Beginning July 1, 2025, Virginia will prohibit noncompete agreements for all employees eligible for overtime pay. The new law builds on previous prohibitions for “low-wage employees” in the Commonwealth.
As McGuireWoods previously reported, Virginia already prohibits noncompetes for most “low-wage employees,” defined as those who earn less than the average weekly wage in the Commonwealth. The 2025 average weekly wage is $1,463.10, or about $76,000 per year. This represents an increase of about $3,000 over 2024’s threshold and an increase of about $17,500 from the law’s enactment in 2020.
The new law prohibits noncompetes for workers eligible for overtime compensation regardless of how much they earn. However, exceptions remain for workers whose earnings are derived, in whole or in predominant part, from commissions, incentives or bonuses. The amendment does not affect covenants with overtime-eligible employees entered into before July 1, 2025.
Employers should carefully review their population of Virginia workers subject to noncompetes and determine if adjustments are required in response to the new law. This also could serve as an opportunity to ensure employees are properly classified as overtime exempt or nonexempt, which may affect the enforceability of noncompetes in Virginia.
