Partial Prohibition on Non-Compete Clauses | Changes to Virginia Employment Law

Many changes to Virginia employment law went into effect in recent years, including a partial prohibition on non-compete clauses. Historically, Virginia courts have disfavored restrictions on competition, often refusing to enforce them if they contain unreasonable restrictions.

Additionally, Virginia has declined to “blue-pencil” overbroad non-compete provisions. By statue, Virginia greatly restricts employers’ ability to impose and enforce non-compete clauses against current and former employees. It also provides a private right of action for employees to enforce the law. The new law includes the following provisions.

Prohibition on Non-Compete Clauses for Lower-Wage Employees

According to the updated employment laws, employers are prohibited from entering into, enforcing, or threatening to enforce any non-compete clause against a “low wage employee”. This is defined as an employee, intern, or individual independent contractor whose average weekly earnings are less than the average weekly wage in Virginia which is currently $999.67.

Some employees are excluded from protection under this new statue, including those whose earnings wholly or predominately come from sales commissions, incentives, or bonuses.

Other Limitations in the Statue

This law does not restrict standard confidentiality agreements. However, it does forbid employers from establishing or enforcing any covenant with any employee that “restricts 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.”

Communication of Rights

Employers are required to post a copy of the statute or a summary approved by the Virginia Department of Labor and Industry in the workplace. Failure to do so, after a warning, may result in civil penalties.

Private Right of Action

Employees may sue an employer or other person who attempts to enforce a prohibited non-compete in violation of the statute. Remedies include lost compensation, liquidated damages, an injunction, an order voiding the clause, and attorney’s fees.

Violating this statue may result in a civil penalty of $10,000 for each violation of the prohibition.

Fairfax Employment Law Attorney

If you would like to learn more about employment law, ensure that your business is following VA statutes, or speak to an attorney about a violation of the non-compete clauses, please contact Cook, Craig, and Francuzenko today.