Virginia Gov. Abigail Spanberger signed Senate Bill (SB) 170 into law on April 13, 2026, after Virginia’s General Assembly passed the bill on March 4, 2026. SB 170 amends § 40.1-28.7:8 of the Code of Virginia by introducing new restrictions and requirements regarding covenants not to compete between employers and employees, with a particular focus on low-wage employees and employees who are discharged. Under the bill, a noncompete agreement will be unenforceable if an employer terminates an employee without cause and the employee does not receive severance pay or other prior disclosed monetary compensation. The bill does not define what constitutes “cause.”
SB 170 applies to all employees in Virginia who enter into noncompete agreements on and/or after July 1, 2026 (not just low-wage employees). Any employee may bring a private civil action against an employer for alleged unfair contractual practices related to the enforcement of an unlawful noncompete agreement. The bill does not limit nondisclosure agreements protecting trade secrets or proprietary/confidential information. Contracts, covenants, or agreements entered into, amended, or renewed before July 1, 2026, are not affected by SB 170. The bill does not include any express carve-outs for noncompetes entered into after sale of business.
Likewise, the bill does not address whether the definition of “covenant not to compete” includes non-solicitation provisions. Notably, however, the Court of Appeals of Virginia recently addressed this very question. In Sentry Force, Sec., LLC v. Barrera, the court held that “the plain language of Code § 40.1-28.7:8 actually does allow [an employer] to protect its own customers from direct solicitation by [the employer’s] current or former employees.” 2026 Va. App. LEXIS 54, at *18 (Jan. 27, 2026). The court noted that the definition of “covenant not to compete” states, in relevant part, that “[a] ‘covenant not to compete’ shall not restrict an employee 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.” The court reasoned that the language prohibiting enforcement of a restrictive covenant where the employee “does not initiate conduct” meant that restrictive covenants prohibiting solicitation remained enforceable. SB 170 leaves the definition of “covenant not to compete” unchanged, and therefore, the holding of Sentry Force intact.
Under existing Virginia law, employers are prohibited from entering into noncompete provisions with certain low-wage employees. Low-wage employees include individuals whose average weekly earnings in a year amount to less than the average weekly wage in Virginia, which currently stands at $1,507.01 (or $78,364.52 annually). As discussed in our July 2025 GT Alert, last year, Virginia amended this law to expand the noncompete ban to all employees who, regardless of their earnings level, are classified as non-exempt employees under the Fair Labor Standards Act. Virginia law defines “low-wage employee” to not only include employees but also (a) independent contractors whose hourly rate is less than the median hourly wage for Virginia and (b) interns, students, apprentices, or trainees, whether paid or unpaid.
Enforcement and Remedies
Employees may bring civil actions against former employers who attempt to enforce unlawful covenants. Such actions must be brought within two years of the later of: signing the covenant, learning of the covenant, termination of employment, or enforcement attempt. Courts may void unlawful covenants and order relief including injunctions, liquidated damages, lost compensation, and attorney fees. Employers are further prohibited from retaliating against any employee who brings a civil action seeking remedies.
Civil Penalties
Employers violating the prohibition on covenants with low-wage employees or discharged employees (without severance) may face civil penalties of $10,000 per violation.
Posting Required
SB 170 requires employers to post a copy of the law or a summary approved by the Virginia Department of Labor and Industry in the same location where they post other legally required employee notices. Failure to comply with this requirement may result in civil penalties of up to $1,000.
Takeaways
Impacted employers may wish to update their existing templates to include clear severance or other monetary benefits to be provided “upon execution” of any noncompete agreement.