Are employee non-compete agreements enforceable in Tennessee?
Sometimes. Tennessee enforces a non-compete that is reasonable and protects a legitimate business interest, but it treats the covenant as a disfavored restraint of trade. A new statute effective July 1, 2026 adds rebuttable time-reasonableness presumptions and makes a non-compete void against any employee earning less than $70,000 a year.
Tennessee has no general statute banning all ordinary employee non-competes; enforceability is governed by common law, supplemented by the 2026 statute's time presumptions and its bar on covenants for employees earning under $70,000. Under that common law, covenants not to compete are not favored because they restrain trade, but they are not void on their face and will be enforced when reasonable under the circumstances . Tennessee's general restraint-of-trade statute separately declares competition-lessening combinations void as a matter of public policy, which is the policy backdrop courts invoke when they call non-competes disfavored .
The 2026 legislation does not displace that reasonableness analysis. It layers two statutory rules on top of it: time presumptions a court must apply, and an outright bar on non-competes for lower-paid employees. Both take effect July 1, 2026 and apply to proceedings occurring and to agreements entered into, renewed, or amended on or after that date .
Sources for this answer
Case law · 1984-05-29
A.1 Hasty v. Rent-A-Driver, Inc.Hasty supports the rule that Tennessee non-competes are disfavored as restraints of trade but enforceable when reasonable under the circumstances.
They are not, however, invalid per se and may be enforced, provided, they are reasonable under the particular circumstances.
See Hasty v. Rent-A-Driver, Inc., 671 S.W.2d 471, 472 (Tenn. 1984).
Primary law · 2024-04-23
A.4 Tenn. Code Ann. § 47-25-101PDFSection 47-25-101 supports the point that Tennessee public policy disfavors restraints of trade, the backdrop for the common-law treatment of non-competes.
All arrangements, contracts, agreements, trusts, or combinations between persons or corporations made with a view to lessen, or which tend to lessen, full and free competition in trade or commerce affecting this state, and all arrangements, contracts, agreements, trusts, or combinations between persons or corporations designed or which tend to advance, reduce, or control the price or the cost to the producer or the consumer of any product or service in trade or commerce affecting this state, are declared to be against public policy, unlawful, and void.
See Tenn. Code Ann. § 47-25-101 (2024 Tenn. Pub. Acts, ch. 776).
Primary law · 2026-05-07
A.2 2026 Tenn. Pub. Acts, ch. 934 (HB 1034)PDFNew Tenn. Code Ann. § 50-1-211 supports the rule that, effective July 1, 2026, a non-compete is void and unenforceable against an employee earning less than $70,000 annually.
Notwithstanding a law to the contrary, an employer shall not require, request, or enforce a noncompete agreement against an employee whose annualized compensation is less than seventy thousand dollars ($70,000).
See Tenn. Code Ann. § 50-1-211(a) (2026 Tenn. Pub. Acts, ch. 934) (eff. July 1, 2026).
Primary law · 2026-05-07
A.3 2026 Tenn. Pub. Acts, ch. 934 (HB 1034)PDFNew Tenn. Code Ann. § 50-1-210 supports the rule that, effective July 1, 2026, courts apply rebuttable presumptions to the reasonableness in time of a restrictive covenant, applicable to agreements entered into, renewed, or amended on or after that date.
This act takes effect July 1, 2026, the public welfare requiring it, and applies to proceedings occurring and agreements entering into, renewed, or amended, on or after that date.
See 2026 Tenn. Pub. Acts, ch. 934, § 3.
What makes a non-compete reasonable in Tennessee?
A protectable business interest plus terms no broader than needed to protect it. Tennessee courts ask whether the time and territory of the covenant are greater than necessary to protect the employer's legitimate business interest, weighing the consideration given, the danger to the employer without the covenant, the hardship to the employee, and the public interest.
