Virginia's New Noncompete Limit (SB 170) Takes Effect July 1: No Enforcement After a No-Cause Firing Without Severance

Virginia's New Noncompete Limit (SB 170) Takes Effect July 1: No Enforcement After a No-Cause Firing Without Severance

Virginia will bar employers from enforcing a noncompete agreement against a worker who is fired without cause and who was not paid the severance the employer promised. Governor Abigail Spanberger signed Senate Bill 170 on April 13, 2026, amending Virginia Code 40.1-28.7:8. The change takes effect July 1, 2026.

Information last verified on June 22, 2026. This is a developing story; we update it as the record changes.

Status: Enacted. Governor Abigail Spanberger signed SB 170 on April 13, 2026. It amends Va. Code 40.1-28.7:8 and takes effect July 1, 2026, applying to noncompete agreements entered into, amended, or renewed on or after that date. The Senate passed it 40-0 and the House 87-12.

Jurisdiction scope: This article addresses Virginia's noncompete statute, Va. Code 40.1-28.7:8, as amended by SB 170. It does not address noncompete law in other states or the separate federal rulemaking history, and it is not legal advice. For the broader state framework, see Virginia at-will employment laws.

What Happened

The Virginia General Assembly passed Senate Bill 170 during its 2026 regular session, and Governor Abigail Spanberger signed it on April 13, 2026. The Senate had approved the bill 40 to 0 on February 6, 2026, and the House of Delegates passed it 87 to 12 on March 4, 2026. The law amends Virginia Code section 40.1-28.7:8, the state's statute on covenants not to compete, and takes effect July 1, 2026.

The core of SB 170 is a single new limit. An employer may not enforce a covenant not to compete against an employee whom the employer discharges without cause, unless the employer provides the severance or other monetary payment that it disclosed to the employee when the noncompete was signed. If the employer fires the worker without cause and does not pay that promised amount, the noncompete cannot be enforced against the worker.

The reach of the change is prospective. By its terms, SB 170 applies to covenants not to compete entered into, amended, or renewed on or after July 1, 2026. Agreements signed before that date, and not later amended or renewed, are governed by the prior version of the statute.

What the Law Actually Says

Virginia Code 40.1-28.7:8 already restricts noncompete agreements. Enacted in its current form in 2020 and expanded since, the statute prohibits employers from entering into, enforcing, or threatening to enforce a covenant not to compete against "low-wage employees," as the statute defines that term, and it provides for civil penalties and a private right of action. SB 170 adds a new category of unenforceability that does not turn on the worker's wages.

Under the amended statute, the trigger is the manner of the separation combined with the employer's own disclosed promise. Two elements matter. First, the employer must discharge the employee without cause. SB 170 does not define "cause," so Virginia courts will give the term meaning as cases arise. Second, the employer must fail to provide the severance benefits or other monetary payment that it disclosed when the employee signed the noncompete. The statute does not set a minimum dollar figure for that payment, but it must have been disclosed at signing for the employer to rely on it.

The enforcement structure carries over from the existing statute. A violation exposes the employer to a civil penalty of $10,000 for each violation, and an employee who prevails may recover reasonable costs and attorney fees, along with expert witness fees. Because the new rule applies only to agreements entered into, amended, or renewed on or after July 1, 2026, its practical effect will build gradually as employers issue or update agreements after that date.

Analysis: Why This Matters

The following is analysis from the Recording Law Editorial Team.

SB 170 fits a broader pattern of states tightening noncompete rules through their legislatures, a trend that gained urgency after a federal court set aside the Federal Trade Commission's nationwide noncompete ban. With no federal rule in place, the operative law on noncompetes is again a state-by-state matter, and Virginia's amendment is one of the more targeted recent examples.

What makes the Virginia approach distinctive is that it ties enforceability to the employer's own conduct and promises rather than only to the employee's wage level. An employer that wants to keep a noncompete enforceable after a no-cause termination must actually deliver the severance it disclosed at signing. That links the restraint on the worker to a concrete benefit the worker was promised, and it gives employers a clear, if demanding, compliance path.

We are not predicting how Virginia courts will define "cause" or how any particular dispute will resolve. Those questions will be litigated. The durable takeaway is that, for noncompete agreements signed, amended, or renewed on or after July 1, 2026, a Virginia employer that fires a worker without cause and withholds the promised severance cannot enforce the noncompete, and faces a $10,000-per-violation penalty plus fees if it tries.

How This Affects You

For Virginia employers, the change means reviewing noncompete templates before July 1, 2026. An agreement that promises severance on a without-cause termination must say so clearly, because the disclosed payment is what preserves enforceability if that kind of termination later occurs. For Virginia employees, the change adds a potential defense: a worker fired without cause who did not receive the promised payment may be able to argue that the noncompete is unenforceable.

None of this is automatic, and the statute applies only to agreements entered into, amended, or renewed on or after the effective date. Whether a particular termination was "without cause," and whether a particular payment was "disclosed," are fact-specific questions for a court. Noncompete law also varies widely by state, so this describes Virginia only. This is general information, not advice about any specific agreement or termination.

This is general legal information, not legal advice. It covers Virginia's noncompete statute, Va. Code 40.1-28.7:8, as amended by SB 170, and it reflects sources verified on June 22, 2026. Laws change and consult a lawyer licensed in your jurisdiction about your specific situation.

Sources

• Virginia SB 170 (2026 Regular Session), bill text and history, Virginia Legislative Information System: https://lis.virginia.gov/bill-details/20261/SB170
• Code of Virginia section 40.1-28.7:8, Covenants not to compete; civil penalty: https://law.lis.virginia.gov/vacode/40.1-28.7:8/
• Office of the Governor of Virginia, legislation signed (Governor Abigail Spanberger): https://www.governor.virginia.gov/

Related articles

• Virginia at-will employment laws
• At-will employment laws by state
• Virginia whistleblower protections
• California at-will employment laws

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Last updated: 2026-06-22. This is a developing story; details verified as of 2026-06-22.