Virginia Covenants Not to Compete Prohibited as to Low-Wage Employees Poster Required

Code of Virginia
Title 40.1. Labor and Employment
Chapter 3. Protection of Employees
Article 1. General Provisions

§ 40.1-28.7:8. Covenants not to compete prohibited as to lowwage employees; civil penalty
A. As used in this section:
"Covenant not to compete" means a covenant or agreement, including a provision of a contract of
employment, between an employer and employee that restrains, prohibits, or otherwise restricts
an individual's ability, following the termination of the individual's employment, to compete
with his former employer. A "covenant not to compete" shall not restrict an employee from
providing a service to a customer or client of the employer if the employee does not initiate
contact with or solicit the customer or client.
"Low-wage employee" means an employee whose average weekly earnings, calculated by dividing
the employee's earnings during the period of 52 weeks immediately preceding the date of
termination of employment by 52, or if an employee worked fewer than 52 weeks, by the number
of weeks that the employee was actually paid during the 52-week period, are less than the
average weekly wage of the Commonwealth as determined pursuant to subsection B of § 65.2-500
. "Low-wage employee" includes interns, students, apprentices, or trainees employed, with or
without pay, at a trade or occupation in order to gain work or educational experience. "Low-wage
employee" also includes an individual who has independently contracted with another person to
perform services independent of an employment relationship and who is compensated for such
services by such person at an hourly rate that is less than the median hourly wage for the
Commonwealth for all occupations as reported, for the preceding year, by the Bureau of Labor
Statistics of the U.S. Department of Labor. For the purposes of this section, "low-wage employee"
shall not include any employee whose earnings are derived, in whole or in predominant part,
from sales commissions, incentives, or bonuses paid to the employee by the employer.
B. No employer shall enter into, enforce, or threaten to enforce a covenant not to compete with
any low-wage employee.
C. Nothing in this section shall serve to limit the creation or application of nondisclosure
agreements intended to prohibit the taking, misappropriating, threating to misappropriate, or
sharing of certain information, including trade secrets, as defined in § 59.1-336, and proprietary
or confidential information.
D. A low-wage employee may bring a civil action in a court of competent jurisdiction against any
former employer or other person that attempts to enforce a covenant not to compete against
such employee in violation of this section. An action under this section shall be brought within
two years of the latter of (i) the date the covenant not to compete was signed, (ii) the date the
low-wage employee learns of the covenant not to compete, (iii) the date the employment
relationship is terminated, or (iv) the date the employer takes any step to enforce the covenant
not to compete. The court shall have jurisdiction to void any covenant not to compete with a
low-wage employee and to order all appropriate relief, including enjoining the conduct of any
person or employer, ordering payment of liquidated damages, and awarding lost compensation,
damages, and reasonable attorney fees and costs. No employer may discharge, threaten, or
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otherwise discriminate or retaliate against a low-wage employee for bringing a civil action
pursuant to this section.
E. Any employer that violates the provisions of subsection B as determined by the Commissioner
shall be subject to a civil penalty of $10,000 for each violation. Civil penalties owed under this
subsection shall be paid to the Commissioner for deposit in the general fund.
F. If the court finds a violation of the provisions of this section, the plaintiff shall be entitled to
recover reasonable costs, including costs and reasonable fees for expert witnesses, and attorney
fees from the former employer or other person who attempts to enforce a covenant not to
compete against such plaintiff.
G. Every employer shall post a copy of this section or a summary approved by the Department in
the same location where other employee notices required by state or federal law are posted. An
employer that fails to post a copy of this section or an approved summary of this section shall be
issued by the Department a written warning for the first violation, shall be subject to a civil
penalty not to exceed $250 for a second violation, and shall be subject to a civil penalty not to
exceed $1,000 for a third and each subsequent violation as determined by the Commissioner.
Civil penalties owed under this subsection shall be paid to the Commissioner for deposit in the
general fund.
The Commissioner shall prescribe procedures for the payment of proposed assessments of
penalties that are not contested by employers. Such procedures shall include provisions for an
employer to consent to abatement of the alleged violation and to pay a proposed penalty or a
negotiated sum in lieu of such penalty without admission of any civil liability arising from such
alleged violation.
2020, cc. 948, 949, § 40.1-28.7:7.
The chapters of the acts of assembly referenced in the historical citation at the end of this
section(s) may not constitute a comprehensive list of such chapters and may exclude chapters
whose provisions have expired.

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Updated 5/21