Matthew Purushotham
Wed., June 24, 2026
Understanding Noncompete Agreements—and Why They Matter
If you have ever signed an offer letter or employment agreement, you may have seen a “covenant not to compete” or “noncompete agreement.” These clauses try to limit where you can work after you leave a job.
A typical noncompete might stop you from joining a competitor, starting a similar business, or working with certain clients for a period of time after you leave a job. Employers often say they need these clauses to protect trade secrets and customer relationships.
But for many workers, noncompetes create real challenges. They can block you from pursuing better opportunities. They can also limit your earning potential and career growth. In some cases, they force workers to choose between relocation and unemployment. As a result, workers may hesitate to accept a strong offer because they fear legal trouble. Some employers rely on that fear to keep employees in place.
However, Virginia courts have long viewed noncompetes with skepticism. Judges often strike down overly broad restrictions that prevent people from earning a living. For instance, in Modern Env’ts v. Stinnett, 263 Va. 491, 493-94 (2002), the Supreme Court of Virginia affirmed a lower court ruling that struck a noncompete clause as overly broad because it prohibited the employee from being employed by an employer in any capacity.
Still, until recently, many employees remained stuck with restrictive agreements. That is beginning to change.
What Is Changing on July 1, 2026?
Virginia lawmakers passed Senate Bills 170 and 128 to expand worker protections. Both laws modify section 40.1-28.7:8 of Virginia Code and take effect on July 1, 2026. They apply to new employment agreements or employment agreements that are updated after July 1, 2026.
Here are the key changes that matter to you:
- New Limits When Employers Terminate You
Under Senate Bill 170, employers cannot enforce a noncompete if they fire you without cause—unless they offer severance pay or similar compensation. (SB 170, Amending Va. Code 40.1-28.7:8(C). This rule applies to all employees, not just lower-wage workers. Id.
The employer must disclose any severance arrangement when you sign the agreement. If they do not, the noncompete likely will not hold up. Id.
In simple terms, if a company chooses to end your job for its own reasons, it cannot also block your next opportunity without paying for that restriction.
- New Ban for Healthcare Professionals
Senate Bill 128 expands worker protections by prohibiting noncompetes for most licensed healthcare professionals. See 40.1-28.7:8. While this change targets a specific field, it reflects a broader trend. Policymakers increasingly see noncompetes as harmful to workers and the public.
- Stronger Enforcement Rights
The new law gives employees a clear path to challenge unlawful agreements. You can bring a civil claim against an employer that tries to enforce a prohibited noncompete. See 40.1-28.7:8(E).
If you win, you may recover damages, lost compensation, and attorneys’ fees. Id. That fee-shifting provision matters. It allows workers to stand up to employers without bearing the full financial risk.
- Continued Protection for Lower-Wage Workers
Virginia had already banned noncompetes for many “low-wage” and non-exempt employees. See SB 170 (showing amendments to previous text of Va. Code 40.1-28:7(D)) “Low-wage” workers are defined in the statute as workers compensated below a state wage threshold and includes many employees eligible for overtime. See Va. Code 40.1-28.7:8(A).
How These Changes Benefit You
These new rules shift the balance of power. They give you more freedom to change jobs and negotiate better terms. If your employer lets you go, the law now discourages “double penalties.” The company cannot both terminate you and restrict your future without meaningful compensation. The changes also encourage employers to think carefully before using noncompetes at all. Many companies will revisit their contracts to avoid legal exposure.
Enforcing Your Rights
Knowing your rights is only the first step. Here are practical ways to protect yourself:
- Review Agreements Carefully
Pay attention to any noncompete language when you accept a new role. Look for details about severance, duration, and scope.
- Document Your Termination
If your employer terminates you, keep records of the reason given. The distinction between “for cause” and “without cause” may determine whether the noncompete applies.
- Do Not Assume the Clause Is Valid
Many employees assume a signed agreement is automatically enforceable. That is not true under Virginia law, especially after July 1, 2026.
- Talk to an Employment Attorney
If an employer threatens to enforce a noncompete, seek guidance quickly. A lawyer can evaluate the agreement and help you respond.
- Consider Legal Action if Necessary
You have the right to challenge an unlawful noncompete in court. The law allows recovery of damages and attorneys’ fees in many cases. See Va. Code 40.1-28.7:8(E).
The Bottom Line
Noncompete agreements can limit your career options and reduce your negotiating power. Virginia’s new laws take meaningful steps to curb the use of such agreements.
Starting July 1, 2026, employers face tighter rules and greater accountability. If you understand these changes, you can make informed decisions about your career and protect your future.
