Virginia Non-Compete Agreement Template
Create a Virginia non-compete that complies with Va. Code § 40.1-28.7:8, which prohibits covenants for low-wage employees, all FLSA non-exempt workers, and employees discharged without cause without severance.
AI-generated draft for review. Not legal advice. Starting at $19.
Legal Requirements in Virginia
An employer may not enter into, enforce, or threaten to enforce a non-compete with a low-wage employee, defined as one earning less than the Commonwealth's average weekly wage ($1,507.01/week, about $78,364 annually for 2026) (Va. Code § 40.1-28.7:8).
As of July 1, 2025, all employees entitled to overtime under the FLSA (i.e., non-exempt employees) are treated as low-wage and cannot be bound by a non-compete, regardless of total pay.
As of July 1, 2026 (SB 170), a non-compete may not be enforced against an employee discharged without cause who does not receive severance or other monetary payment.
The prohibition does not bar agreements restricting the disclosure of trade secrets or proprietary information (Va. Code § 40.1-28.7:8(A)).
Employers must post a copy of the statute or an approved summary in the workplace; failure to post can draw a civil penalty (Va. Code § 40.1-28.7:8(D)).
Key Statutes & Regulations
- Va. Code § 40.1-28.7:8 (Covenants not to compete prohibited for low-wage employees; 2020, as amended)
- Va. Code § 40.1-28.7:8(A) (definition of low-wage employee; trade-secret exception)
- Va. Code § 40.1-28.7:8(C) (civil penalty up to $10,000 per violation)
- Va. Code § 40.1-28.7:8(D) (workplace posting requirement)
- Virginia SB 170 (2026) (no-cause discharge without severance bars enforcement, effective July 1, 2026)
Common Pitfalls
- •Imposing a non-compete on any FLSA non-exempt employee, which is prohibited regardless of how much they earn (effective July 1, 2025).
- •Using a fixed dollar threshold instead of Virginia's annually updated average weekly wage figure.
- •Attempting to enforce a covenant against an employee fired without cause and without severance on or after July 1, 2026.
- •Failing to post the required statutory notice in the workplace.
Local Terminology
- Low-wage employee
- Under Va. Code § 40.1-28.7:8, a worker earning less than the Commonwealth's average weekly wage ($1,507.01/week for 2026) or any employee entitled to FLSA overtime (non-exempt).
- Covenant not to compete
- An agreement restraining a former employee from competing, but not one merely protecting trade secrets or barring solicitation of customers the employee did not contact first.
- Average weekly wage
- The annually published statewide figure used to set the low-wage threshold under Virginia law.
- Discharge without cause
- A termination not for the employee's misconduct; under SB 170 (effective July 1, 2026), a non-compete cannot be enforced against such a worker absent severance.
How Virginia Differs
Virginia's ban turns on FLSA exempt/non-exempt status, not just a dollar figure, so most hourly and overtime-eligible workers cannot be bound at all.
The average-weekly-wage threshold is recalculated annually, unlike fixed statutory dollar amounts elsewhere.
Virginia exposes employers to a $10,000 civil penalty per violation enforced by the Attorney General (Va. Code § 40.1-28.7:8(C)).
As of July 1, 2026, a no-cause termination without severance independently defeats enforcement, a protection few states match.
A prevailing employee can recover liquidated damages, lost compensation, and attorney's fees in a private suit.
Frequently Asked Questions
Who cannot be bound by a non-compete in Virginia?
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Low-wage employees cannot be bound under Va. Code § 40.1-28.7:8. As of July 1, 2025, that includes any FLSA non-exempt (overtime-eligible) employee, regardless of pay, plus anyone earning below the state average weekly wage ($1,507.01/week, about $78,364 annually, for 2026).
Can Virginia enforce a non-compete after a layoff?
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Often not. Under SB 170, effective July 1, 2026, an employer may not enforce a non-compete against an employee discharged without cause who receives no severance or other monetary payment. This is in addition to the existing ban covering low-wage and FLSA non-exempt employees.
What is the penalty for an unlawful Virginia non-compete?
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The Attorney General may impose a civil penalty of up to $10,000 per violation under Va. Code § 40.1-28.7:8(C). A wronged employee can also sue privately to void the covenant and recover liquidated damages, lost compensation, and reasonable attorney's fees and costs.
Does the FTC ban control Virginia non-competes?
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No. The FTC's 2024 rule was vacated in Ryan LLC v. FTC and removed from federal regulations in February 2026. Virginia non-competes are governed by state law, principally Va. Code § 40.1-28.7:8, which independently bans covenants for low-wage and non-exempt workers.
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