There is a threshold requirement before the factors even matter: the employer must have a legitimately protectable interest, something beyond ordinary competition. An employer cannot use a covenant to restrain ordinary competition, and the general knowledge, skill, and experience an employee brings or develops on the job belong to the employee, not the employer. The special facts that qualify typically involve trade secrets or confidential information, an employer's investment in special training, or customer relationships in which the employee is the face of the business .
Once a protectable interest exists, reasonableness is fact-specific and turns on the balance of the four considerations rather than any fixed formula .
“An employer, however, cannot by contract restrain ordinary competition.”
Sources for this answer
Case law · 1966-11-14
B.1 Allright Auto Parks, Inc. v. BerryAllright supports the rule that the ultimate reasonableness question is whether the time and territorial limits are greater than necessary to protect the employer's business interest.
Based upon the foregoing, the ultimate question presented in the case sub judice appears to be whether or not the time and territorial limits of the noncompetition agreement are greater than is required to protect the business interest of the complainant.
See Allright Auto Parks, Inc. v. Berry, 409 S.W.2d 361, 363 (Tenn. 1966).
Case law · 1966-11-14
B.2 Allright Auto Parks, Inc. v. BerryAllright supports the list of factors Tennessee courts weigh: consideration, threatened danger to the employer, economic hardship to the employee, and the public interest.
Among these are: the consideration supporting the agreements; the threatened danger to the employer in the absence of such an agreement; the economic hardship imposed on the employee by such a covenant; and whether or not such a covenant should be inimical to public interest.
See Allright Auto Parks, Inc. v. Berry, 409 S.W.2d 361, 363 (Tenn. 1966).
Case law · 1984-05-29
B.3 Hasty v. Rent-A-Driver, Inc.Hasty supports the rule that an employer cannot use a covenant to restrain ordinary competition; only a special protectable interest will support a non-compete.
An employer, however, cannot by contract restrain ordinary competition.
See Hasty v. Rent-A-Driver, Inc., 671 S.W.2d 471, 473 (Tenn. 1984).
Case law · 1984-05-29
B.4 Hasty v. Rent-A-Driver, Inc.Hasty supports the requirement of special facts over and above ordinary competition before an employer is entitled to non-compete protection.
In order for an employer to be entitled to protection, there must be special facts present over and above ordinary competition.
See Hasty v. Rent-A-Driver, Inc., 671 S.W.2d 471, 473 (Tenn. 1984).
Can a Tennessee employer use a non-compete against an employee earning under $70,000?
No, for enforcement proceedings occurring on or after July 1, 2026 and for agreements entered into, renewed, or amended on or after that date. New Tenn. Code Ann. § 50-1-211 prohibits an employer from requiring, requesting, or enforcing a non-compete against an employee whose annualized compensation is less than $70,000, and a non-compete signed in violation is void as a matter of public policy.
Annualized compensation is defined broadly to include wages, salary, commissions, nondiscretionary bonuses, and other remuneration; for an hourly employee it is calculated as the hourly rate times 40 times 52 . The bar reaches more than enforcement: an employer may not even request that a below-threshold employee sign a covenant .
The prohibition attaches to asking a below-threshold employee to sign, not only to suing on the covenant. Before presenting a Tennessee non-compete on or after July 1, 2026, confirm the employee's annualized compensation clears $70,000 using the statutory definition, and recalculate for hourly workers using the rate-times-40-times-52 formula.
Sources for this answer
Primary law · 2026-05-07
C.1 2026 Tenn. Pub. Acts, ch. 934 (HB 1034)PDFSection 50-1-211(a) supports the prohibition on requiring, requesting, or enforcing a non-compete against an employee earning less than $70,000 annually.
Notwithstanding a law to the contrary, an employer shall not require, request, or enforce a noncompete agreement against an employee whose annualized compensation is less than seventy thousand dollars ($70,000).
See Tenn. Code Ann. § 50-1-211(a) (2026 Tenn. Pub. Acts, ch. 934) (eff. July 1, 2026).
