Effective July 1, 2026, Virginia enacted House Bill 627, expanding its restrictions on covenants not to compete. The law extends existing protections — previously limited to low‑wage employees — to now also cover a broad category of licensed health care professionals.
Expansion of Non‑Compete Prohibitions
Virginia law already prohibited employers from entering into or enforcing non‑compete agreements with low‑wage employees. HB 627 builds on that framework by extending the prohibition to health care professionals, including individuals licensed by boards such as:
- Medicine
- Nursing
- Counseling
- Optometry
- Psychology
- Social Work
As a result, employers are now prohibited from:
- Entering into new non‑compete agreements with covered individuals;
- Enforcing new non‑compete provisions; or
- Threatening to enforce such restrictions.
This marks a significant expansion of employee mobility protections in the state.
Existing Agreements Grandfathered
Importantly, the legislation includes a key limitation on its reach:
- The law does not invalidate or alter any contracts, covenants, or agreements entered into or renewed prior to July 1, 2026.
This means existing non‑compete agreements with health care professionals (or low‑wage workers) executed before the effective date may remain enforceable, subject to other applicable legal constraints.
Permitted Exceptions and Employer Protections
Although the law broadly restricts non‑compete agreements, it preserves certain exceptions and alternative protections for employers.
Specifically:
- Business sale transactions in the health care context may still involve non‑compete provisions;
- Employers may require repayment of recruitment‑related costs for health care professionals under defined conditions; and
- Employers may enforce anti‑solicitation provisions, including restrictions on soliciting patients or employees.
These carve‑outs allow employers to protect legitimate business interests without relying on full non‑compete restrictions.
Changes to Agreement Structures
The legislation also reorganizes statutory provisions and clarifies that:
- Nondisclosure agreements remain permissible, subject to specified exceptions; and
- Employers may continue to use contractual mechanisms that do not function as prohibited non‑competes.
This reflects a broader trend toward more narrowly tailored restrictive covenants.
Posting Requirements
Employers must comply with updated notice obligations.
Specifically, employers are required to:
- Post a copy of the law or an approved summary; and
- Display it in the same location as other required workplace notices.
Failure to meet these requirements may result in escalating penalties.
Penalties and Enforcement
The law includes significant enforcement mechanisms and exposure:
- A civil penalty of $10,000 per violation for unlawful non‑compete practices;
- Additional penalties for posting violations:
- Written warning for a first offense;
- Up to $250 for a second violation; and
- Up to $1,000 for subsequent violations; and
- Potential court‑ordered remedies, including:
- Liquidated damages;
- Lost compensation; and
- Attorney’s fees and costs.
Employers Impacted
The amendments affect health care employers and organizations (e.g., hospitals, clinics, medical practices). These employers will need to reassess both existing and new contractual arrangements.
Employer Takeaway
With an effective date of July 1, 2026, Virginia employers should act promptly to ensure compliance. Key steps include:
- Reviewing employment agreements to remove or revise non‑compete provisions for covered workers in new or renewed contracts;
- Evaluating alternative protections such as non‑solicitation, confidentiality, and repayment agreements;
- Assessing which existing agreements are grandfathered under the July 1, 2026 cutoff; and
- Updating required workplace postings.
The expansion underscores a continued trend toward limiting non‑competes — particularly in high‑demand sectors like health care — while preserving more targeted contractual protections