L&E; covenants not to compete prohibited, low-wage employees, exceptions, civil penalty.
SB1218 amends Virginia’s existing ban on noncompete agreements for low-wage workers. The bill defines “low-wage employee” broadly to include workers earning below the Commonwealth’s average weekly wage, workers entitled to overtime, interns, students, apprentices, trainees, and certain independent contractors paid below the state median hourly wage, while excluding workers whose pay is primarily commissions, incentives, or bonuses. It prohibits employers from entering into, enforcing, or threatening to enforce covenants not to compete against those workers.
The bill preserves employers’ ability to use nondisclosure agreements and other protections for trade secrets and confidential or proprietary information. It also creates enforcement mechanisms: affected workers may sue for injunctive relief, damages, liquidated damages, attorney’s fees, and costs; employers that violate the ban may face a $10,000 civil penalty per violation; and employers must post notice of the law, with escalating penalties for failure to do so. The act applies prospectively and does not invalidate agreements entered into or renewed before July 1, 2025.
This bill expands and clarifies Virginia Code § 40.1-28.7:8 by broadening the category of workers protected from noncompete agreements and by adding explicit remedies and penalties for violations. It affects employers, former employers, and other persons attempting to enforce prohibited covenants, while preserving the use of nondisclosure agreements and protections for trade secrets under Virginia law. The bill also imposes workplace notice requirements and directs civil penalties to the general fund.
The bill appears to have been generally supported, especially in the Senate, where it passed overwhelmingly after committee approval. In the House, it advanced by a narrower margin, indicating broader but less uniform support. Overall, the voting history suggests a favorable view of limiting noncompete agreements for lower-wage workers, with some resistance or concern in the House.
The main point of contention is the scope of the prohibition and who qualifies as a “low-wage employee,” particularly the inclusion of interns, apprentices, trainees, and certain independent contractors. Another likely area of debate is the balance between worker mobility and employer interests in protecting business relationships and confidential information, though the bill expressly preserves nondisclosure agreements and trade secret protections. The House vote margin suggests some members may have been concerned about the bill’s impact on employers’ ability to protect legitimate business interests or about the breadth of the enforcement provisions and penalties.