Beginning July 1, 2025, a significant change to Virginia employment law will take effect, further strengthening protections for workers across the Commonwealth. Under the newly enacted legislation, Senate Bill 1218, employers will be prohibited from entering into or enforcing non-compete agreements with any employee classified as non-exempt under the federal Fair Labor Standards Act (FLSA), regardless of that employee’s income level.
This marks a major expansion of Virginia’s existing non-compete restrictions, which since 2020 have only applied to “low-wage” employees based on a defined salary threshold. With this new law, classification rather than compensation will be the controlling factor.
What Is a Non-Compete Agreement?
A non-compete agreement is a contractual provision that restricts an employee from working for a competitor or starting a competing business for a certain period of time after leaving a company. While these agreements are intended to protect business interests, they can also often limit an employee’s job mobility and earning potential.
Who Will Be Protected?
As of July 1, 2025, any employee classified as non-exempt under the FLSA will be covered by the non-compete ban. Non-exempt employees are typically hourly workers who are entitled to overtime pay. This classification encompasses a wide range of occupations and industries, including administrative, technical, customer service, retail, healthcare, and skilled trades.
Previously, the law only covered employees earning less than the average weekly wage in Virginia, amounting to about $76,000 per year. Under the new legislation, that income-based limitation will no longer apply.
What This Means for Employees
- Non-Competes for Non-Exempt Employees Will No Longer Be Enforceable: If you are a non-exempt employee, your employer cannot require you to sign a non-compete agreement after July 1, 2025. If you have already signed one, it will no longer be enforceable if renewed or updated after that date.
- Legal Recourse Is Available: Employees who are subject to an unlawful non-compete may bring legal action against their employer.
- Workplace Notices Required: Employers must display a notice informing employees of their new rights under the amended law. This notice must be posted conspicuously in the workplace and may also be made available electronically.
- Protections Do Not Cover Other Restrictive Covenants: The law applies specifically to non-compete clauses. Confidentiality and non-solicitation agreements may still be valid, depending on their scope and content.
What Employees Should Do
- Review Your Employment Contract: If you have signed a non-compete agreement, determine whether you are classified as exempt or non-exempt under federal law. If you are non-exempt and employed under Virginia law, you will soon benefit from additional legal protections.
- Consult with an Attorney: If you believe a non-compete agreement may be limiting your professional opportunities, consider seeking legal advice to better understand your rights.
- Know Your Rights: By becoming familiar with your classification and understanding the restrictions that employers can and cannot impose, you can make more informed decisions about your career and employment transitions.
Looking Ahead
Virginia’s amendment to its non-compete law reflects a broader legislative trend focused on enhancing employee mobility and access to opportunity. This development empowers a larger segment of the workforce and ensures that non-compete agreements do not act as undue barriers to employment.
Employees who fall within the non-exempt classification should be aware of these upcoming changes and prepared to assert their rights as this law comes into effect.
For additional guidance or assistance in evaluating your employment contract, contact the employment attorneys at Potomac Legal Group to review your current agreements and determine the best options for protecting yourself and your career.
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