There’s been a lot of attention on non-compete agreements in recent years — particularly on how they’ve been overused by some employers. Even workers at fast-food chains have had non-compete clauses in their employment contracts, preventing them from getting work in the same industry if they left their employer.
Despite the efforts of the Biden administration, changes to the law that would minimize the use of non-compete clauses on the federal level were blocked. However, some states have changed their laws to limit “non-competes” to those employees with valuable skills and/or knowledge that could benefit a competitor if they went to work for them immediately after leaving an employer.
What does the new law do?
Virginia’s new law regarding non-competes took effect this July. It’s intended to protect “low-wage” employees from having to agree to these restrictive and often financially harmful clauses. The law states, “No employer shall enter into, enforce, or threaten to enforce a covenant not to compete with any low-wage employee.”
A low-wage employee is defined as anyone who earns less than the average weekly wage throughout the Commonwealth or who is eligible to receive overtime pay, regardless of how much they earn. It applies to employees as well as independent contractors.
Going forward, employees have up to two years to bring a civil suit against an employer who violates the new law by requiring them to agree to a non-compete clause, and employers can’t retaliate against them for doing so. The law isn’t retroactive — meaning employees can’t sue for being required to sign a non-compete within the last two years if it was legal at the time. In addition to having to pay damages to a plaintiff, employers can be required to pay up to $10,000 to the Commonwealth for each violation.
What about NDAs?
It’s important to note that employers can still require employees to sign nondisclosure agreements (NDAs) “intended to prohibit the taking, misappropriating…or sharing of certain information to which an employee has access, including trade secrets…and proprietary or confidential information.”
These generally apply to higher-wage, specialized employees. They still, however, cannot be so restrictive in duration or geography that a person can’t get work in their field if they quit or are terminated.
It’s crucial for everyone to thoroughly read and understand any agreement they sign as a condition of employment. It’s also important to know your rights. If you have questions or concerns to which your employer isn’t responsive, getting legal guidance can help you protect those rights.