Primary law · 2026-05-07
C.2 2026 Tenn. Pub. Acts, ch. 934 (HB 1034)PDFSection 50-1-211(c) supports the rule that a non-compete executed in violation of the threshold is void and unenforceable as a matter of public policy.
A noncompete agreement executed in violation of this section is void and unenforceable as a matter of public policy.
See Tenn. Code Ann. § 50-1-211(c) (2026 Tenn. Pub. Acts, ch. 934) (eff. July 1, 2026).
Primary law · 2026-05-07
C.3 2026 Tenn. Pub. Acts, ch. 934 (HB 1034)PDFSection 50-1-211(b) supports the broad definition of annualized compensation and the hourly-employee calculation of rate times forty times fifty-two.
Annualized compensation for an hourly employee must be calculated by multiplying the employee's hourly rate by forty (40) and multiplying the product by fifty-two (52).
See Tenn. Code Ann. § 50-1-211(b)(2) (2026 Tenn. Pub. Acts, ch. 934) (eff. July 1, 2026).
How long can a Tennessee non-compete last?
For agreements governed by the 2026 statute, a court presumes a restraint is unreasonable in time if it runs longer than the period set for the relevant relationship: two years for a former employee or independent contractor, three years for a distributor, dealer, franchisee, lessee, or licensee, and the longer of five years or the payout period for the seller of a business.
These are rebuttable presumptions, not hard caps. A court must presume that a time restraint longer than the applicable period is unreasonable, but a party can try to overcome the presumption, and a covenant within the period is not automatically reasonable on its other terms . The presumptions address only the time dimension; geographic scope and the protectable-interest requirement still come from the common-law reasonableness analysis .
For employee covenants entered into, renewed, or amended on or after July 1, 2026, draft the duration at or under two years to stay inside the presumption of reasonableness in time. A longer term is presumptively unreasonable, so the party seeking enforcement should expect to rebut that presumption, on top of the separate requirement that the covenant protect a legitimate interest and be reasonable in geography.
Sources for this answer
Primary law · 2026-05-07
D.1 2026 Tenn. Pub. Acts, ch. 934 (HB 1034)PDFSection 50-1-210(a) supports the rule that a court applies rebuttable presumptions and presumes a time restraint longer than the applicable period is unreasonable.
In determining the reasonableness in time of a restrictive covenant sought to be enforced after the termination of an employment or business relationship, a court shall apply the rebuttable presumptions established in this section. A court shall presume that a time restraint greater than the applicable restraint described in subdivision (b)(1), (b)(2), or (b)(3) is unreasonable.
See Tenn. Code Ann. § 50-1-210(a) (2026 Tenn. Pub. Acts, ch. 934) (eff. July 1, 2026).
Primary law · 2026-05-07
D.2 2026 Tenn. Pub. Acts, ch. 934 (HB 1034)PDFSection 50-1-210(b)(1) supports the two-year presumptively-reasonable period for a covenant enforced against a former employee or independent contractor.
A court shall presume to be reasonable in time a restraint sought to be enforced against a former employee or independent contractor that: (A) Is two (2) years or less in duration, measured from the date the employment or business relationship terminates; and
See Tenn. Code Ann. § 50-1-210(b)(1) (2026 Tenn. Pub. Acts, ch. 934) (eff. July 1, 2026).
Primary law · 2026-05-07
D.3 2026 Tenn. Pub. Acts, ch. 934 (HB 1034)PDFSection 50-1-210(b)(2) supports the three-year presumptively-reasonable period for a covenant enforced against a distributor, dealer, franchisee, lessee, or licensee.
A court shall presume to be reasonable in time a restraint three (3) years or less in duration, measured from the date of termination of the business relationship in the case of a restrictive covenant sought to be enforced against a current or former distributor, dealer, franchisee, lessee of real or personal property, or licensee of a trademark, trade dress, or service mark, and not associated with the sale of all or a material part of:
See Tenn. Code Ann. § 50-1-210(b)(2) (2026 Tenn. Pub. Acts, ch. 934) (eff. July 1, 2026).
