Virginia's Near-Total Ban on Non-Compete Agreements Takes Effect July 2026
Effective July 1, 2026, Virginia's SB 170 significantly restricts the use of non-compete agreements for nearly all workers. The law specifically protects all non-exempt employees and even exempt employees who are discharged without cause, unless specific severance conditions are met. This sweeping change aims to promote worker mobility and fair competition.
SB 170 Non-Compete Ban (July 2026)
Prohibits non-compete clauses for non-exempt workers and discharged exempt workers (unless severance is paid).
What those rules do as a Virginia shift is created.
Teambridge's platform is designed to navigate the complexities of Virginia's evolving labor laws, including the new non-compete restrictions. When you create shifts and manage employees in Virginia, our system automatically applies the relevant protections to ensure compliance and mitigate risk.
Non-Compete Ban Enforcement
For all non-exempt workers, Teambridge ensures that any non-compete clauses in employment agreements are flagged as unenforceable and not presented or relied upon, protecting worker mobility from the outset.
Discharged Exempt Worker Protection
If an exempt employee is discharged without cause, Teambridge's offboarding workflows will prompt for verification of severance payment to determine the enforceability of any existing non-compete, ensuring compliance with SB 170's specific conditions.
Agreement Review & Flagging
Teambridge's document management features will automatically review and flag any employment agreements containing non-compete provisions for non-exempt workers or provisions that do not meet the severance exception for discharged exempt workers, alerting you to potential non-compliance.
Stop worrying about Virginia labor law.
Teambridge handles the tricky parts of compliance, so you can focus on your business.
Virginia's comprehensive non-compete ban for most workers and discharged exempt employees.
Effective July 1, 2026, Virginia Code § 40.1-28.7:8 (as amended by SB 170) dramatically limits the enforceability of non-compete agreements. The law broadly protects "low-wage employees" (defined as those earning less than the state's average weekly wage) and extends protections to exempt employees who are terminated without cause, unless they receive specific severance benefits. This legislation aims to foster greater labor mobility within the Commonwealth.
Virginia Code § 40.1-28.7:8. Noncompete agreements prohibited for low-wage employees and under certain circumstances for other employees.
A. No employer shall enter into, enforce, or threaten to enforce a noncompete agreement with any low-wage employee.
B. No employer shall enter into, enforce, or threaten to enforce a noncompete agreement with any other employee who is discharged by the employer without cause, unless the employer provides the employee with severance pay at the time of discharge equal to at least two weeks of the employee's regular wages.
C. For the purposes of this section: "Low-wage employee" means an employee whose average weekly earnings are less than the average weekly wage of the Commonwealth as determined by the Virginia Employment Commission for the preceding year.
D. Nothing in this section shall be construed to prohibit an employer from entering into a non-disclosure agreement or a non-solicitation agreement with an employee.
Scope of "Low-Wage Employee"
The definition of "low-wage employee" is tied directly to the average weekly wage in Virginia, as published annually by the Virginia Employment Commission. For 2026, this threshold is anticipated to cover a significant portion of the workforce, effectively banning non-competes for all non-exempt workers and many entry-to-mid level exempt employees. Employers must regularly monitor this threshold to ensure compliance.
Severance Exception for Discharged Exempt Workers
A key provision of SB 170 allows non-compete agreements to remain enforceable for exempt employees who are discharged without cause, provided the employer pays at least two weeks of the employee's regular wages as severance at the time of discharge. This creates a specific carve-out, but employers must ensure the severance is clearly designated and timely paid to invoke this exception. The law does not protect employees terminated for cause or those who resign voluntarily.
Teambridge ensures your Virginia non-compete compliance is effortless.
With Teambridge, navigating Virginia's strict non-compete regulations becomes a background process, not a compliance headache. Our system continuously monitors changes to the law and automatically adjusts your employment practices, providing peace of mind and reducing legal risk.
Real-time updates to wage thresholds.
Teambridge continuously tracks the Virginia Employment Commission's average weekly wage, automatically updating the "low-wage employee" definition within your system to ensure non-compete restrictions are always applied correctly.
Non-compete clauses flagged and suppressed.
Our platform automatically reviews employment agreement templates. Any non-compete clauses that would be unenforceable under SB 170 for a given employee profile are flagged and suppressed from use, preventing accidental violations.
Conditional severance prompts for exempt staff.
For exempt employees, Teambridge's offboarding process intelligently prompts for severance payment details when a "without cause" termination is indicated, ensuring that the non-compete exception is correctly leveraged or bypassed based on the law.
Comprehensive compliance records.
All actions and decisions related to non-compete enforceability are logged and auditable within Teambridge, providing a clear record of your compliance efforts should questions arise.
People also ask.
What is the effective date of Virginia's new non-compete ban (SB 170)?
Virginia's SB 170, which significantly restricts non-compete agreements, becomes effective on July 1, 2026. Employers should review and update their employment agreements and policies well in advance of this date.
Who is considered a "low-wage employee" under SB 170?
A "low-wage employee" is defined as an employee whose average weekly earnings are less than the average weekly wage of the Commonwealth, as determined annually by the Virginia Employment Commission. This threshold is updated each year and employers should consult the VEC for the most current figure.
Can I still use non-compete agreements for my exempt employees?
For exempt employees, non-compete agreements may still be enforceable under SB 170, but with a critical caveat. If an exempt employee is discharged without cause, the non-compete is only enforceable if the employer provides severance pay equal to at least two weeks of the employee's regular wages at the time of discharge. If the employee resigns or is terminated for cause, this severance condition does not apply.
Does SB 170 affect non-disclosure or non-solicitation agreements?
No, SB 170 specifically states that it does not prohibit an employer from entering into or enforcing non-disclosure agreements (NDAs) or non-solicitation agreements with employees. The law's focus is solely on restrictive covenants that prevent an employee from working for a competitor or starting a similar business.
What are the penalties for violating Virginia's non-compete ban?
Violations of Virginia Code § 40.1-28.7:8 can lead to civil penalties, including fines up to $1,000 for each violation. Employees may also have a private right of action to sue for damages, including lost wages, reasonable attorneys' fees, and costs. The non-compete agreement itself would be deemed void and unenforceable.
How does Teambridge help with SB 170 compliance?
Teambridge automates compliance by tracking the low-wage threshold, flagging unenforceable non-compete clauses in employment documents, and guiding employers through the necessary steps (like offering severance) for discharged exempt employees to maintain non-compete enforceability where permitted. This ensures proactive adherence to the law.