Will a Virginia court enforce this non-compete against our former employee?
Only if you prove it is reasonable, and for a large and growing class of employees not at all. The common-law test: "The enforceability of a provision that restricts competition is a question of law that we review de novo. ... It is enforceable if it 'is narrowly drawn to protect the employer's legitimate business interest, is not unduly burdensome on the employee's ability to earn a living, and is not against public policy'" (Home Paramount, quoting Omniplex). "When evaluating whether the employer has met that burden, we consider the 'function, geographic scope, and duration' elements of the restriction", and "These elements are 'considered together' rather than 'as three separate and distinct issues.'" Considered together does not mean traded off, and Home Paramount settles that: the employer argued that its "relatively narrow" geography and a commonly accepted duration "compensate for the breadth of the function element", and the Court answered "We disagree", because "We have consistently assessed the function element of provisions that restrict competition by determining whether the prohibited activity is of the same type as that actually engaged in by the former employer." The clause that failed barred the employee from "engag[ing] indirectly or concern[ing] himself . . . in any manner whatsoever" in pest control "as an owner, agent, servant, representative, or employee, and/or as a member of a partnership and/or as an officer, director or stockholder of any corporation", and the Court AFFIRMED unenforceability and overruled its own earlier decision upholding identical words ("to the extent that Paramount Termite conflicts with any portion of our holding today, Paramount Termite is overruled"). The employer carries the burden and loses ambiguities: "Because such restrictive covenants are disfavored restraints on trade, the employer bears the burden of proof and any ambiguities in the contract will be construed in favor of the employee" (Omniplex); "First, covenants in restraint of trade are not favored, will be strictly construed, and, in the event of an ambiguity, will be construed in favor of the employee", and "Second, the employer bears the burden to show that the restraint is no greater than necessary to protect a legitimate business interest, is not unduly harsh or oppressive in curtailing an employee's ability to earn a livelihood, and is reasonable in light of sound public policy" (Modern Environments). On top of that sits Va. Code § 40.1-28.7:8: "No employer shall enter into, enforce, or threaten to enforce a covenant not to compete with any low-wage employee or health care professional", and (a separate rule that reaches EVERY employee) "No covenant not to compete between an employer and an employee is enforceable if such employer discharges such employee from employment without providing severance benefits or other monetary payment to such employee, unless such employer discharges such employee for cause. Such severance benefits or other monetary payment shall be disclosed upon execution of the covenant not to compete."
The trap
"Low-wage employee" is far wider than the name suggests. It means an employee whose average weekly earnings over the preceding 52 weeks are below the Commonwealth's average weekly wage under § 65.2-500(B), OR one "who, regardless of his average weekly earnings, is entitled to overtime compensation under the provisions of 29 U.S.C. § 207 for any hours worked in excess of 40 hours in any one workweek", so any non-exempt employee is covered however well paid, while an employee whose pay is derived in whole or in predominant part from sales commissions, incentives or bonuses is not. The definition is also wider at both ends than the name: it expressly INCLUDES "interns, students, apprentices, or trainees employed, with or without pay" and an independent contractor paid below the Commonwealth's median hourly wage, and expressly EXCLUDES an employee whose earnings come "in whole or in predominant part, from sales commissions, incentives, or bonuses". Violating subsection B or C carries, as determined by the Commissioner, a civil penalty of $10,000 for each violation payable to the Commissioner, and a separate failure to post the section carries a written warning and then penalties of up to $250 and $1,000 (§ 40.1-28.7:8(E), (G)); a private action that "shall be brought within two years of the latter of" the signing, the employee's learning of the covenant, the termination, or "the date the employer takes any step to enforce" it, in which the court may void the covenant and order "liquidated damages" and "lost compensation, damages, and reasonable attorney fees and costs", with anti-retaliation protection for low-wage employees and health care professionals who bring it (subsection D); and, on a finding of violation, "reasonable costs, including costs and reasonable fees for expert witnesses, and attorney fees" (subsection F). The section does not limit nondisclosure agreements protecting trade secrets as defined in § 59.1-336 or proprietary or confidential information. And on procedure: Virginia will not let you lose the covenant on the pleadings, because "Because a demurrer cannot be used to decide on the merits whether a restraint on competition is enforceable, we will reverse the circuit court's judgment" and "restraints on competition are neither enforceable nor unenforceable in a factual vacuum" (Assurance Data), which also means an employer cannot win on the pleadings and must put on evidence of its legitimate business interest. The 2026 amendments (cc. 883, 1113, 1114) also wrote in the exceptions, and a drafter who reads only the bans misses them. The definition itself says 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". Subsection (H)(2) permits a covenant with a health care professional or that person's business entity "as part of a sale of business" transferring all or substantially all of the operating assets and goodwill, provided it "is reasonable in scope, duration, and geographic area". And subsection (I) lets employers of health care professionals recover recruitment-related costs (relocation, signing or retention bonuses, training) from one who leaves within five years, and enforce a post-termination customer non-solicitation limited to customers with whom the professional had material contact, both "valid and enforceable by law"; the non-solicit may not stop the professional telling existing patients about the new practice, its contact details and the patient's right to choose.
