Virginia Adopts Sweeping Noncompete Ban Effective July 2026
Virginia passed SB170, banning noncompete agreements for most employees, effective July 1, 2026.
Why it matters: The law eliminates most noncompetes for all Virginia employees—not just low-wage workers—raising the stakes for compliance, employment contracting, and risk management in the state. In-house and employment counsel must review agreements, update notice postings, and prepare for possible litigation risks when the law takes effect.
- SB170 voids noncompete agreements for employees terminated without cause unless severance or monetary compensation is paid.
- Applies to all new, renewed, or amended agreements entered on or after July 1, 2026.
- Violations are subject to $10,000 civil penalties per incident, plus private lawsuits for damages and attorney fees.
- Employers must post notice of the law in the workplace or risk civil penalties up to $1,000.
Virginia Governor Abigail Spanberger signed SB170 into law on April 13, 2026, fundamentally changing the landscape for restrictive employment covenants statewide. The ban applies broadly—covering not just low-wage workers but all employees who enter into, amend, or renew noncompete agreements on or after July 1, 2026.
- The law makes noncompetes "void and unenforceable" for employees terminated without cause unless the employer provides severance pay or disclosed compensation. However, the statute does not define "cause."
- Notably, SB170 does not address whether the prohibition extends to non-solicitation agreements. In Sentry Force Security, LLC v. Barrera, the Virginia Court of Appeals ruled that reasonable non-solicitation covenants remain enforceable, so practitioners should distinguish these when reviewing agreements.
- The law authorizes employees to bring private civil actions for violations. Remedies may include injunctions, lost compensation, liquidated damages, and attorney fees. Each violation may also trigger a $10,000 civil penalty, assessed by the Virginia Department of Labor and Industry.
- Employers are required to provide notice of the new prohibitions in the workplace. Failing to post the required information may result in fines up to $1,000.
- Existing noncompete agreements (signed before July 1, 2026) are not affected. The statute is also silent regarding business sale noncompetes, so buyers and sellers in M&A transactions in Virginia should consult counsel regarding continuing gaps.
This law follows national trends, such as the FTC's recent noncompete ban proposal, signaling increased scrutiny of restrictive covenants. In-house counsel should reassess current policies and contracts ahead of the law’s effective date.
By the numbers:
- $10,000 — Civil penalty per violation of SB170's noncompete provisions.
- $1,000 — Maximum fine for failing to post required workplace notice.
- July 1, 2026 — Effective date for new, renewed, or amended noncompetes covered by SB170.
Yes, but: The law does not define 'cause' for termination and is silent on noncompete agreements executed as part of the sale of a business, introducing unresolved issues for employers.
What's next: Employers must prepare to comply before July 1, 2026, by reviewing all new and renewed noncompete agreements and updating workplace postings.