This will be the first in our series about the new legislation resulting from the 2020 Virginia General Assembly session.
As of July 1, 2020, employers are prohibited from entering into, enforcing, or threatening to enforce a covenant not to compete with any “low-wage employee.” The law defines “low-wage employee” as one whose average weekly earnings are less than the average weekly wage of the Commonwealth, as determined annually by the Virginia Workers’ Compensation Commission. That amount as of July 1, 2020 will be $1,137 per week. In addition, the law broadly defines the types of employees who are covered, which can include some independent contractors. It specifically excludes, however, employees “whose earnings are derived, in whole or in predominant part, from sales commissions, incentives or bonuses.”
The legislation specifies that it does not limit the creation or application of nondisclosure agreements that are intended to prohibit the taking, misappropriating, threating to misappropriate, or sharing of certain information, including trade secrets, as defined in the Virginia Uniform Trade Secrets Act, and proprietary or confidential information. Those types of agreements are still permitted.
There are stiff penalties built into the law for violations, including damages, fines, and the employee’s reasonable costs, attorney fees, expert witness fees. A court can also order an injunction and similar relief.
Employers must post either a copy of the new law or a summary approved by the Virginia Department of Labor and Industry where other state and federal laws are required to be posted, and can be subject to penalties for failure to do so.
The new law is applicable to covenants not to compete that are entered into on or after July 1, 2020. It does not apply to current noncompete agreements.
Feel free to contact us if you have questions about this matter.