Can a Non-Compete Be Enforced in Virginia?

Virginia's reasonableness test

Virginia courts disfavor restraints on trade and analyze non-competes under a three-part reasonableness test. The employer carries the burden to show that the covenant is:

• No greater than necessary to protect a legitimate business interest
• Not unduly harsh or oppressive in curtailing the employee's ability to earn a livelihood
• Reasonable from the standpoint of sound public policy

Each prong matters. A covenant can be reasonable in geography but overbroad in scope of activity, or reasonable in duration but vague about the restricted territory. Virginia courts generally do not "blue-pencil" — meaning if any prong of the covenant is unreasonable, the entire restriction can fail.

The low-wage employee statute

Effective July 1, 2020, Va. Code § 40.1-28.7:8 prohibits employers from entering into, enforcing, or threatening to enforce non-compete agreements against low-wage employees. The statute defines low-wage employee by reference to Virginia's average weekly wage, with the figure updated periodically.

The statute also provides employees who are subject to unlawful non-competes a private cause of action — including civil penalties and attorney's fees — and requires employers to post notice of the statute. Employers using one-size-fits-all non-competes across their workforce often have exposure here without realizing it.

What counts as a legitimate business interest

Virginia recognizes several legitimate business interests that can support a non-compete:

• Protection of trade secrets and confidential information
• Protection of customer relationships developed at the employer's expense
• Protection of investments in specialized employee training
• Protection of goodwill associated with the business

What is not a legitimate interest: simply preventing competition. A covenant that restrains an employee from working in the same industry generally, without tying the restriction to a specific protectable interest, is vulnerable.

Scope, duration, and geography

The covenant must be tailored to the legitimate interest. In practice, that means:

• Scope — restricting the specific activities that would harm the employer's interest, not all employment in the industry
• Duration — long enough to protect the interest but no longer; 1- to 2-year restrictions are common; longer terms face more scrutiny
• Geography — limited to the territory where the employer actually competes or the employee actually operated; nationwide restrictions for a regional business are routinely struck down

Non-solicits and confidentiality clauses

Non-solicitation agreements — covenants not to solicit customers or employees — are also subject to the reasonableness test, but they generally face less skepticism than outright non-competes because they restrict less. A well-drafted non-solicit can often be enforced when a parallel non-compete would not.

Confidentiality and trade-secret protections are governed by separate frameworks (including the Virginia Uniform Trade Secrets Act) and are generally easier to enforce than restrictive covenants. Combining them strategically is often more effective than relying on the non-compete alone.

Special categories

Virginia law provides separate protections for physicians and certain other categories that limit how their non-competes can be enforced. The general framework still applies, but specific statutes can override or supplement it.

Sale-of-business covenants — restrictions a seller agrees to when selling a business — generally receive more favorable treatment than employment covenants, because they protect the value of the business the buyer paid for.

Where non-competes come up at PLDR

PLDR does not maintain a labor and employment practice. Restrictive covenants still surface regularly in the business work the firm does handle — most often in a purchase agreement when a business changes hands, in an operating or shareholder agreement among owners, or in a contract dispute where a covenant is one term among many.

Sale-of-business covenants sit squarely in PLDR's business transition and business formation work. James Richards heads the firm's business and general counsel practice and can advise on how a covenant is drafted into a deal. For a standalone employment dispute — an employee challenging a non-compete, or an employer seeking to enforce one against a former employee — PLDR refers the matter to counsel who practice employment law.

This page provides general information about Virginia non-compete law. It is not legal advice and does not create an attorney-client relationship. Statutory thresholds and case-law standards update periodically; verify current values with counsel.