25 authorities
- statuteVa. Code § 40.1-28.7:8enactment date not established
The words that state the rule
No employer shall enter into, enforce, or threaten to enforce a covenant not to compete with any low-wage employee or health care professional.
- statuteVa. Code § 40.1-28.7:8enactment date not established
The words that state the rule
No covenant not to compete between an employer and an employee is enforceable if such employer discharges such employee from employment without providing severance benefits or other monetary payment to such employee, unless such employer discharges such employee for cause. Such severance benefits or other monetary payment shall be disclosed upon execution of the covenant not to compete.
- statuteVa. Code § 40.1-28.7:8enactment date not established
The words that state the rule
"Low-wage employee" means an employee (i) 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 or (ii) who, regardless of his average weekly earnings, is entitled to overtime compensation under the provisions of 29 U.S.C. § 207 for any hours worked in excess of 40 hours in any one workweek. "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" 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 by the employer.
- statuteVa. Code § 40.1-28.7:8enactment date not established
The words that state the rule
Nothing in this section shall serve to limit the creation or application of: 1. Nondisclosure agreements intended to prohibit the taking, misappropriating, threatening to misappropriate, or sharing of certain information to which an employee has access, including trade secrets, as defined in § 59.1-336 , and proprietary or confidential information; or
The words that state the rule
The enforceability of a provision that restricts competition is a question of law that we review de novo. Omniplex World Servs. Corp. v. US Investigations Servs., Inc., 270 Va. 246, 249, 618 S.E.2d 340, 342 (2005). It is enforceable if it “is narrowly drawn to protect the employer’s legitimate business interest, is not unduly burdensome on the employee’s ability to earn a living, and is not against public policy.”
The words that state the rule
The employer bears the burden of proving each of these factors. Modern Env’ts, Inc. v. Stinnett, 263 Va. 491, 493, 561 S.E.2d 694, 695 (2002). When evaluating whether the employer has met that burden, we consider the “function, geographic scope, and duration” elements of the restriction.
The words that state the rule
These elements are “considered together” rather than “as three separate and distinct issues.”
- case270 Va. 246Omniplex World Services Corp. v. U.S. Investigations Services, Inc.Va.decided 2005read it at the source ↗
The words that state the rule
Because such restrictive covenants are disfavored restraints on trade, the employer bears the burden of proof and any ambiguities in the contract will be construed in favor of the employee.
- case270 Va. 246Omniplex World Services Corp. v. U.S. Investigations Services, Inc.Va.decided 2005read it at the source ↗
The words that state the rule
Each non-competition agreement must be evaluated on its own merits, balancing the provisions of the contract with the circumstances of the businesses and employees involved.
The words that state the rule
This Court evaluates the validity and enforceability of restrictive covenants in employment agreements using well settled principles. First, covenants in restraint of trade are not favored, will be strictly construed, and, in the event of an ambiguity, will be construed in favor of the employee.
The words that state the rule
Second, the employer bears the burden to show that the restraint is no greater than necessary to protect a legitimate business interest, is not unduly harsh or oppressive in curtailing an employee's ability to earn a livelihood, and is reasonable in light of sound public policy.
The words that state the rule
Because a demurrer cannot be used to decide on the merits whether a restraint on competition is enforceable, we will reverse the circuit court's judgment.
The words that state the rule
The premise running through Simmons, Modern Environments, Home Paramount, and our other decisions is that restraints on competition are neither enforceable nor unenforceable in a factual vacuum. Based on evidence presented, a trial court must ascertain whether a restraint "'is narrowly drawn to protect the employer's legitimate business interest, is not unduly burdensome on the employee's ability to earn a living, and is not against public policy.'"
- statuteVa. Code § 40.1-28.7:8enactment date not established
The words that state the rule
"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.
- statuteVa. Code § 40.1-28.7:8enactment date not established
The words that state the rule
2. Covenants not to compete or similarly restrictive covenants with any health care professional or such person's business entity as part of a sale of business when the transaction includes the sale of all or substantially all of (a) the operating assets together with the goodwill of the health care professional's business entity, (b) the operating assets of a division or subsidiary of the health care professional's business entity together with the goodwill of that division or subsidiary, or (c) the ownership interest of the health care professional's business entity or any division or subsidiary thereof. In such transactions, the seller and buyer may enter a covenant not to compete or similarly restrictive covenant for the health care professional or such person's business entity, provided that such covenant not to compete or similarly restrictive covenant is reasonable in scope, duration, and geographic area.
