Effective July 1, 2026, Virginia Senate Bill 170 further limits when employers may enforce covenants not to compete against workers, expanding Virginia’s already restrictive noncompete framework. The new law not only reinforces existing protections for low‑wage employees, but it also introduces discharge‑based limitations that apply more broadly to employees subject to noncompete agreements. Together, these changes continue Virginia’s shift toward narrowing the circumstances in which post‑employment restraints are enforceable.
Most notably, SB 170 provides that a covenant not to compete is unenforceable if an employer discharges an employee without providing severance benefits or other monetary payment, unless the discharge is for cause. To preserve enforceability in the event of a non‑for‑cause termination, employers must provide severance or another form of compensation and must disclose the severance benefits or monetary payment at the time the noncompete agreement is executed. This disclosure requirement is intended to ensure employees understand both the post‑termination restrictions and the compensation tied to their enforcement. The bill also broadens enforcement rights by allowing any employee (not just low‑wage employees) to bring a civil action if an employer attempts to enforce an unlawful noncompete.
The Commissioner may assess a civil penalty of up to $10,000 per violation for unlawful noncompete practices, including violations of the new discharge‑related restrictions. Employers must also post a copy of the statute or an approved summary in the same location as other required workplace notices. Failure to comply with the posting requirement carries escalating penalties, starting with a written warning and increasing up to $1,000 for repeat violations. In addition to administrative penalties, courts may order employers to pay liquidated damages, lost compensation, and reasonable attorney fees and costs to prevailing employees.