Effective July 1, 2025, Virginia Extends its Ban on Non-Compete Agreements to all Non-Exempt Employees
In 2020, Virginia enacted a law prohibiting employers from entering into or enforcing non-compete agreements (NCA) with "low-wage" employees (which is currently set at a threshold of $76,081). Virginia has now amended that law and expanded the non-compete prohibition to all employees who are non-exempt from the Fair Labor Standard Act's (FLSA) overtime requirements.
This means that any employee who is not exempt from the FLSA's overtime provision cannot enter into a NCA in Virginia. The implications are significant. For instance, this would include employees earning up to $107,432—the income qualification for the FLSA's "highly compensated employee" exemption—as long as they are not salaried or are not performing certain exempt duties.
These changes will go into effect on July 1, 2025. Importantly, existing NCAs will not be affected by this law; employers are only prohibited from entering into new NCAs or renewing existing NCAs with non-exempt employees after July 1. But employers must post an updated copy of the law or an approved summary before July 1 to be in compliance.
Penalties for violations remain the same—$10,000 per violation of the NCA ban and up to $1,000 per violation of the poster requirement.
To successfully navigate the new interplay between Virginia's ban on non-compete agreements and the Fair Labor Standards Act, contact an attorney in our employment-law practice.
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