Primary law · 2026-05-07
D.4 2026 Tenn. Pub. Acts, ch. 934 (HB 1034)PDFSection 50-1-210(b)(3) supports the longer presumptively-reasonable period for the seller of a business: the greater of five years or the period during which sale payments are made.
A court shall presume to be reasonable in time a restraint that is the longer of five (5) years or less, or a period equal to the time during which payments are made to the owner or seller, in the case of a restrictive covenant sought to be enforced against the owner or seller of all or a material part of:
See Tenn. Code Ann. § 50-1-210(b)(3) (2026 Tenn. Pub. Acts, ch. 934) (eff. July 1, 2026).
Case law · 1966-11-14
D.5 Allright Auto Parks, Inc. v. BerryAllright supports the point that geographic reasonableness remains a common-law question even where the statute addresses time.
Based upon the foregoing, the ultimate question presented in the case sub judice appears to be whether or not the time and territorial limits of the noncompetition agreement are greater than is required to protect the business interest of the complainant.
See Allright Auto Parks, Inc. v. Berry, 409 S.W.2d 361, 363 (Tenn. 1966).
Is continued at-will employment enough consideration for a Tennessee non-compete?
Yes, when the employment actually continues. Under Central Adjustment Bureau, Inc. v. Ingram, a covenant an existing employee signs is supported by consideration where the employee then remains employed for an appreciable period, so a non-compete signed after hire does not fail for lack of fresh consideration .
The court enforced covenants signed after employment began because each employee continued working for the company; the length of the continued employment supplied the consideration . Tennessee has not fixed how long the continued employment must last, so the question is fact-specific: a very short tenure after signing weakens the argument, and the safer course is still to pair the covenant with employment that continues for an appreciable time or with separate consideration .
Sources for this answer
Case law · 1984-09-17
E.1 Central Adjustment Bureau, Inc. v. IngramCentral Adjustment Bureau supports the rule that continued employment supplies consideration for a covenant signed after hire, here making the covenants binding because of the length of each employee's continued employment.
We find that because of the length of employment of each defendant, the covenant is binding against them.
See Central Adjustment Bureau, Inc. v. Ingram, 678 S.W.2d 28, 35 (Tenn. 1984).
Will a Tennessee court narrow or reform an overbroad non-compete?
Often yes, but not always. Tennessee follows the rule of reasonableness rather than the strict blue-pencil rule, so a court may modify an unreasonable covenant to make it reasonable instead of striking it — but it can refuse and void the covenant entirely when the employer drafted it in a deliberately unreasonable or oppressive way.
In Central Adjustment Bureau, the Tennessee Supreme Court adopted the rule of reasonableness, under which a court may enforce an overbroad covenant to the extent it is reasonable rather than rewriting only severable words . Vantage Technology, LLC v. Cross shows the rule in action: the court modified an overbroad territory and limited the restriction to the customer locations where the employee had actually worked . The 2026 statute carries the same idea forward for covenants it governs, expressly authorizing a court to modify a restrictive covenant to render it reasonable and enforceable .
Reformation is discretionary, not guaranteed. A court may decline to save an oppressive covenant, and it may refuse enforcement entirely where the hardship to the employee and the harm to the public outweigh the employer's interest, as the court did in Columbus Medical Services, LLC v. Thomas.
Do not rely on a Tennessee court to rewrite an aggressive covenant. A deliberately unreasonable or oppressive covenant can be voided rather than trimmed, so draft duration, geography, and scope to the minimum the legitimate interest actually requires.
Sources for this answer
Case law · 1984-09-17
F.1 Central Adjustment Bureau, Inc. v. IngramCentral Adjustment Bureau supports Tennessee's adoption of the rule of reasonableness, abandoning the strict blue-pencil rule so courts may enforce a covenant to the extent reasonable.
