Virginia’s non-compete law doesn’t seem to sit still. On July 1, 2026, Virginia will change the rules… again! Last time, the change reduced the scope of the employees that employers could enter non-competes with. This time, enforceability is becoming dependent on how an employee leaves, and in some cases, on whether you handle their exit in a very specific way. If you have non-competition agreements with the key people you rely on (the ones that know your strategies, your clients, your systems), the ground is shifting.
Get it wrong, and you may find the protection you were relying on has vanished at the exact moment you need it: when your best employee is standing in a competitor’s lobby.
But there’s no need to panic. Instead, we need to plan it. Let’s walk through what changed, where the traps are hiding, and what to do now.
What Actually Changed
Here’s the old rule. For the past few years, Virginia said you couldn’t enforce a non-compete against a “low-wage” employee, generally someone earning less than the state’s average weekly wage. That rule recently expanded to restrict enforceability against anyone entitled to overtime pay. Above that line, your non-competes were largely fair game.
That line still exists. But the new law (Chapter 883, signed April 13, 2026, amending Virginia Code § 40.1-28.7:8) modifies things even on the right side of the line. Starting July 1, a non-compete is no longer enforceable against an employee you discharge without providing severance, unless you discharge that employee “for cause.”
Our guidepost has moved beyond evaluating “how much did this person earn?” and has expanded to include “how did this person leave, and what did we do on the way out?” An employee you let go without cause and without severance can walk straight to a competitor, non-compete and all. And if they do, under the law, your options are limited.
The Whole Thing Now Turns on Two Words, and the Law Defines Neither
Your protection now rises or falls on two words: “cause” and “severance.” You’d expect a statute that hangs so much on those words to tell you what they mean. It doesn’t. Neither term is defined. That gap is exactly where the traps live. But as with any trap, there’s opportunity if we understand the situation and plan it well.
Trap #1: Assuming your handbook’s idea of “cause” will hold up. Many employee handbooks and agreements treat “cause” loosely. If they address it at all, they use a vague catch-all. Many businesses have nothing more than the unwritten understanding that “we can let someone go if it isn’t working out.” After all, it’s employment at will, right? That may have been fine before. But now “for cause” is the difference between an enforceable non-compete and a worthless one. After-the-fact reasoning like “they did a bad job and I didn’t like it” is precisely what a former employee’s lawyer will pick apart. The more concretely you’ve defined cause in advance, the easier your non-compete is to defend.
Trap #2: Planning to “just pay severance later.” It’s tempting to assume you can decide to terminate someone for cause, then sprinkle on a severance check to keep the non-compete alive. But this is a big gamble. One, a severance is an agreement between you and the employee. If your employee doesn’t want to agree, because they may already have an eye on working with your competitor, your employee does not have to agree. Two, the new law says that a severance “shall be disclosed upon execution” of the non-compete. There may be some wiggle room in this later, but the law definitely favors a severance that has been agreed to in connection with you and your employee signing a non-compete, not after. The safest move may be to build severance into the deal from the start. Treating severance as an afterthought is a gamble, and you won’t learn whether you lost until you’re in court trying to enforce.
Trap #3: Thinking this blows up every agreement you already have. Good news: it doesn’t. The law is prospective only. Any non-compete you entered, amended, or renewed before July 1, 2026, is grandfathered and untouched. But that grace doesn’t last forever. The moment one of those agreements comes up for renewal after July 1, the new rules are in play. Today’s safe agreement becomes tomorrow’s exposure if you renew it on autopilot.
We also need to highlight one important distinction. This law is about non-competes, not about everything. Your NDAs and trade-secret protections still stand. So do properly drafted customer non-solicitation provisions. If a departing employee tries to walk off with your confidential information or solicit your clients, those tools are still in your kit. The new law leaves them alone.
What to Do Before July 1
None of this requires a fire drill. It requires a few deliberate moves while you still have runway.
- Tighten what “cause” means. Start with your employee handbook, because that’s the easiest and quickest lever you can pull. You generally can’t change a defined term inside an existing employment agreement until it comes up for renewal. Your handbook isn’t a contract, though, so you can change that at any time. As you sharpen the definition, think like a risk manager: what are the things an employee could actually do that would harm your business, its finances, its operations, or its reputation? Name those things specifically and call them what they are, cause for termination. The clearer and more concrete your list, the stronger your footing if you ever need to enforce. Build a definition you could defend with a straight face in front of a judge, rather than a gut-feel reason you’ll have to dress up after the fact.
- Decide what severance you can actually live with. Because severance is now part of what keeps a non-compete alive, figure out, in advance, what severance terms are reasonable and supportable for your business. This isn’t about being generous; it’s about being deliberate. Pick a structure you’d be comfortable honoring across the board, and make preparations to bake it into how you handle termination without cause in the future.
- Map your renewals. Pull the list of who’s under a non-compete and when each agreement renews. The ones signed before July 1 are safe, for now. But every renewal after that date is a fresh agreement under the new rules. Knowing which agreements expire when lets you update the language on your timeline, calmly, instead of scrambling after someone’s already on the way out.
And one housekeeping item that’s easy to overlook: the law requires employers to post a copy of the statute (or an approved summary) wherever you keep your other required employee notices.
Make Your Plan Today!
Many business owners won’t think about any of this until a key person is already walking out the door. By then, the choices that decide whether your non-compete works have already been made. Don’t be that owner. The whole point of getting ahead of July 1 is to make those choices on a calm afternoon instead of a bad Monday.
This is exactly the kind of decision that rewards thinking a step ahead: low-drama if you handle it now, genuinely costly if you don’t.
If you have non-competes in your business, or you’re wondering whether the ones you already have will still hold, let’s take a look together before the deadline does it for you. We’ll help you find the path that keeps you protected and keeps you moving.
That’s what Team Way Law is here for. Let’s talk!