                                 CODE OF VIRGINIA

COVENANTS NOT TO COMPETE PROHIBITED; EXCEPTIONS; CIVIL PENALTY (§ 40.1-28.7:8)

A. As used in this section:
			&#8220;Covenant not to compete&#8221; means a covenant or agreement,
including a provision of a contract of employment, between an employer and
employee that restrains, prohibits, or otherwise restricts an individual&#8217;s
ability, following the termination of the individual&#8217;s employment, to
compete with his former employer. A &#8220;covenant not to compete&#8221; shall
not restrict an employee from providing a service to a customer or client of the
employer if the employee does not initiate contact with or solicit the customer
or client.
			&#8220;Low-wage employee&#8221; means an employee (i) whose average weekly
earnings, calculated by dividing the employee&#8217;s earnings during the period
of 52 weeks immediately preceding the date of termination of employment by 52,
or if an employee worked fewer than 52 weeks, by the number of weeks that the
employee was actually paid during the 52-week period, are less than the average
weekly wage of the Commonwealth as determined pursuant to subsection B of &#xA7;
65.2-500 or (ii) who, regardless of his average weekly earnings, is entitled to
overtime compensation under the provisions of 29 U.S.C. &#xA7; 207 for any hours
worked in excess of 40 hours in any one workweek. &#8220;Low-wage
employee&#8221; includes interns, students, apprentices, or trainees employed,
with or without pay, at a trade or occupation in order to gain work or
educational experience. &#8220;Low-wage employee&#8221; also includes an
individual who has independently contracted with another person to perform
services independent of an employment relationship and who is compensated for
such services by such person at an hourly rate that is less than the median
hourly wage for the Commonwealth for all occupations as reported, for the
preceding year, by the Bureau of Labor Statistics of the U.S. Department of
Labor. For the purposes of this section, &#8220;low-wage employee&#8221; shall
not include any employee whose earnings are derived, in whole or in predominant
part, from sales commissions, incentives, or bonuses paid to the employee by the
employer.

B. No employer shall enter into, enforce, or threaten to enforce a covenant not
to compete with any low-wage employee.

C. Nothing in this section shall serve to limit the creation or application of
nondisclosure agreements intended to prohibit the taking, misappropriating,
threatening to misappropriate, or sharing of certain information to which an
employee has access, including trade secrets, as defined in &#xA7; 59.1-336, and
proprietary or confidential information.

D. A low-wage employee may bring a civil action in a court of competent
jurisdiction against any former employer or other person that attempts to
enforce a covenant not to compete against such employee in violation of this
section. An action under this section shall be brought within two years of the
latter of (i) the date the covenant not to compete was signed, (ii) the date the
low-wage employee learns of the covenant not to compete, (iii) the date the
employment relationship is terminated, or (iv) the date the employer takes any
step to enforce the covenant not to compete. The court shall have jurisdiction
to void any covenant not to compete with a low-wage employee and to order all
appropriate relief, including enjoining the conduct of any person or employer,
ordering payment of liquidated damages, and awarding lost compensation, damages,
and reasonable attorney fees and costs. No employer may discharge, threaten, or
otherwise discriminate or retaliate against a low-wage employee for bringing a
civil action pursuant to this section.

E. Any employer that violates the provisions of subsection B as determined by
the Commissioner shall be subject to a civil penalty of $10,000 for each
violation. Civil penalties owed under this subsection shall be paid to the
Commissioner for deposit in the general fund.

F. If the court finds a violation of the provisions of this section, the
plaintiff shall be entitled to recover reasonable costs, including costs and
reasonable fees for expert witnesses, and attorney fees from the former employer
or other person who attempts to enforce an unlawful covenant not to compete
against such plaintiff.

G. Every employer shall post a copy of this section or a summary approved by the
Department in the same location where other employee notices required by state
or federal law are posted. An employer that fails to post a copy of this section
or an approved summary of this section shall be issued by the Department a
written warning for the first violation, shall be subject to a civil penalty not
to exceed $250 for a second violation, and shall be subject to a civil penalty
not to exceed $1,000 for a third and each subsequent violation as determined by
the Commissioner. Civil penalties owed under this subsection shall be paid to
the Commissioner for deposit in the general fund.
			The Commissioner shall prescribe procedures for the payment of proposed
assessments of penalties that are not contested by employers. Such procedures
shall include provisions for an employer to consent to abatement of the alleged
violation and to pay a proposed penalty or a negotiated sum in lieu of such
penalty without admission of any civil liability arising from such alleged
violation.

HISTORY: 2020, cc. 948, 949, § 40.1-28.7:7; 2025, c. 585.