The most recent trend, therefore, has been to abandon the "blue pencil" rule in favor of a rule of reasonableness.
See Central Adjustment Bureau, Inc. v. Ingram, 678 S.W.2d 28, 33 (Tenn. 1984).
Case law · 1984-09-17
F.2 Central Adjustment Bureau, Inc. v. IngramCentral Adjustment Bureau supports the limit on reformation: a deliberately unreasonable and oppressive covenant is invalid rather than reformed.
If there is credible evidence to sustain a finding that a contract is deliberately unreasonable and oppressive, then the covenant is invalid.
See Central Adjustment Bureau, Inc. v. Ingram, 678 S.W.2d 28, 33 (Tenn. 1984).
Case law · 1999-10-19
F.3 Vantage Technology, LLC v. CrossVantage supports reformation in practice: a court may modify an unreasonable covenant, and here it narrowed the territory to the customer locations where the employee actually performed services.
Hence, a court may modify an unreasonable covenant so as to render it reasonable.
See Vantage Technology, LLC v. Cross, 17 S.W.3d 637, 647 (Tenn. Ct. App. 1999).
Case law · 2009-08-13
F.5 Columbus Medical Services, LLC v. ThomasColumbus Medical supports the point that a court may refuse to enforce even a covenant backed by a legitimate interest when employee hardship and the public interest outweigh it.
We reverse, concluding that, while the plaintiff agency had a legitimate protectable business interest, the non-compete covenants are not enforceable in light of the hardship to the defendant therapists and the adverse impact on the public interest.
See Columbus Medical Services, LLC v. Thomas, 308 S.W.3d 368, 374 (Tenn. Ct. App. 2009).
Primary law · 2026-05-07
F.4 2026 Tenn. Pub. Acts, ch. 934 (HB 1034)PDFSection 50-1-210(d) supports the statutory authorization for a court to modify a governed restrictive covenant to render it reasonable and enforceable.
A court may modify a restrictive covenant governed by this section to render it reasonable and enforceable.
See Tenn. Code Ann. § 50-1-210(d) (2026 Tenn. Pub. Acts, ch. 934) (eff. July 1, 2026).
Are non-competes enforceable against Tennessee physicians and healthcare providers?
Yes, within statutory limits. A healthcare-provider covenant is deemed reasonable if it is in writing, runs two years or less, and stays within the greater of a 10-mile radius or the provider's county (or a facility-based limit). Emergency-medicine physicians fall outside that statutory authorization, so their covenants remain void under Udom.
Before the statute, Tennessee voided physician non-competes outright as contrary to public policy. In Murfreesboro Medical Clinic, P.A. v. Udom, the Tennessee Supreme Court held that, except as specifically allowed by statute, physician covenants not to compete are unenforceable and void . The legislature responded with Tenn. Code Ann. § 63-1-148, which authorizes covenants for covered providers within the duration and geographic limits above and applies to providers licensed under Title 63, chapters 3, 4, 5, 6, 8, 9, and 11. A covenant tied to the sale of a provider's practice gets a rebuttable presumption that its agreed duration and area are reasonable . Meeting the safe harbor makes a covenant deemed reasonable in time and area; it does not by itself guarantee enforcement, because the covenant must still rest on a legitimate interest and satisfy the other common-law limits .
Do not impose a non-compete on an emergency-medicine physician. Section 63-1-148(d) removes them from the statute's safe harbor, and because no statute then authorizes the covenant, it remains void under Udom. For other covered providers, keep the term at or under two years and the area within the greater of a 10-mile radius or the county of the primary practice site to stay within the statutory safe harbor.
Sources for this answer
Primary law · 2011-01-01
G.1 Tenn. Code Ann. § 63-1-148Section 63-1-148(a) supports the safe harbor under which a healthcare-provider covenant is deemed reasonable if in writing, two years or less, and within the greater of a 10-mile radius or the county (or a facility-based limit).
