Earlier this year, we informed you that Virginia passed new legislation restricting the use of non-competes for low-wage employees. This new law is now in effect and applies to non-compete agreements entered on or after July 1.
Updated Guidance for Employers
Below are some guidelines for employers to follow to ensure compliance with this new law.
1. Non-competes for low-wage workers entered on or after July 1 are illegal and, therefore, unenforceable.
– Violations of this statute will result in a civil penalty of $10,000 for each violation.
– The law also allows employees to bring a civil action for violations.
2. Low-wage workers include the following employees:
– Salaried employees earning less than $59,124.00/year or $1,137.00/week;
– Hourly employees earning less than $20.30/hour;
– Independent contractors earning less than $20.30/hour; and
– Unpaid interns, students, apprentices, and trainees
3. However, low-wage workers do not include employees who are paid primarily by sales commission, incentives, or bonuses.
4. This law does not affect non-disclosure and confidentiality agreements to protect confidential information and trade secrets.
5. Employers are required to post the law or an approved summary in the same place as other federal and state employee notices.
– Failure to post will result in increasing civil penalties up to $1,000.
Now that the law is in effect, employers operating in Virginia should be cautious when issuing or enforcing non-compete agreements for low-wage employees. Even the threat of enforcing a non-compete for a low-wage employee on or after July 1 is a violation of law. Employers should also post the new law in the appropriate location in the workplace as soon as possible to avoid civil penalties.
Thank you to Allyson R. Mancuso, an Emory University School of Law student and BFV’s 2020 summer associate, for contributing to this article.
Benjamin Fink is known for his work in noncompete, trade secret and competition-related disputes. A shareholder at Berman Fink Van Horn, Ben concentrates his practice in business and employment litigation.