Virginia Tightens Noncompete Rules With New Law Effective July 2026
Virginia Governor Abigail Spanberger signed SB 170, tightening noncompete rules, effective July 1, 2026.
Why it matters: The new restrictions require employers and counsel to revisit noncompete agreements, especially regarding terminations and low-wage staff. Failure to comply could trigger civil liability and penalties for corporate employers.
- SB 170 renders noncompetes unenforceable if employees are discharged without cause and not given severance or other monetary compensation.
- Employers face $10,000 civil penalties per violation if they enforce unlawful noncompete agreements.
- The law does not define 'cause' for termination, leaving legal ambiguity.
- Provisions apply to agreements entered, amended, or renewed on or after July 1, 2026.
Virginia continues to restrict the use of noncompete covenants, with Governor Abigail Spanberger signing Senate Bill 170 into law on April 13, 2026. The changes specifically target protections for employees discharged without cause and further limit enforceability for low-wage earners.
- Under SB 170, employers cannot enforce noncompete agreements on employees terminated without cause unless they provide severance pay or similar compensation. However, 'cause' remains undefined in the statutory language, raising potential disputes over applicability.
- The bill keeps intact exceptions for nondisclosure agreements intended to protect trade secrets or proprietary/confidential information.
- Violations carry a civil penalty of $10,000 per incident, increasing financial risk for companies slow to adapt agreements and policies.
- The law covers all newly entered, amended, or renewed agreements as of July 1, 2026. Existing contracts remain untouched unless modified after that date.
- Employers must display a copy or summary of the law in locations where other employee legal notices are posted, per the Virginia Department of Labor and Industry's requirements.
Virginia's previous legislative efforts barred noncompetes for low-wage and non-exempt employees. SB 170 extends these employment protections, a move Governor Spanberger said is "about making sure that when these laws take effect, they work." (read statement)
The latest update does not alter coverage for nondisclosure agreements or contracts predating July 1, 2026. Legal and HR teams should assess employment agreements ahead of the effective date to avoid costly violations and litigation risk.
By the numbers:
- $10,000 — civil penalty per violation for unlawful enforcement of noncompete agreements.
- $1,507.01 — average weekly wage in Virginia in 2026, threshold for low-wage employee status.
- July 1, 2026 — effective date of SB 170’s new provisions.
Yes, but: The law does not clarify what qualifies as 'cause' for termination, creating uncertainty for employers and employees.
What's next: Employers must update templates and post required notices before July 1, 2026, to comply with SB 170.