No severance, no noncompete: VA’s new termination without cause rule

Virginia has drawn a bright line for employers: If you terminate an employee without cause and don’t provide for severance, you cannot enforce a noncompete. Governor Abigail Spanberger recently signed SB170 into law, codifying this “no severance, no noncompete” rule, effective July 1, 2026. If your company uses noncompetes, nonsolicitation agreements, or other restrictive covenants, now is the time to review your practices.

Core rule

SB170 is straightforward: no severance, no noncompete. If an employer discharges an employee without cause and didn’t provide severance benefits or other monetary payment, the noncompete is unenforceable. And the employer must have disclosed the severance benefits at the time the noncompete was signed—not after the fact. Previously, Virginia’s noncompete restrictions applied only to “low-wage employees.” SB170 extends the no-severance-no-noncompete rule to all employees.

The law carves out two exceptions. Enforcement remains available if the employee was terminated for cause or if the employee voluntarily resigned.

These changes apply to restrictive covenants entered into, amended, or renewed on or after July 1, 2026. Agreements executed before that date are grandfathered and won’t be subject to the new requirements.

Stakes: Penalties for violating the no-severance rule