A restriction on the right of an employed or contracted healthcare provider to practice the healthcare provider's profession upon termination or conclusion of the employment or contractual relationship shall be deemed reasonable if: (1) The restriction is set forth in an employment agreement or other written document signed by the healthcare provider and the employing or contracting entity; and (2) The duration of the restriction is two (2) years or less and either: (A) The maximum allowable geographic restriction is the greater of: (i) A ten-mile radius from the primary practice site of the healthcare provider while employed or contracted; or (ii) The county in which the primary practice of the healthcare provider while employed or contracted is located;
See Tenn. Code Ann. § 63-1-148(a).
Primary law · 2011-01-01
G.2 Tenn. Code Ann. § 63-1-148Section 63-1-148(d) supports the rule that the healthcare safe harbor does not apply to emergency-medicine physicians, who cannot be subject to a non-compete.
This section shall not apply to physicians who specialize in the practice of emergency medicine.
See Tenn. Code Ann. § 63-1-148(d).
Primary law · 2011-01-01
G.5 Tenn. Code Ann. § 63-1-148Section 63-1-148(b) supports the rebuttable presumption that the duration and area of a covenant tied to the purchase or sale of a provider's practice are reasonable.
There shall be a rebuttable presumption that the duration and area of restriction agreed upon by the parties in such an agreement are reasonable.
See Tenn. Code Ann. § 63-1-148(b).
Primary law · 2011-01-01
G.4 Tenn. Code Ann. § 63-1-148Section 63-1-148(c) supports the range of covered healthcare providers, defined by license under the listed chapters of Title 63.
This section shall apply to healthcare providers licensed under chapters 3, 4, 5, 6, 8, 9 and 11 of this title.
See Tenn. Code Ann. § 63-1-148(c).
Case law · 2005-06-29
G.3 Murfreesboro Medical Clinic, P.A. v. UdomUdom supports the rule that, except where specifically allowed by statute, physician covenants not to compete are unenforceable and void as against Tennessee public policy.
We hold that except for those specifically prescribed by statute, physicians' covenants not to compete are unenforceable and void.
See Murfreesboro Medical Clinic, P.A. v. Udom, 166 S.W.3d 674, 684 (Tenn. 2005).
Are customer non-solicits, employee non-solicits, and confidentiality agreements still allowed in Tennessee?
Yes. The 2026 statute that regulates non-competes expressly preserves an employer's ability to enforce a confidentiality or nondisclosure agreement, a customer non-solicitation agreement, and an employee non-solicitation agreement .
Section 50-1-210(c) preserves these covenants from the time-presumption rules, and the $70,000 bar in § 50-1-211 applies only to noncompete agreements — so a true non-solicit or confidentiality clause sits outside both. They are not automatically enforceable, though: a non-solicit or confidentiality clause that operates as a de facto non-compete can still be attacked as an unreasonable restraint, and a confidentiality clause that protects trade secrets is backed by the Tennessee Uniform Trade Secrets Act.
Keep a confidentiality or non-solicitation covenant tied to genuine confidential information, customers, or employees rather than drafting it so broadly that it bars the worker from competing at all. A clause that functions as a disguised non-compete invites the same reasonableness scrutiny — and, for a below-threshold employee, the same voidness risk — as an express non-compete.
Sources for this answer
Primary law · 2026-05-07
H.1 2026 Tenn. Pub. Acts, ch. 934 (HB 1034)PDFSection 50-1-210(c) supports the carve-out preserving confidentiality or nondisclosure agreements, customer non-solicitation agreements, and employee non-solicitation agreements.
This section does not prohibit an employer from enforcing: (1) A confidentiality or nondisclosure agreement; (2) A client or customer nonsolicitation agreement; or (3) An employee nonsolicitation agreement.
See Tenn. Code Ann. § 50-1-210(c) (2026 Tenn. Pub. Acts, ch. 934) (eff. July 1, 2026).
