Virginia Non-Compete and Non-Solicitation Agreements: What Is Enforceable?

The information in this article is for general informational purposes only and does not constitute legal advice. Laws change and individual circumstances vary. Consult a licensed Virginia attorney about your specific situation. Reading this article does not create an attorney-client relationship nor does merely contacting our office through this website or any other means.

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Virginia’s approach to non-compete agreements shifted significantly in 2020, when the General Assembly enacted legislation protecting lower-wage workers from these restrictions. For employers and employees throughout the New River Valley, including businesses in Blacksburg, Christiansburg, Radford, and Pulaski, understanding what is now enforceable, what is prohibited, and how courts evaluate these agreements has become more important than ever.

The 2020 Change: Virginia’s Non-Compete Ban for Lower-Wage Workers

Effective July 1, 2020, Va. Code § 40.1-28.7:8 prohibits employers from entering into, enforcing, or threatening to enforce a non-compete agreement with any low-wage employee. The statute defines a low-wage employee as someone whose average weekly earnings are less than the average weekly wage for Virginia as a whole, as reported by the Virginia Employment Commission.

The average weekly wage threshold is updated periodically. Employers using non-compete agreements should confirm the current threshold, as an agreement that was permissible when signed may become unenforceable if an employee’s wages fall below the updated figure.

Violations of the statute are not merely unenforceable agreements. The law allows aggrieved employees to bring a civil action and recover:

• Lost compensation
• Damages
• Reasonable attorney fees and costs
• Injunctive relief

This is a meaningful change from prior law. Employers who attempt to enforce a prohibited non-compete face real financial exposure, not simply having the court decline to issue an injunction.

The prohibition applies to non-compete agreements specifically. It does not, by its terms, prohibit non-solicitation agreements or confidentiality agreements, which are treated separately.

The Reasonableness Test for Higher Earners

For employees and independent contractors whose earnings exceed the statutory threshold, non-compete agreements remain permissible, but they are evaluated under a common law reasonableness standard that Virginia courts have applied for decades.

Virginia courts assess non-compete agreements by examining three factors:

Duration

The restriction must be reasonable in length. Virginia courts have upheld non-competes of one to two years in many cases. Restrictions extending to five years are viewed more skeptically and may be struck down depending on the circumstances.

Geographic Scope

The geographic restriction must correspond to the employee’s actual territory or the employer’s actual competitive market. A restriction covering the entire United States is generally not enforceable for an employee who only served customers in the New River Valley. A restriction covering the Blacksburg-Christiansburg area for a business whose customers are concentrated there is more defensible.

Scope of Activity

The restriction on activities must be no broader than necessary to protect the employer’s legitimate business interests. A restriction that prevents a former employee from working anywhere in the industry, in any capacity, is broader than one that prevents them from working in the same specific role for a direct competitor. Courts look at whether the restriction is tailored to protect the employer’s actual interests, such as customer relationships, trade secrets, or specialized knowledge, rather than simply preventing competition generally.

Virginia courts have been willing to void non-compete agreements that fail any one of these three criteria. The standard is applied by the courts with the employer bearing the burden of proving reasonableness.

Non-Solicitation Agreements

A non-solicitation agreement restricts a departing employee from soliciting customers, clients, or fellow employees, but does not prohibit them from working for a competitor. These agreements are generally treated more favorably than non-competes because they are less restrictive of the employee’s ability to earn a living.

Virginia courts apply a similar reasonableness analysis to non-solicitation agreements, though the lower burden on the employee often means a court is more willing to enforce them if the duration and scope are reasonable.

Customer Non-Solicitation

A restriction on soliciting customers the employee served or had contact with during employment, for a reasonable period (commonly one to two years), is generally viewed as a legitimate means of protecting established business relationships.

Employee Non-Solicitation

A restriction on recruiting or soliciting former co-workers after departure protects the employer’s investment in its workforce. Courts in Virginia have enforced these provisions where they are time-limited and tied to actual employees with whom the departing employee worked.

Blue-Penciling vs. Void in Its Entirety

When a Virginia court finds a non-compete too broad, it has a choice: narrow the restriction to make it enforceable (blue-penciling), or void the entire agreement.

Virginia courts have historically declined to blue-pencil non-compete agreements. The rule in Virginia is generally that a court will not rewrite the parties’ agreement for them. If the employer drafted an overbroad restriction, the court is more likely to void it entirely than to modify it into something enforceable.

This has a practical implication for employers: drafting a deliberately overbroad non-compete in the hope that a court will enforce a narrower version is a risky strategy. The better approach is to draft restrictions that are reasonable on their face and defensible under Virginia’s three-factor test.

Some courts have been willing to apply blue-penciling in limited circumstances where the agreement contains separate, severable provisions and one of them is enforceable on its own. The result varies depending on the specific language of the agreement and the court.

Practical Drafting Considerations

Businesses in the New River Valley that rely on non-compete or non-solicitation agreements should review their existing templates with several questions in mind:

• Does the agreement comply with the wage threshold prohibition under § 40.1-28.7:8? If any current employees subject to non-competes are below the threshold, those agreements may now be void and attempting to enforce them creates liability.
• Are the duration and geographic scope tied to the employee’s actual role and the business’s actual market?
• Is the scope of restricted activity defined narrowly enough to survive a Virginia court’s scrutiny?
• Does the agreement include a choice of law clause specifying Virginia law? If not, a departing employee who moves to another state may argue that a different state’s law (which may be even more restrictive of non-competes) applies.
• Are the non-compete, non-solicitation, and confidentiality provisions separated into distinct provisions, so that if one is unenforceable the others survive?

There is no universal template. An agreement appropriate for a senior sales executive with years of customer relationships and access to proprietary pricing is different from one appropriate for a technician with general skills who serves a broad customer base.

When Non-Competes Are Part of a Business Sale

Non-compete agreements tied to the sale of a business are analyzed differently from employment non-competes. When a seller agrees not to compete as part of selling their business, Virginia courts give more latitude because the seller is receiving compensation for the goodwill they are agreeing not to undermine. The reasonableness standard still applies, but the analysis is more forgiving toward the buyer in that context.

What to Do If You Have a Non-Compete Question

Whether you are an employer concerned about a departing employee taking clients, or an employee wondering whether the agreement you signed is actually enforceable, a Virginia attorney can assess the specific language of your agreement against current law.

Non-compete disputes often involve an urgent timeline. A business owner concerned about a departing employee may need to act quickly to seek injunctive relief. An employee preparing to take a new position needs to understand their obligations before starting. In either case, getting qualified advice early provides the most options.

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This article is general information only and is not legal advice. Do not rely on this article to make decisions about your specific situation. Contact Valley Legal or another licensed Virginia attorney to discuss your case. Attorney advertising.

Valley Legal, PLLC is located at 107 Pepper St SE, Christiansburg, Virginia 24073, and serves clients throughout the New River Valley of Virginia, including Montgomery County, Blacksburg, Radford, Pulaski, and surrounding communities.