Effective July 1, 2025, it will be unlawful for Virginia employers to enter into noncompete agreements with employees who are eligible for overtime pay under the Fair Labor Standards Act (FLSA). The new law significantly expands existing Virginia law, which, since 2020, has prohibited employers from entering or enforcing noncompetes with “low wage employees.”
What is Current Virginia Law on Noncompetes?
As we previously discussed, current Virginia law defines noncompetes broadly as any agreement that “restrains, prohibits, or otherwise restricts an individual’s ability to compete with his former employer” and is applicable to “low wage” workers (this includes interns, students, apprentices, and trainees) whose average weekly earnings are less than the average weekly wage in the Commonwealth. For 2025, the average weekly wage in Virginia is $1,463.10, which works out to $76,081.20 per year.
How Expansive Will the Ban on Noncompetes Be Under the New Virginia Law?
Under the new law, the ban on noncompetes will expand to include all workers who, regardless of the amount of average weekly earnings, are entitled to overtime compensation under the FLSA for any hours worked in excess of forty in a workweek. The new law does not bar employer use of noncompetes for employees “whose earnings are derived, in whole or in predominant part, from sales commissions, incentives, or bonuses paid to the employee by the employer.”
What Should Employers Do to Prepare for the New Law?
Virginia employers should use the run-up to July 1, 2025, to carefully consider whether their current workforce is properly classified as either exempt from overtime or non-exempt and overtime eligible, which will matter under the new law. With the pending changes, employers also should review their existing employee NDAs and non-solicitation agreements with an eye toward strengthening those important protections.
If you have questions concerning noncompetes or need help with a specific legal issue, please contact Doug Taylor at (703) 525-4000 or rdougtaylor@beankinney.com.
This article is for informational purposes only and does not contain or convey legal advice. Consult a lawyer. Any views or opinions expressed herein are those of the authors and are not necessarily the views of any client.