition, documenting severance offers contemporaneously with the non‑compete, and establishing clear internal protocols for termination decisions. Monitoring parallel legislative efforts in Texas, Michigan, and other states is also prudent, as a patchwork of state‑level reforms could soon affect multi‑state operations. Ultimately, a disciplined approach to contract design and severance strategy will mitigate risk while preserving the ability to protect legitimate business interests.