New Employment Laws Effective July 1: What to Know
The first five months of 2025 were marked by events nationally and internationally and a seemingly endless dire news cycle. Nonetheless, “quieter” legal developments have emerged locally in Virginia and Maryland with significant impact. These legislative updates are effective July 1, 2025 and have significant penalties if not implemented correctly. I recommend that employers and employees take note of the following legal modifications:
Virginia’s non-compete ban has been expanded. In 2020, the Commonwealth of Virginia barred the use of non-compete agreements for “low-wage workers.” Low-wage was previously defined as employees earning approximately $76,081 annually. The 2025 amendment (effective July 1) restricts the use of non-competes for all non-exempt employees. This significant extension means that those who are eligible for overtime (under the Fair Labor Standards Act and Virginia law) cannot be bound to a non-compete regardless of their overall earnings. Agreements entered into or renewed before July 1, 2025, fall under the purview of the ban. The statutory update also increases civil penalties to $10,000 per violation and provide claimants with the ability to recover attorney’s fees and costs. I recommend that Virginia employers modify onboarding practices to strip non-competes for non-exempt employees while confirming that any exempt employees are properly classified. I also recommend that employers revisit their existing restrictive covenants to ensure compliance.
Maryland’s non-compete ban expanded for healthcare workers. In 2021, Maryland banned non-compete agreements for low-wage workers (defined as earning $46,800). On July 1, the ban will be expanded in the field of healthcare, banning non-competes for employees making less than $350,000. Workers earning more than $350,000 will be limited to a duration of one year and include a geographic limitation of ten miles. I recommend that employers with team members in Maryland review any existing non-competes with healthcare workers to ensure compliance (and/or modify the agreements).
Maryland Family and Medical Insurance (FAMLI) payments and required paid leave have been delayed. Maryland Family and Medical Leave Insurance (FAMLI) was passed in 2022, providing 12-weeks of paid leave to employees in workplaces of all sizes. Payroll deductions were set to be effective on July 1, 2025; however, on April 5, 2025, the Maryland General Assembly delayed the implementation date to January 1, 2027. Leave benefits must now become available on January 3, 2028. I recommend employers utilize the extra time available to familiarize themselves with the law and proactively adjust their policies and practices accordingly.
Have questions about this new legislation and how it affects you? Reach out to me at tstringham@kramerelias.com or (703) 202-7633 to discuss.
Theodora Stringham focuses her practice on bringing solutions-oriented representation and zealous advocacy to complex issues impacting individuals, organizations, and businesses. Ms. Stringham seeks to understand clients’ concerns and provide thorough and strategic options aimed at achieving their goals. She has been recognized for her work in the Real Estate, Labor and Employment, and Commercial Litigation practice areas, providing counseling and litigation support for a wide variety of Real Estate and Labor and Employment concerns.