Virginia’s New Minimum Salary Level for Non-Compete Agreements

We’re here to bring you the latest news that directly impacts your business operations in the great Commonwealth of Virginia. It’s time to take note: Virginia has a new minimum salary level for non-compete agreements. This affects how employers can enter into, enforce, or even consider enforcing non-compete agreements with their employees.

Let's dive into the specifics of Virginia’s non-compete law.

Employers in Virginia cannot “enter into, enforce, or threaten to enforce a covenant not to compete” with any "low-wage employee." Who falls into this category? A low-wage employee currently means any worker, including independent contractors, who earns an average of less than $1,343 per week, or $69,836 annually. The Virginia Employment Commission (VEC) calculates this amount based on data collected from employers across the commonwealth. VEC analyzes the data regularly to ensure it aligns with current economic conditions and trends.

The threshold for identifying low-wage employees can change as Virginia's average weekly wage fluctuates. To stay up to date on any modifications to the threshold, we strongly advise checking the Virginia Department of Labor and Industry (DOLI) website or consulting with an experienced employment law attorney. It is important to note that the annual mean wage for all occupations in Virginia stands at $65,590, according to Occupational Employment Statistics (OES) survey data for Virginia by the U.S. Bureau of Labor Statistics (BLS). This means a significant number of Virginia employers could be impacted by the revised salary threshold. If you use non-competes, you should review them to determine if they remain lawful after the threshold increase.

Let's address the consequences of non-compliance.

Employers found in violation of this law can face a slew of legal repercussions, including lawsuits seeking damages, attorneys' fees, and liquidated damages. The Commissioner of the Virginia DOLI can impose civil monetary penalties of up to $10,000 per violation. It's a costly path to tread, so ensure your business is on the right side of the law.

Compliance is key.

You must prominently display a copy of the code or an approved summary provided by Virginia DOLI in the same location where other employee notices required by state or federal law are posted. Think of it as an opportunity to showcase your commitment to adherence and create an informed workplace environment.

When can you enforce non-compete agreements?

Remember Virginia's non-compete law only applies to low-wage employees as defined by the statute. This means that for employees earning more than $1,343 per week, employers can still enter into and enforce non-compete agreements.  Regardless of salary level, a “low-wage employee” does not include “any employee whose earnings are derived, in whole or in predominant part, from sales commissions, incentives, or bonuses paid to the employee.”  This commission exception is an important limitation that should be evaluated in each case.  However, it's paramount to ensure any non-compete agreements with employees who do not fall under the low-wage employee definition are reasonable in geographic and functional scope and duration. Virginia remains vigilant against overly broad or excessively lengthy non-compete agreements, which may be deemed unenforceable.

To navigate these changes smoothly, we recommend employers review their existing non-compete agreements and practices. It's crucial to ensure compliance with this new law, protecting both your business interests and your valued employees. If you have any questions or concerns about how this law affects your business, don't hesitate to seek guidance from a member of the WRVB Labor & Employment team. We're here to support you every step of the way!