Virginia Expands Non-Compete Ban for Low-Wage Employees: What Employers Need to Know

This article is from The National Law Review: https://ow.ly/3x3r50Vx5UE Virginia employers will soon face stricter limitations on the use of non-compete agreements, thanks to a newly signed law that broadens the definition of “low-wage employees.” On March 24, 2025, Governor Glenn Youngkin signed S.B. 1218, amending Virginia Code § 40.1-28.7:8 to further protect employees from overly restrictive post-employment covenants.

The amendment takes effect July 1, 2025, and significantly expands the scope of workers for whom non-compete agreements are prohibited—regardless of how much they earn.

What Changed?

Under the prior version of the law, a “low-wage employee” was defined as an employee whose average weekly earnings fell below the Virginia average weekly wage—$1,463 per week (or $76,081 per year in 2025).

S.B. 1218 expands that definition to include any employee entitled to overtime pay under the federal Fair Labor Standards Act (FLSA). This means that many hourly and non-exempt salaried workers, even those earning more than the Virginia average wage, will now be protected from non-compete clauses.

Quick Recap of Virginia’s Non-Compete Law

Other key features of Virginia’s non-compete statute remain unchanged, including:

• Ban on Non-Competes for Low-Wage Employees Employers may not enter into, enforce, or attempt to enforce non-compete agreements with covered low-wage employees.

• Private Right of Action Employees can sue for violations and may recover:

  • Lost compensation

  • Liquidated damages

  • Reasonable attorneys’ fees

• $10,000 Civil Penalty Employers may be fined $10,000 per violation of the statute.

• Mandatory Posting Requirement Employers must post either the full statute or a summary approved by the Virginia Department of Labor and Industry in the workplace. Failing to post this notice may also result in penalties.

  
  

What This Means for Employers

Virginia’s expanded law underscores a growing national trend toward restricting non-compete agreements, especially for lower-earning and non-executive employees. With the July 1, 2025, effective date approaching, employers with a Virginia workforce should act now to:

1. Audit existing non-compete agreements and identify any that may conflict with the new definition of “low-wage employees”

2. Update employment agreement templates to exclude non-compete language for employees covered under FLSA overtime rules

3. Train HR and legal teams on the updated definitions and enforcement risks

4. Ensure required workplace postings are compliant and visible by the deadline

   
   

Final Thoughts

With expanded legal protections and the risk of costly penalties, Virginia employers must revisit how they use restrictive covenants, particularly with non-exempt workers. This amendment reflects a continued shift in legislative and regulatory focus toward employee mobility and fairness in the post-employment landscape.