- statuteVa. Code § 40.1-28.7:8enactment date not established
The words that state the rule
I. Nothing in this section shall serve to limit the ability of employers of health care professionals to: 1. Include provisions in employment agreements, through a promissory note or otherwise, that require repayment for all or a prorated portion of recruitment-related costs, including relocation expenses, signing or retention bonuses, and other remuneration provided to induce relocation or establishment of a practice in a specified geographic area, as well as recruiting, education, or training expenses from a departing health care professional who has been employed for fewer than five years, and such provisions shall be valid and enforceable by law; or 2. Include provisions in employment agreements requiring a health care professional, for the benefit of an employer and for a stated period of time following termination, to refrain from soliciting or attempting to solicit, directly or by assisting others, any business from any of such employer's customers, including actively seeking prospective customers, with whom the employee had material contact during his employment, for purposes of providing products or services that are the same or substantially similar to those provided by the employer, except for any notice or communication as required by state or federal law. Any reference to a prohibition against soliciting or attempting to solicit customers shall be narrowly construed to apply only to (i) the health care professional's customers, including actively sought prospective customers, with whom the health care professional had material contact during employment and (ii) products and services that are the same as or substantially similar to those provided by the employer. Such provisions shall be valid and enforceable by law. Such provisions shall not preclude a health care professional from disclosing the following information to a patient to whom the health care professional was providing consultation or treatment before departure from an employer: the health care professional's continuing practice of medicine, the health care professional's new contact information, and the patient's right to choose a health care professional.
- statuteVa. Code § 40.1-28.7:8enactment date not established
The words that state the rule
D. An employee or health care professional 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 employee or health care professional 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 an employee or health care professional 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 otherwise discriminate or retaliate against a low-wage employee or health care professional for bringing a civil action pursuant to this section.
- statuteVa. Code § 40.1-28.7:8enactment date not established
The words that state the rule
E. Any employer that violates the provisions of subsection B or C 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 an unlawful covenant not to compete against such plaintiff.
The words that state the rule
Home Paramount asserts that the circuit court erred by focusing on the language of the Provision prohibiting Shaffer from “engag[ing] indirectly or concern[ing] himself . . . in any manner whatsoever” in pest control “as an owner, agent, servant, representative, or employee, and/or as a member of a partnership and/or as an officer, director or stockholder of any corporation, or in any manner whatsoever.” By doing so, Home Paramount argues, the court took those words out of context and gave undue weight to the function element of the enforceability analysis to the exclusion of the geographic scope and duration elements. Home Paramount contends the geographic scope was relatively narrow and the duration was one commonly accepted for such provisions, so those elements compensate for the breadth of the function element, making the Provision as a whole no broader than necessary to protect its legitimate business interests. We disagree. 3 We have consistently assessed the function element of provisions that restrict competition by determining whether the prohibited activity is of the same type as that actually engaged in by the former employer.
The words that state the rule
We acknowledge that the language of the provision we upheld in Paramount Termite is identical to the Provision. However, we have incrementally clarified the law since that case was decided in 1989. In the intervening twenty-two years, we have gradually refined its application beginning with Blue Ridge Anesthesia and continuing through Advanced Marine Enterprises, Simmons, Motion Control Systems, and ultimately Omniplex World Services in 2005. Therefore, to the extent that Paramount Termite conflicts with any portion of our holding today, Paramount Termite is overruled.
The words that state the rule
Because we have found the circuit court did not err in ruling the Provision unenforceable, Home Paramount’s evidence of Shaffer’s actual breach was not relevant. III. CONCLUSION For the foregoing reasons, we will affirm the judgment of the circuit court.
- case270 Va. 246Omniplex World Services Corp. v. U.S. Investigations Services, Inc.Va.decided 2005read it at the source ↗
The words that state the rule
Because the prohibition in this non- competition provision is not limited to employment that would be in competition with Omniplex, the covenant is overbroad and unenforceable. Motion Control Sys., 262 Va. at 37-38, 546 S.E.2d at 426; Richardson, 203 Va. at 795, 127 S.E.2d at 117. Accordingly, for the reasons stated, we will affirm the judgment of the trial court.
The words that state the rule
In the absence of any justification for imposing the instant restraint on an employee's ability to earn a livelihood, Modern has not carried its burden of showing that the restrictive covenant at issue is reasonable and no greater 4 than necessary to protect a legitimate business interest.
- statuteVa. Code § 40.1-28.7:8enactment date not established
The words that state the rule
"Health care professional" means any person licensed, registered, or certified by the Board of Medicine, Nursing, Counseling, Optometry, Psychology, or Social Work.
- statuteVa. Code § 40.1-28.7:8enactment date not established
The words that state the rule
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.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.