A big shift is coming to Virginia employment law—and employers need to be ready. Beginning July 1, 2025, noncompete agreements will be prohibited for all employees eligible for overtime pay, regardless of how much they earn. If your business currently uses noncompetes as part of its employment strategy, now’s the time to reassess.
What’s Changing?
Virginia already bans noncompete agreements for most “low-wage employees.” As of 2025, that category includes workers earning less than $1,463.10 per week, or about $76,000 annually. This threshold has steadily increased since the law was first introduced in 2020.
The new law goes a step further: overtime eligibility becomes the key factor. That means even employees earning well above the low-wage threshold—but who are classified as nonexempt under the federal Fair Labor Standards Act—will now fall under the noncompete ban.
What About Existing Agreements?
Here’s an important point: noncompete agreements entered into before July 1, 2025, are still valid. The law is not retroactive, so employers don’t need to tear up current contracts—but they cannot enforce new noncompetes against overtime-eligible workers signed after the law goes into effect.
Are There Exceptions?
Yes. The law continues to allow noncompete agreements for certain workers whose income comes primarily from commissions, incentives, or bonuses. This exception acknowledges the unique nature of some roles, like high-earning sales positions.
Why This Matters for Employers
This update is more than just a contract tweak—it’s an opportunity (and a necessity) to:
- Audit your current employee classifications. Are your workers properly classified as exempt or nonexempt under federal law? Misclassification could affect your ability to enforce agreements in Virginia.
- Update your onboarding and offboarding practices. Start preparing now so you’re not scrambling when July 2025 hits.
- Consider alternative protections. Nonsolicitation, nondisclosure, and confidentiality agreements are still enforceable and may offer similar protections without running afoul of the new law.
Final Thoughts
Virginia is continuing its trend toward employee-friendly employment laws, and this latest update could significantly change how businesses approach talent retention and competition. If you haven’t already, now is the time to review your workforce, your contracts, and your compliance strategies.
For questions about these changes—or if you’d like help reviewing your current agreements and classifications—contact your Lengea team.