Non-Solicitation Agreements in Virginia: Enforceability Rules

Federal law does not prohibit or directly regulate non-solicitation agreements. The enforceability of restrictive covenants, including non-solicitation provisions, is governed exclusively by state law. The Federal Trade Commission has proposed a rule to ban most non-compete agreements nationwide, but non-solicitation agreements have not been subject to the same federal scrutiny. Under federal contract law principles, restrictive covenants are enforceable only if supported by consideration (something of value given in exchange) and if they are not unconscionable or contrary to public policy.

Federal employment law, including Title VII and the ADA, does not address the validity of non-solicitation agreements directly. However, federal courts applying state law principles have consistently held that non-solicitation agreements are distinct from non-compete agreements and are generally viewed more favorably because they do not prevent the employee from working in the same industry—they only restrict solicitation of customers or employees. The NLRA (National Labor Relations Act) does not prohibit non-solicitation agreements, though overly broad agreements that interfere with protected concerted activity may be unenforceable.

Virginia Code § 40.1-21.1 explicitly permits and regulates non-solicitation agreements. Under this statute, a non-solicitation agreement is enforceable only if it meets strict criteria: (1) it must be in writing, (2) it must be reasonable in time, area, and line of business, (3) it must protect a legitimate business interest such as trade secrets, confidential business information, substantial relationships with prospective or existing customers or employees, or goodwill associated with an ongoing business, and (4) it must be supported by consideration.

Virginia distinguishes between non-solicitation and non-compete agreements. A non-solicitation agreement restricts an employee from soliciting or inducing customers or employees to cease doing business with the employer or to refrain from entering into a business relationship with the employer after the employment ends. A non-compete agreement, by contrast, prevents the employee from engaging in competitive business activities. Non-solicitation agreements are viewed more favorably by Virginia courts because they are narrower in scope and do not prevent the employee from working in the same field.

Under Virginia Code § 40.1-21.2, any non-solicitation agreement must be accompanied by specific statutory disclosures. Employers must provide written notice to employees at the time of hire (or, for existing employees, at the time the agreement is entered into) that states the employee has the right to consult with an attorney before signing, and that the agreement may not be enforceable depending on specific circumstances. Virginia courts apply a reasonableness test that is less stringent for non-solicitation agreements than for non-compete agreements. A non-solicitation provision is presumed reasonable if it is limited to a one-year period and applies only to customers with whom the employee had contact or about whom the employee obtained confidential information during employment.

Virginia law protects legitimate business interests broadly, including protection of customers, confidential information, trade secrets, and employee relationships. Courts have upheld non-solicitation agreements protecting key employee relationships and substantial customer relationships. The state's approach is more employer-friendly than some jurisdictions, but still requires that restrictions be no broader than necessary to protect legitimate interests. Unlike some states, Virginia does not apply a blanket ban on non-solicitation agreements in any industry, though some agreements may be unenforceable if they are unreasonable or lack consideration.

Non-solicitation agreements are unenforceable in Virginia if they lack consideration (something of value must be given in exchange for the agreement). At-will employees hired after the agreement is presented may not have adequate consideration if the agreement is presented on the first day of employment without other benefits offered. However, Virginia courts have found that continued employment can constitute consideration for agreements presented to existing employees, depending on the circumstances.

An agreement that is unreasonable in time, area, or line of business is unenforceable. Courts examine whether the restrictions are broader than necessary to protect the employer's legitimate interests. For example, a non-solicitation agreement that prevents an employee from soliciting any customer in the entire United States for ten years may be found unreasonable.

Non-solicitation agreements cannot restrict an employee's ability to solicit customers the employee developed entirely on their own time without using the employer's resources or confidential information. If a customer relationship is truly personal and predates the employment relationship, a non-solicitation clause may not apply to that customer.

Unions and collective bargaining agreements may carve-outs from non-solicitation obligations. If a collective bargaining agreement includes different terms, the union agreement may supersede individual agreements. At-will employment does not exempt non-solicitation agreements from the reasonableness requirement; Virginia law still requires that such agreements be reasonable and supported by consideration. Agreements presented to employees as a condition of continued employment must still offer some independent consideration beyond the threat of termination.

Employees who refuse to sign a non-solicitation agreement and are terminated as a result may have a wrongful termination claim if the refusal was based on public policy grounds (e.g., refusing to agree to something illegal), but simply refusing to sign a lawful, reasonable non-solicitation agreement is generally not protected.

**Step 1: Document the Non-Solicitation Violation.** Keep detailed records of any communications indicating the employee solicited customers or employees. Save emails, text messages, social media posts, letters, or witness statements from affected customers or employees describing the solicitation. Document the timing (when the solicitation occurred relative to the employee's departure), the nature of the relationship (how the employee interacted with the customer or employee during employment), and the outcome (whether the customer or employee actually ceased doing business or was induced to switch). Maintain records of the original non-solicitation agreement and any consideration provided at the time it was signed.

**Step 2: Review the Agreement and Assess Enforceability.** Before taking action, confirm that the non-solicitation agreement is enforceable under Virginia law. Verify that the agreement is in writing, that it was supported by consideration, and that it specifies reasonable time, area, and line of business restrictions. Confirm that statutory disclosures were provided as required by Virginia Code § 40.1-21.2. Determine whether the customer or employee being solicited falls within the protected category (existing customers with whom the employee had contact, or employees with whom the employee worked). Assess whether the time restriction (typically one year) has been exceeded, which would make the agreement unenforceable.

**Step 3: Send a Cease-and-Desist Notice.** Before filing a lawsuit, send a written demand letter to the former employee demanding that solicitation cease immediately. The letter should identify the specific customers or employees being solicited, cite the non-solicitation agreement and its terms, and state that continued violation will result in legal action. Include a deadline (typically 10–14 days) for the employee to cease solicitation activities. Keep a copy of this letter and proof of delivery. This step demonstrates good faith and may encourage compliance without litigation.

**Step 4: File a Breach of Contract Lawsuit.** If the employee does not comply, file a breach of contract action in Virginia state court (district court for amounts under $25,000 or circuit court for higher amounts). The lawsuit should be filed within five years of the violation (statute of limitations for breach of contract under Virginia Code § 8.01-246). Provide the court with the written agreement, evidence of consideration, proof of the employee's solicitation activity, and damages (lost profits, lost customer relationships, costs to retain customers). The burden is on the employer to prove the violation by a preponderance of the evidence.

**Step 5: Seek an Injunction and Damages.** In addition to monetary damages, request a preliminary injunction to stop ongoing solicitation immediately while the case proceeds. To obtain a preliminary injunction, the employer must show a substantial likelihood of success on the merits, irreparable harm (that money damages alone cannot remedy), and that the balance of equities favors the injunction. Once a judgment is obtained, the court may award actual damages (lost profits or wages), attorney fees if provided in the agreement, and in some cases, liquidated damages if the agreement specifies them. Virginia courts generally do not award punitive damages for breach of contract, only compensatory damages.

**Step 6: Consult an Employment Attorney Early.** Contact a Virginia employment attorney as soon as you suspect a violation. An attorney can review the enforceability of your agreement, assess the strength of evidence, and advise on remedies. An attorney experienced in Virginia non-solicitation cases is essential because the reasonableness of the restriction is fact-specific and courts apply close scrutiny. An attorney can also negotiate a settlement or pursue alternative dispute resolution (mediation or arbitration) if the agreement includes such provisions.