As employers across the DMV area are aware, Virginia has been steadily tightening the rules around restrictive covenants in recent years. The latest development, Senate Bill 170, represents a significant shift in the non-compete landscape and demands attention from every Virginia employer that relies on post-employment restrictive covenants to protect its business interests.
What Does SB 170 Do?
At its core, SB 170 renders a non-compete agreement unenforceable if an employer terminates an employee without cause and does not provide the employee with severance benefits or other monetary payment. Critically, the severance or other monetary compensation must be disclosed to the employee at the time the non-compete is executed. In other words, a post-termination offer of severance will not save a non-compete that was silent on the topic when the employee originally signed it.
It is important to note what SB 170 does not define. The law does not define “cause,” “severance benefits,” or “other monetary payment,” and it does not establish a minimum severance amount. These ambiguities will likely be the subject of future litigation and court interpretation. Nor does the bill include an express carve-out for non-compete agreements entered into in connection with the sale of a business.
What Remains Enforceable?
Employers should take comfort in the fact that SB 170 does not limit nondisclosure agreements protecting trade secrets or proprietary and confidential information. The bill also leaves the statutory definition of “covenant not to compete” unchanged.
On the topic of non-solicitation agreements, the Court of Appeals of Virginia recently provided helpful guidance in Sentry Force Security, LLC v. Barrera, 2026 Va. App. LEXIS 54 (Jan. 27, 2026). In that decision, the court held that Virginia’s non-compete statute does not prohibit employers from enforcing provisions that bar employees from directly soliciting the employer’s customers. Because SB 170 does not alter the relevant statutory definition, the Sentry Force holding should remain intact, and customer non-solicitation provisions that prohibit employees from initiating contact with customers should remain enforceable. Employers should note, however, that employee non-solicitation provisions—those that bar a departing worker from soliciting or hiring fellow employees—may face greater scrutiny under the court’s reasoning in Sentry Force.
Enforcement, Penalties, and Posting Requirements
SB 170 carries meaningful teeth. Any employee may bring a private civil action against an employer for alleged unfair contractual practices related to an unlawful non-compete. Such actions must be brought within two years of the later of: (a) signing the covenant, (b) learning of the covenant, (c) termination of employment, or (d) the employer’s enforcement attempt. Courts are authorized to void unlawful covenants and order relief including injunctions, liquidated damages, lost compensation, and attorney fees. Employers are also prohibited from retaliating against any employee who brings such a civil action.
Employers who violate the prohibition face civil penalties of $10,000 per violation. Additionally, SB 170 requires employers to post a copy of the law—or a summary approved by the Virginia Department of Labor and Industry—in the same location where they post other legally required employee notices. Failure to comply with the posting requirement may result in civil penalties of up to $1,000.
What Employers Should Do Now
The law applies only to non-compete agreements entered into, amended, or renewed on or after July 1, 2026—existing agreements that predate this effective date are not affected. That said, employers should use the time between now and July 1 to take several important steps.
First, review and update template non-compete agreements to include clear disclosure of severance or other monetary benefits that will be provided upon execution of the agreement, ensuring enforceability in the event of a without-cause termination. Second, consider whether your termination policies adequately define “cause,” since the statute does not provide a definition and an ambiguous termination may leave you unable to enforce a covenant. Third, ensure that your workplace postings are updated to include SB 170 or a Department-approved summary once available. Finally, review your broader restrictive covenant strategy—including whether non-solicitation and nondisclosure agreements may serve as effective alternatives where a non-compete may no longer be enforceable.
Virginia’s non-compete landscape continues to shift, and proactive employers will be best positioned to protect their workforce investments, client relationships, and proprietary information within the bounds of the law. If you have questions about how SB 170 may affect your business, we encourage you to reach out to our labor and employment team.
About the Authors
Merry Campbell
Meredith “Merry” Campbell, Co-Chair of Shulman Rogers’ Employment and Labor Practice Group, is a trusted partner for organizations navigating their most complex people challenges. Merry brings elite employment law expertise and a practical, clear-eyed approach, advising on everything from proactive HR strategies and workplace compliance to litigation when it matters most. Clients value her for the accessibility and steady guidance that defines the Shulman Rogers experience.
Learn more about Merry and her practice: https://www.shulmanrogers.com/attorneys/meredith-merry-campbell/
Joy Einstein
Meet Joy C. Einstein, a shareholder in Shulman Rogers’ Employment and Labor Practice Group whose practice spans the full spectrum of employer-side employment and labor law. Joy advises businesses on workplace policies, harassment and discrimination matters, wage and hour compliance, and union-related issues, and she represents clients before federal and state courts and administrative agencies when litigation is unavoidable. Recognized by Best Lawyers in America, Joy is known for her responsiveness, her ability to craft tailored solutions, and her commitment to delivering results even under tight time constraints.
Learn more about Joy: https://www.shulmanrogers.com/attorneys/joy-c-einstein/
