On March 4, 2026, the Virginia General Assembly approved Senate Bill No. 170, which limits the enforceability of restrictive covenants, or non-compete clauses, for certain terminated employees. If signed by the Governor, the bill would invalidate non-competes for employees who are laid off without severance benefits or other monetary payment, unless they are terminated for cause. The severance benefits or monetary payment must be disclosed to the employee upon execution of the restrictive covenant. Under the measure, employers could no longer enforce non-compete clauses with healthcare professionals licensed, registered or certified by state regulatory boards.

Non-compete clauses limit where an employee can work after leaving a job, particularly preventing them from going to work for local competitors, and have become routine in many healthcare contracts.

The bill amends Virginia’s existing non-compete statute by broadening the scope of relief available beyond low-wage employees. The state expanded the definition of “low-wage” last year in the current ban on non-competes for healthcare employees. It now applies to workers earning just under $80,000 a year.

Senate Bill 170 allows for any employee to bring a civil action against an employer that attempts to enforce a non-compete in violation of the law. If the court finds a violation of the statute, employees could be entitled to injunctive relief, liquidated damages, lost compensation, other damages, as well as reasonable attorneys’ fees and costs. These restrictions will apply to non-competes signed on or after July 1, 2026.

Supporters of the legislation contend that it will help keep clinicians in communities that are already facing shortages – particularly in the area of primary care providers. Opponents of the legislation include larger healthcare systems, which contend that allowing for non-competes helps protect significant investments in recruiting and training clinicians and prevents competitors from routinely poaching experienced staff.

Even if the bill becomes law, employers would still have other options. The legislation permits provisions requiring clinicians to repay relocation expenses or signing bonuses if they leave employment early. It also does not affect nondisclosure agreements or restrictions on actively soliciting patients after a departure.

Other states already have similar laws in place. In Nevada, a non-compete agreement issued to a laid off or terminated employee is void unless the employer continues to pay the employee’s salary, benefits, or equivalent compensation. In Washington, a non-compete issued to a laid off employee is void unless the employer pays compensation equivalent to the employee’s base salary for the duration of the non-compete period. And in Massachusetts, a non-compete agreement is not enforceable against employees who have been terminated without cause or laid off (unless included in a separation agreement that provides the employee with seven business days to revoke the employee’s signature). Virginia Governor Spanberger has until 11:59 p.m. on April 13, 2026, to take action on the measure. If the bill is signed into law, Virginia employers should promptly review and update their future non-compete agreements to ensure compliance and consider consulting counsel so they are prepared to navigate these potential changes.