Virginia Tightens Noncompete Laws With Sweeping 2026 Amendments

Virginia enacted new legislation further restricting noncompete agreements, effective July 1, 2026.

Virginia has taken another major step to limit noncompete agreements. Senate Bill 170, signed by Governor Abigail Spanberger on April 13, 2026, introduces sweeping new restrictions effective July 1, 2026.

• Noncompetes will be unenforceable against employees terminated without cause unless the employer provides severance pay or previously disclosed monetary compensation.
• The provisions apply to all employees entering into noncompetes after July 1, 2026, not just low-wage or non-exempt employees.
• According to Sen. Jeremy McPike, "The problem that we're solving is with the constituents who have been terminated, not for cause... but they all still had a noncompete in place. So, they're essentially out in the street."
• Employers found in violation—for example, imposing noncompetes on low-wage employees or on those terminated without cause/severance—face $10,000 civil penalties per violation.
• The law allows employees to bring private civil actions for alleged unfair or unlawful noncompete enforcement.

There are important parallel changes for the franchise sector. The amended Virginia Retail Franchising Act outlaws post-termination noncompete clauses in new franchise agreements and bars out-of-state choice-of-law provisions. Existing agreements are grandfathered if signed, extended, or amended before July 1, 2026.

Employment law experts call the changes "seismic" for Virginia and part of a broader trend toward employee-friendly policies. Tom Spiggle, an employment attorney, noted employers have historically used noncompetes coercively—even after firing workers without cause.

However, the legislation leaves open questions regarding what qualifies as "cause" for termination, and the precise requirements for severance to preserve a noncompete's enforceability.

Yes, but: The legislation does not clarify what constitutes 'cause' for termination or specify the severance required to enforce a noncompete, introducing ambiguity for employers.