New Virginia Law Prohibits Non-Competes for Low-Wage Earners

Effective July 1, 2020, Virginia employers may not enter into, enforce or threaten to enforce, a covenant not to compete against a low-wage earner. Low-wage earners are defined as those employees whose average weekly earnings (during the preceding 52-week period or the actual number worked if fewer than 52 weeks) are less than the average weekly wage of the Commonwealth as calculated by the Virginia Workers Compensation Commission. The 2020 weekly wage rate as set forth on the Virginia WCC website is $1,137 effective July 1, 2020, or $59,124 annualized. However, low-wage earners do not include employees whose earnings are derived, in whole or in predominant part, from sales commissions, incentives or bonuses. This new law does not prevent employers from requiring employees to sign agreements prohibiting solicitation of customers or employees or non-disclosure agreements intended to protect confidential information and trade secrets.

If an employer violates this new law, it provides for a private right of action for the employee to ask a court to void the non-compete and award damages, including lost compensation, liquidated damages, and reasonable attorneys’ fees. The Commissioner of the Virginia Department of Labor and Industry may also fine the employer up to $10,000 per violation. As with a number of the new Virginia employment laws, employers are also required to post a copy of this new law where other required posters are posted.