EMPLOYMENT LAW NEWS
Compliance Conundrum: Keeping Up with Non-Compete Bans and Restrictions and the Latest Change in Virginia
By Jana Bjorklund, GovDocs Senior Counsel and Director
Employment Law and Compliance
Published May 13, 2025
More states are limiting the use of non-compete agreements — and Virginia’s latest amendment expands protections for low wage workers beginning July 1, 2025.
What are non-compete agreements?
Non-compete agreements are contractual agreements between an employer and employee that restrict an employee’s ability to work for a competitor or start a competing business after leaving employment with their employer. Many states have passed laws that outright ban or significantly restrict non-compete agreements.
Which states have implemented bans on non-compete agreements?
Four states, (Minnesota, North Dakota, Oklahoma and California) have implemented bans on non-compete agreements with limited exceptions.
Several other states have laws restricting the use of non-compete agreements in employment. And some of these have bans on noncompete agreements with low income workers. As is usually the case, the laws vary from state to state so employers need to be aware of the requirements in each state with non-compete restrictions.
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Virginia amends their law that prohibits non-compete agreements
Virginia is following the lead from several other states and has recently amended their law that prohibits non-compete agreements for low wage workers. Virginia is expanding the definition of “low wage employees” making it important for employers, HR professionals and business owners to understand the changes taking effect soon.
The changes under the amendment will go into effect on July 1, 2025.
Key Details of Virginia’s Amendment
Virginia’s law previously banned non-compete agreements with “low wage employees” and it still does. However, the prior law defined a low wage employee as one that earned less than the state’s average weekly wage. The new amendment to the law changes the definition of a low wage employee to one who is non-exempt and entitled to overtime under the federal Fair Labor Standards Act (FLSA), regardless of their average weekly earnings.
This new definition of low wage workers does not apply retroactively to existing agreements but applies to agreements entered into on and after July 1, 2025.
What Stays Unchanged Under Virginia Law
The law continues to exclude employees who receive their earnings predominantly from sales commissions, incentives or bonuses.
Employees may still bring private causes of action against employers who violate the law and civil penalties of $10,000 may apply.
Employers may continue to utilize confidentiality or nondisclosure agreements to prevent the misappropriation or disclosure of proprietary information.
Impact for Employers
Virginia’s amended law reflects a growing nationwide effort to protect workers, particularly those in low wage positions, from restrictive covenants that limit their career mobility. For employers, this means taking a fresh look at current agreements to ensure compliance.
Under the amended law, more employees will fall under the non-compete ban. The FLSA salary threshold for exempt workers is $58,656 annually. Employees making less than this are considered non-exempt and employers will be prohibited from entering into non-compete agreements with these employees. This amount is lower than the state’s average weekly wage.
Employers should assess the impact of this amendment on their workforce and their use of non-compete agreements with their employees. All processes involving non-compete agreements should be reviewed to ensure compliance with the changes under the amendment to Virginia’s non-compete law as well as the requirements in states across the country.
This Employment Law News blog is intended for market awareness only, it is not to be used for legal advice or counsel.
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