Effective July 1, 2025, Virginia will expand its restrictions on non-compete agreements, broadening the definition of employees protected from non-competition covenants. Under current law, Virginia Code § 40.1-28.7:8, employers already are prohibited from entering into or enforcing non-compete agreements with “low-wage employees,” defined as those earning less than the Commonwealth’s average weekly wage. This threshold figure adjusts annually and was set at $76,081 annually for 2025.

Under the statutory amendments (Senate Bill 1218), the new definition of “low-wage employee” now expands to include all employees classified as non-exempt under the Fair Labor Standards Act (FLSA), regardless of their earnings. Non-exempt employees typically are eligible for overtime. With the amendment, new non-compete agreements will be banned for any employee who does not qualify for an FLSA exemption (such as executive, administrative, professional, outside sales, or certain computer employees), even if they earn more than the average weekly wage. However, employees whose pay is primarily from sales commissions, incentives or bonuses remain excluded from the definition of “low-wage employee”.

Existing Non-Compete agreements in place prior to July 1, 2025 are not voided and still could be enforced if they meet other reasonableness tests. The law and these amendments do not prohibit nondisclosure agreements (NDAs) or agreements protecting trade secrets, confidential, or proprietary information, provided they do not function as de facto non-competes.