Virginia Requires Severance for Non‑Compete Enforcement
From July 1, 2026, all Virginia non‑compete clauses must be supported by severance or other pay to be enforceable.
Virginia’s non‑compete statute was amended on July 1, 2026 to impose a two‑pronged test for enforceability: a clause must specify a severance amount, or otherwise compensate the employee, and the clause must be narrowly tailored to protect legitimate business interests. The changes extend the statutory definition of “reasonable however” to include the amount of compensation as a determining factor, effectively tightening enforcement. Firms with employees or clients operating across state lines should review existing agreements, adjust severance packages, and update HR policies to ensure compliance. Failure to comply can result in unenforceable clauses and potential litigation over misapplied non‑compete restrictions. Legal teams should also monitor upcoming case law that may further clarify the court’s approach to the new compensation requirement and the scope of acceptable business interests. This development is significant for all law practices dealing with Virginia talent and is likely to affect contracts, litigation, and advisory work.