Primary law · 2026-05-07
H.2 2026 Tenn. Pub. Acts, ch. 934 (HB 1034)PDFSection 50-1-211(a) supports the point that the income-threshold bar applies to noncompete agreements specifically, so a covenant drafted as a de facto non-compete carries the same voidness risk.
Notwithstanding a law to the contrary, an employer shall not require, request, or enforce a noncompete agreement against an employee whose annualized compensation is less than seventy thousand dollars ($70,000).
See Tenn. Code Ann. § 50-1-211(a) (2026 Tenn. Pub. Acts, ch. 934) (eff. July 1, 2026).
How does the Tennessee Uniform Trade Secrets Act interact with non-competes?
It runs alongside them. The Tennessee Uniform Trade Secrets Act displaces overlapping tort remedies for trade-secret misappropriation but expressly preserves contractual remedies, and it confirms that a confidentiality duty is not void merely for lacking a time or geographic limit .
That preservation matters for drafting: an employer can protect trade secrets through both a contract covenant and a TUTSA claim, and a contractual duty to protect a trade secret is not void merely for lacking the durational and geographic limits a non-compete needs — though a broader confidentiality clause reaching non-trade-secret information is still tested under ordinary contract and restraint principles . Where misappropriation is willful and malicious, the Act allows exemplary damages of up to twice the compensatory award, which can make a trade-secret claim a stronger remedy than enforcing a marginal non-compete .
Sources for this answer
Primary law · 2000-01-01
I.1 Tenn. Code Ann. § 47-25-1708PDFSection 47-25-1708 supports the rule that TUTSA preserves contractual remedies and that a contractual secrecy duty is not void merely for lacking a durational or geographic limit.
a contractual duty to maintain secrecy or limit use of a trade secret shall not be deemed to be void or unenforceable solely for lack of durational or geographical limitation on the duty
See Tenn. Code Ann. § 47-25-1708(b)(1).
Primary law · 2000-01-01
I.2 Tenn. Code Ann. § 47-25-1704PDFSection 47-25-1704 supports the availability of exemplary damages of up to twice the compensatory award for willful and malicious misappropriation.
If willful and malicious misappropriation exists, the court may award exemplary damages in an amount not exceeding twice any award made under subsection (a).
See Tenn. Code Ann. § 47-25-1704(b).
Are sale-of-business non-competes treated differently in Tennessee?
Yes, more generously. For a covenant enforced against the owner or seller of a business, the 2026 statute presumes a restraint reasonable in time for the longer of five years or the period during which sale payments are made — well beyond the two-year presumption for ordinary employees .
This fits the sale-of-business context, where a buyer paying for a business is protecting purchased goodwill rather than merely restraining a former employee. In the healthcare setting, a covenant tied to the purchase or sale of a provider's practice likewise gets a rebuttable presumption that its agreed duration and area are reasonable .
Sources for this answer
Primary law · 2026-05-07
J.1 2026 Tenn. Pub. Acts, ch. 934 (HB 1034)PDFSection 50-1-210(b)(3) supports the longer presumptively-reasonable period for a covenant against the owner or seller of a business: the greater of five years or the payout period.
A court shall presume to be reasonable in time a restraint that is the longer of five (5) years or less, or a period equal to the time during which payments are made to the owner or seller, in the case of a restrictive covenant sought to be enforced against the owner or seller of all or a material part of:
See Tenn. Code Ann. § 50-1-210(b)(3) (2026 Tenn. Pub. Acts, ch. 934) (eff. July 1, 2026).
Primary law · 2011-01-01
J.2 Tenn. Code Ann. § 63-1-148Section 63-1-148(b) supports the rebuttable presumption of reasonableness for a covenant tied to the purchase or sale of a healthcare provider's practice.
There shall be a rebuttable presumption that the duration and area of restriction agreed upon by the parties in such an agreement are reasonable.
See Tenn. Code Ann. § 63-1-148(b).
Does a Tennessee non-compete toll or extend during a breach or while litigation is pending?
