The Old Dominion adopts restrictions on noncompetes

Virginia has always allowed you to impose reasonable restrictions on your employees’ ability to compete after the termination of the employment relationship. While this right was not unfettered, you could take steps to protect your business by preventing a former employee from taking customers or clients with them upon their departure. Such agreements were permitted so long as the restrictions were for a reasonable time and scope. But all of that is about to change for certain of your employees!

New law

Effective July 1, Virginia has adopted a new scheme to protect the right to work of certain workers—even when doing so in direct competition with your business.

The new legislation now prohibits you from entering into or enforcing a noncompete with any “low-wage employee.” Further, you may not prevent such 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.”

‘Details’

As with all laws, the devil is in the details here. First, “low-wage” probably doesn’t mean what you may think it means. Covered employees are those whose average weekly earnings are less than the average weekly wage in the Commonwealth. As of December 2019, the average weekly wage was $1,113, or roughly $50,000 per year.