A BILL to amend and reenact § 40.1-28.7:8 of the Code of Virginia, relating to covenants not to compete prohibited; exceptions; civil penalty.
HB949 would revise Virginia’s existing ban on noncompete agreements by narrowing when employers may use post-employment restrictions and by expanding protections for workers. The bill keeps the general prohibition on covenants not to compete for low-wage employees, but it also bars such covenants for employees who do not regularly solicit customers, make sales, manage others, or qualify as key employees or professionals. For employees outside the low-wage category, the bill allows only a limited written nonsolicitation agreement covering customers or prospective customers with whom the employee had material contact, and only for products or services that are the same as or substantially similar to those offered by the employer. It also preserves the use of nondisclosure agreements for trade secrets and confidential information.
The bill adds enforcement tools and penalties. An employee could sue a former employer or other person attempting to enforce a prohibited covenant, seek voiding of the agreement, damages, liquidated damages, attorney fees, and injunctive relief, and would be protected from retaliation for bringing such an action. Employers that violate the ban could face a $10,000 civil penalty per violation, and employers would also be required to post notice of the law, with escalating penalties for failure to do so. The bill applies only to contracts entered into, amended, or renewed on or after July 1, 2026.
HB949 would amend § 40.1-28.7:8 of the Code of Virginia, the state’s statute governing covenants not to compete, by expanding the categories of workers protected from noncompete enforcement and by clarifying the limited circumstances in which customer nonsolicitation agreements may still be used. It would also create or strengthen civil remedies, administrative penalties, and workplace notice requirements, affecting employers, employees, the Commissioner of Labor and Industry, and courts that hear enforcement actions. The bill’s effective-date provision would limit its application to new, amended, or renewed contracts on or after July 1, 2026.
The available legislative history shows limited recorded debate, but the bill was referred to Labor and Commerce and later continued to the next session in subcommittee by voice vote, suggesting the measure did not advance quickly and may have needed further consideration. The structure of the bill indicates a worker-protection approach, with stronger limits on restrictive covenants and stronger remedies for employees. The lack of recorded votes or transcript detail makes it difficult to identify broad support or opposition, but the continuation implies at least some unresolved concerns among committee members.
The main points of contention are likely to be the scope of the noncompete ban and the carveouts for higher-level employees. Employers may object to the bill’s broader prohibition on noncompetes, the new civil penalty, the notice requirement, and the private right of action with attorney-fee shifting. By contrast, employee advocates would likely support the bill’s expansion of protections, especially for low-wage workers and employees who do not have managerial, sales, or key-employee responsibilities. The bill also draws a line between enforceable nonsolicitation agreements and prohibited noncompetes, which may be debated as to whether it is sufficiently narrow or still too restrictive for businesses.