2026 Virginia Noncompete Law: What Employers Need to Know

Virginia’s new noncompete law — effective July 1, 2026 — bans noncompete agreements if an employer terminates an employee without cause and does not provide severance benefits or other monetary compensation. Employers should start preparing for compliance now to avoid costly penalties.

Key Changes to Virginia Noncompete Law Effective July 1, 2026

Virginia’s General Assembly recently passed Senate Bill 170 (SB170), which becomes effective for any noncompete agreement executed, amended, or renewed on or after July 1, 2026. (Agreements executed, amended, or renewed before July 1, 2026, are not affected.)

SB170 essentially implements a severance requirement for noncompetes. Under SB170, a noncompete is unenforceable if an employer terminates an employee without cause and does not provide the severance pay or other monetary compensation that the employer had already “disclosed upon execution” of the noncompete. The statute does not define “cause,” leaving employers with discretion — but also legal risk — when relying on that exception. Nor does SB 170 define “severance benefits or other monetary payment,” meaning this compensation need not correspond to what the employee would have earned during the noncompete period.

Recall that Virginia law already outright prohibited noncompetes with non-exempt employees and employees below a certain income threshold (currently $78,364.52). Assuming an exempt employee earns more than the threshold and can therefore enter a noncompete in the first place, SB170’s new severance requirement applies to Virginiaemployees regardless of income level.

Similar to other jurisdictions, the Virginia law imposes civil penalties and private rights of action, with recovery of attorney fees and damages, on employers who fail to comply.

Key Compliance Steps for Employers with Virginia Noncompetes

1. Review and Update Noncompete Templates as Needed

Employers should ensure that all noncompete templates with Virginia employees that are entered into or updated after July 1, 2026:

• Clearly disclose any severance or monetary consideration that will support enforceability upon execution of the noncompete.
• Avoid overly broad restrictions that could be construed as improperly limiting employees’ rights to provide services to a customer or client who contacts them, because Virginia law prohibits noncompetes that restrict employees from providing a service to a customer or client of the employer if the employee does not initiate contact with or solicit the customer or client.
• Carefully define “cause” in a manner that covers a wide variety of reasons for termination of employment.

Legal counsel should review all templates to ensure compliance and reduce exposure to civil actions.

2. Implement a Severance Strategy

Because enforceability will hinge on severance or other monetary compensation, employers should:

• Decide whether they are willing to offer severance in exchange for enforceable noncompetes.
• Build severance terms into employment agreements or standalone noncompete agreements.
• Disclose severance terms at the time of execution of the agreement, as required by the statute.

3. Reevaluate Termination Practices

Because noncompetes remain enforceable when an employee is terminated for cause, employers should:

• Develop clear internal definitions and documentation standards for “cause.”
• Train HR and management teams on consistent application.
• Maintain thorough records to support termination decisions if enforceability is later challenged.

4. Audit Existing Agreements

Any amendment or renewal to a noncompete after July 1, 2026, triggers the new requirements in SB170. Employers should:

• Inventory all existing restrictive covenants.
• Flag agreements that may require updates before renewal cycles.
• Consider whether to transition employees to non‑solicitation‑only agreements.

Final Thoughts

Virginia’s 2026 noncompete law represents a major shift toward employee mobility. Employers who proactively update their agreements, severance practices, and termination procedures will be best positioned to protect their business interests while remaining compliant.