Last week, the Virginia General Assembly sent Governor Abigail Spanberger a bill that substantially restricts the use of noncompetition agreements with employees. The governor is expected to sign the legislation, which would impact noncompetes signed on or after July 1, 2026.

The bill makes two important changes to Virginia noncompete restrictions. First, employees fired without cause cannot be subject to noncompetes unless they are paid unspecified severance benefits. Cause termination is not defined but presumably relies on common law interpretations of that term. Second, the act adds civil penalties of up to $10,000 along with payment of liquidated damages, lost compensation, damages, and reasonable attorney fees and costs for any employer that violates Virginia’s existing ban on use of noncompetes with low-wage workers (currently $1,507.01 per week or less). In addition, Virginia employers must post notices advising employees of their rights.

Because the bill does not specify the amount of severance required, some companies may try to include a nominal amount of post-employment benefits to avoid this prohibition. While the legislation does not require that the employer pay severance for any specific time, Virginia courts may be called upon to determine the General Assembly’s intent in mandating such payments.

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