VA Supreme Court may clarify if noncompete statute covers nonsolicitation

Virginia employers may soon receive important guidance on the scope of the Commonwealth’s restrictions on restrictive covenant agreements. In Sentry Force Security, LLC v. Barrera, the Supreme Court of Virginia has been asked to review an unpublished court of appeals decision holding that Virginia Code § 40.1-28.7:8 may prohibit employee nonsolicitation provisions for covered employees.

The issue has taken on increased significance because Virginia’s restrictive covenant statute no longer applies only to “low-wage employees.” Recent amendments expanded the law’s coverage to employees entitled to overtime compensation under the Fair Labor Standards Act (FLSA), effectively extending the statute’s protections to most hourly workers in the Commonwealth. As a result, the Supreme Court’s interpretation could affect restrictive covenant agreements used by employers across virtually every industry in Virginia.

Background

Virginia enacted Code § 40.1-28.7:8 to prohibit employers from entering into, enforcing, or threatening to enforce a “covenant not to compete” against covered employees. The statute defines a “covenant not to compete” as an agreement that restrains, prohibits, or otherwise restricts an individual’s ability, after employment ends, to compete with a former employer.