Virginia’s statutory treatment of non-compete agreements continues to evolve. Senate Bill 170 (“SB 170”), recently approved by the General Assembly, would again amend Virginia Code § 40.1-28.7:8 and further restrict the circumstances under which an employer may enforce a covenant not to compete. While the statute has, until now, focused primarily on “low‑wage employees,” SB 170 signals a broader policy choice — one that ties post‑employment restraints directly to how an employee’s separation is handled.
To become law, SB 170 must be signed by Governor Spanberger. SB 170 provides that nothing in it shall invalidate, alter, or otherwise affect any contract, covenant, or agreement entered into, amended, or renewed prior to July 1, 2026.
The legislation reflects a continuing legislative trend in Virginia: narrowing the circumstances under which non‑competes are enforceable and increasing the financial and compliance risks associated with getting it wrong. If approved by the governor, as many expect it to be, the new law will dramatically expand the scope of the statute so that it would cover all employees and not only low-wage employees. Employers that rely on non‑competition covenants should be reviewing, now, how those agreements interact with termination decisions, severance practices, and definitions of “cause.”
No Severance, No Non‑Compete—With One Important Caveat
If enacted in its current form, SB 170 would add a new and significant limitation to Virginia Code § 40.1-28.7:8. Except where an employer discharges an employee “for cause,” a covenant not to compete would be unenforceable if the employer discharges the employee without providing severance benefits or other monetary payment.
The bill goes one step further. It would also require that any severance benefits or other monetary payment supporting the non‑compete be disclosed at the time the covenant not to compete is executed, not negotiated or revealed after the employment relationship ends.
In practical terms, SB 170 would force employers to make an early and explicit choice: either commit, up front, to paying for post‑employment non‑competition in the event of a discharge without cause, or accept that the non‑compete will not be enforceable if the relationship ends by discharge without such payment.
Notably, SB 170 does not define what constitutes “for cause.” That silence may be an invitation to future disputes. Employers and employees should expect that the meaning of “for cause” will be shaped by contract language and, inevitably, litigation.
What SB 170 Does Not Change: Lessons from Sentry Force v. Barrera
SB 170 is also notable for what it leaves untouched. The bill does not propose any modification to the portion of Virginia Code § 40.1-28.7:8 that the Virginia Court of Appeals recently interpreted in Sentry Force Security, LLC v. Barrera, No. 1405‑24‑4, 2026 WL 200848 (Va. Ct. App. Jan. 27, 2026).
In Sentry Force, the Court of Appeals drew an important distinction within the existing low‑wage non‑compete ban:
- First, the statute does not prohibit an employer from enforcing an agreement that bars a former low-wage employee from providing a service to a customer or client of the employer, so long as the restriction targets affirmative solicitation of or initial contact to the customer or client by the former employee.
- Second — and in contrast — the statute does prohibit an employer from enforcing a “covenant not to compete” that prohibits a former low-wage employee from soliciting the employer’s other employees after the employment relationship ends.
SB 170 leaves that framework intact. Employers should not assume that the pending restriction in SB 170 alters the Court of Appeals’ analysis regarding customer non‑solicitation versus employee non‑solicitation. Those issues remain governed by the existing statutory text and the Sentry Force decision.
A Brief Refresher: The Current Statute
Currently, Virginia Code § 40.1-28.7:8 regulates covenants not to compete only as to “low‑wage employees.” In its current form, the statute provides:
- A flat prohibition: No employer may enter into, enforce, or threaten to enforce a covenant not to compete with any low‑wage employee.
- Preservation of confidentiality protections: The statute expressly does not limit nondisclosure agreements intended to prevent the taking, misappropriation, threatened misappropriation, or sharing of trade secrets or other proprietary or confidential information. SB 170 would not disturb the use of non-disclosure agreements.
- A private right of action: A covered employee may bring a civil action seeking injunctive relief, damages, liquidated damages, lost compensation, and reasonable attorneys’ fees and costs. If it becomes law, SB 170 would expand this private right of action beyond low‑wage employees to any employee covered by the new discharge‑and‑severance provisions.
- Civil penalties: Violators may be subjected to civil penalties of $10,000 per violation. SB 170 would extend the penalty authority to violations of the new severance‑related restrictions.
- Posting requirements: Employers must post a copy of § 40.1-28.7:8, or an approved summary, in the same location where other required state or federal employee notices are posted.
- Who is a “low‑wage employee”: The statute currently applies to employees who either (i) earn less than the average weekly wage established from time to time by the Virginia Department of Labor and Industry (currently $1,507.01 per week, or $78,364.52 annually), or (ii) are entitled to overtime premium pay for hours worked in excess of 40 hours in a workweek (i.e., non‑exempt employees).
Timothy M. McConville is a management-side labor-and-employment attorney and President of Praemia Law, PLLC. This article is for general informational purposes only and does not constitute legal advice. Employers and employees should consult counsel regarding specific facts and circumstances. Mr. McConville is available at 703-399-3603, ext. 1, and Timothy.McConville@praemialaw.com.