In the 2026 legislative session, Virginia lawmakers enacted two significant new restrictions on noncompete agreements that will take effect on July 1, 2026. These changes amend Code § 40.1-28.7:8 and build on a series of Virginia laws starting in 2020 and continuing in the 2025 legislative session that scaled back noncompete agreements in the commonwealth.
The first new law, Senate Bill 170, prohibits employers from enforcing noncompete agreements against employees terminated without cause, unless the employees receive severance benefits or other monetary payments. The benefits or payments must have been disclosed to the employees upon execution of the noncompetes. Separately, with House Bill 627, the commonwealth banned noncompete agreements with licensed, registered or certified healthcare professional employees with certain narrow exceptions.
Both restrictions will apply only to agreements entered into on or after July 1, 2026.
Noncompete Restrictions for Without-Cause Terminations
Senate Bill 170, which was signed by Gov. Abigail Spanberger on April 13, 2026, prohibits employers from enforcing noncompete agreements against employees who are terminated by employers without cause, unless the employers provide “severance benefits or other monetary payment” to the employees in connection with termination. These benefits or payments must be disclosed to the employees “upon execution of the covenant not to compete” for enforcement to be permissible. This provision applies to contracts entered into after July 1, 2026.
The law does not define or specify what amount or type of “severance benefits or other monetary payment” would satisfy the employers’ obligation, so this issue will be subject to interpretation by Virginia courts. Employees can sue to challenge enforcement of a noncompete agreement that violates the new law, and they can recover damages, liquidated (double) damages, lost compensation, attorneys’ fees and costs if they prevail.
This new law does not prohibit enforcement of noncompete agreements against employees who resign or are terminated for cause. However, the definition of “cause” is not defined in the bill. Employers should ensure that enforcement is not prohibited by another portion of the law, including the prohibition on enforcement against low-wage employees, hourly employees or healthcare workers as restricted in another new Virginia law discussed below.
Noncompete Restrictions for Healthcare Workers
House Bill 627, which was adopted on April 22, 2026, after amendments from the governor, extends the restrictions on noncompete agreements to employment contracts with healthcare professionals. Notably, this law does not affect contracts entered into prior to July 1, 2026.
The new law prohibits employers from entering into, enforcing or threatening to enforce noncompete agreements with “[h]ealth care professionals.” “Health care professional” is defined as “any person licensed, registered, or certified by the Board of Medicine, Nursing, Counseling, Optometry, Psychology, or Social Work.”
The law includes important carve-outs detailed below:
- Consistent with existing law, the law does not ban nondisclosure agreements that restrict the taking or disclosure of trade secrets, proprietary information or confidential information.
- The law does not prohibit certain restrictive covenants involving healthcare professionals created in connection with the sale of a business.
- The law allows employment agreements with healthcare professionals that require the repayment of relocation, signing or retention bonuses or to recoup educational or training expenses, but only if the healthcare professional was employed by the employer for fewer than five years.
- The law allows for agreements to restrict the “active” solicitation of the employer’s customers or prospective customers, so long as the restriction is limited to customers with whom the healthcare professional had material contact during the previous employment relationship, and so long as the nonsolicit is limited to restricting solicitation for the same or similar products and services to those provided by the employer.
The current law already limits the allowable scope of customer nonsolicits applicable to protected “low wage” workers, by prohibiting agreements that “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.” Beginning July 1, 2026, this will extend to healthcare professionals.
Although the new law allows contracts that restrict active customer solicitation, the law states that healthcare providers cannot be prohibited from disclosing to their patients: (1) that they are continuing to practice medicine; (2) their contact information; and (3) that the patient has a right to choose a healthcare professional. In other words, nonsolicitation agreements with healthcare professionals entered after July 1, 2026, will need to be narrowly tailored to be enforceable.
Finally, like low-wage and non-exempt hourly employees, healthcare professionals can bring a private lawsuit to challenge enforcement or attempted enforcement of a noncompete agreement, and can recover damages, liquidated (double) damages, lost compensation, attorneys’ fees and costs if successful.
Prohibited Noncompetes as of July 1
In light of these and prior changes to Virginia law, by July 1, 2026, the commonwealth’s list of prohibited noncompete agreements (including certain overbroad nonsolicitation provisions) includes noncompete agreements with:
- low-wage employees whose average weekly wage is less than the threshold set by the Department of Labor and Industry (as of July 1, 2025, this is $1,507.01 per week or $78,364.48 per year);
- hourly employees who are entitled to overtime under the federal Fair Labor Standards Act;
- interns, students, apprentices or trainees employed, with or without pay, at a trade or occupation to gain work or educational experience;
- healthcare professionals licensed with the Virginia Board of Medicine, Nursing, Counseling, Optometry, Psychology or Social work; and
- employees terminated without cause, when severance benefits are not provided as previously disclosed by the employers.
Virginia employers should review their agreement templates and practices to comply with these new laws.
Furthermore, because existing law includes workplace poster requirements, employers should update their workplace posters related to noncompete agreements to incorporate the new restrictions once they take effect.
For further information or questions about these or other aspects of Virginia employment law, contact the authors of this alert or a member of the firm’s labor and employment group or the Trade Secrets and Restrictive Covenants Practice Group.