Virginia employers face an immediate change in their ability to protect legitimate business interests—there are two new laws that effectively ban non-competition restrictions for employees terminated without cause and for health care professionals. In addition, the forthcoming results of the Virginia State Bar’s (VSB) study on confidentiality provisions in settlement agreements involving personal injuries for sexual assault could drastically affect how these cases are settled.
Ban on non-competes for terminations without cause
Previously, in 2020, Virginia established a ban on non-competition restrictions for employees who earn less than the average weekly wage of the Commonwealth, which is a fluctuating number currently at $1,507.01 per week ($78,364.52 annualized). Then, in 2025, Virginia expanded that ban to include all employees classified as non-exempt under the federal Fair Labor Standards Act.
Now, effective July 1, 2026, Virginia will prohibit non-compete restrictions where an employee is terminated without cause, unless the employer provides severance benefits or other monetary payment that was disclosed when the covenant was executed. Notably, the new law does not define “cause,” “severance benefits,” or a minimum amount, which will require careful agreement drafting and likely result in litigation interpreting those provisions. Additionally, the new law not only renders offending non-competes unenforceable but also establishes civil penalties of up to $10,000 per violation for maintaining agreements that run afoul of the statute.
Ban on non-competes and restrictions on non-solicitations for health care employers and professionals
Effective July 1, 2026, Virginia will prohibit non-competes for “health care professionals,” defined to include individuals licensed, registered, or certified by the Boards of Medicine, Nursing, Counseling, Optometry, Psychology, or Social Work. The law provides a narrow exception for covenants entered into as part of a sale of a business. The new law does allow repayment provisions for certain recruitment, education, and training costs for professionals with fewer than five years’ tenure.
Beyond the non-compete ban, the new law also indicates that narrowly drawn patient non‑solicitation restrictions are permissible, provided they are limited to (1) patients with whom the professional had material contact, and (2) the same or substantially similar products or services. While this language is written as a carve-out, it essentially functions as a limit on customer non-solicitation restrictions for health care professionals. As an added limitation on non-solicitation prohibitions, the law expressly permits a health care professional to share with a patient to whom they were providing consultation or treatment before departure (1) their new contact information, and (2) the patient’s right to choose a health care professional.
VSB to study confidential settlement agreements
The Virginia State Bar’s Legal Ethics Committee is examining whether professional responsibility rules should restrict attorneys from including nondisclosure or confidentiality provisions in settlement agreements for civil personal injury claims arising from criminal sexual assault, commercial sex trafficking, or other sexual offenses that occurred during a victim’s infancy or incapacity. This inquiry matters to Virginia employers because the outcome could reshape how counsel draft and negotiate settlements in these sensitive cases — potentially limiting or conditioning the use of confidentiality clauses that have historically been standard tools for managing reputational risk and resolving civil claims.
The study sits at the intersection of two competing interests: employer and institutional interests in resolving claims discreetly, and the growing public policy consensus — reflected in legislation in states like California, Texas, and Missouri — that secrecy in sexual offense settlements can shield serial offenders and harm public safety. Virginia already restricts pre‑dispute NDAs covering sexual assault and harassment as a condition of employment under Va. Code § 40.1‑28.01, but that statute does not reach post‑dispute settlement agreements. The VSB’s work could fill that gap through professional responsibility guidance, which would obligate Virginia attorneys to decline to draft or enforce prohibited provisions regardless of client instruction, and could expose attorneys who do so to disciplinary consequences.
The General Assembly’s Senate Courts of Justice Committee directed the VSB to convene a work group of relevant stakeholders and deliver recommendations by November 1, 2026. The VSB solicited public comment earlier this year with the deliberative phase continuing. No additional public comment period has been announced. Employers and counsel who wish to monitor the process before November should watch the VSB calendar for any publicly noticed meetings covered by the Virginia Freedom of Information Act and may contact the Executive Director’s office or Ethics Counsel to express interest in future engagement opportunities, recognizing that further participation is at VSB’s discretion.
Recommended next steps for employers
Virginia employers should take several steps now to prepare for these changes. First, for agreements going forward, ensure that any non-compete provisions for at-will employees clearly disclose severance or other monetary consideration at execution, as required by the new statute. Second, health care employers should audit their restrictive covenant templates to confirm that patient non-solicitation provisions are narrowly drawn and comply with the new limitations. Third, employers in all industries should monitor the VSB’s ongoing study of confidentiality provisions in sexual offense settlement agreements, as any resulting guidance could affect how Virginia counsel draft and negotiate settlements. Now is the time to consult with counsel and update employment agreements and policies before these changes take effect on July 1, 2026.