This is an open question in Tennessee. No Tennessee statute or appellate decision squarely endorses automatically tolling or extending the restricted period while the employee is in breach or while enforcement litigation is pending, and the 2026 statute does not address tolling.
Because Tennessee measures reasonableness in time and may reform an unreasonable term, an extension-on-breach clause is best treated as unsettled rather than reliably enforceable. The 2026 statute fixes the start of the period at the date the relationship terminates and is otherwise silent on tolling, so an extension-on-breach theory has no clear statutory footing either way; an overlong effective restraint would also face the same reasonableness scrutiny as any other duration.
Open question: Tennessee law does not clearly resolve whether a clause that tolls or extends the restricted period during breach or litigation is enforceable. Do not assume a court will extend an expired Tennessee covenant; if an extension provision matters, draft a defined, reasonable cap rather than an open-ended tolling clause, and expect a court to test the total effective duration for reasonableness.
Sources for this answer
Primary law · 2026-05-07
K.1 2026 Tenn. Pub. Acts, ch. 934 (HB 1034)PDFSection 50-1-210(b)(1) supports the point that the statutory time period runs from the date the relationship terminates and the statute is silent on tolling, so an extension-on-breach theory has no clear statutory footing.
A court shall presume to be reasonable in time a restraint sought to be enforced against a former employee or independent contractor that: (A) Is two (2) years or less in duration, measured from the date the employment or business relationship terminates; and
See Tenn. Code Ann. § 50-1-210(b)(1) (2026 Tenn. Pub. Acts, ch. 934) (eff. July 1, 2026).
Case law · 1999-10-19
K.2 Vantage Technology, LLC v. CrossVantage supports the point that a Tennessee court tests a covenant's terms for reasonableness and may modify an unreasonable one, which constrains any extension that lengthens the effective restraint.
Hence, a court may modify an unreasonable covenant so as to render it reasonable.
See Vantage Technology, LLC v. Cross, 17 S.W.3d 637, 647 (Tenn. Ct. App. 1999).
Can another state's law or court govern a Tennessee worker's non-compete?
Sometimes, if the choice is genuine. A Tennessee court honors a contractual choice of another state's law only when certain requirements are met, beginning with the requirement that the choice-of-law provision be executed in good faith.
Those requirements limit the common tactic of using an out-of-state choice-of-law clause to escape Tennessee's reasonableness rules. A clause picking the law of a state with no genuine connection to the parties, or one used to override Tennessee's protections — including the new $70,000 bar — is vulnerable.
Sources for this answer
Case law · 1999-10-19
L.1 Vantage Technology, LLC v. CrossVantage supports the rule that a contractual intent to apply another jurisdiction's law will be honored only when certain requirements are met.
If the parties manifest an intent to instead apply the laws of another jurisdiction, then that intent will be honored provided certain requirements are met.
See Vantage Technology, LLC v. Cross, 17 S.W.3d 637, 650 (Tenn. Ct. App. 1999).
Case law · 1999-10-19
L.2 Vantage Technology, LLC v. CrossVantage supports the requirement that a choice-of-law provision be executed in good faith for a Tennessee court to honor it.
The choice of law provision must be executed in good faith.
See Vantage Technology, LLC v. Cross, 17 S.W.3d 637, 650 (Tenn. Ct. App. 1999).
What are the key recent developments in Tennessee non-compete law?
The headline change is the 2026 statute that, effective July 1, 2026, voids non-competes for employees earning under $70,000 and sets rebuttable time presumptions for the rest.
- April 20, 2026: The General Assembly passed House Bill 1034, substituted for Senate Bill 995; as enacted, it adds new Tenn. Code Ann. §§ 50-1-210 and 50-1-211 .
- May 7, 2026: The Governor signed the bill, which became 2026 Public Chapter 934 .
- July 1, 2026: The act takes effect and applies to proceedings occurring and to agreements entered into, renewed, or amended on or after that date — adding new Tenn. Code Ann. §§ 50-1-210 and 50-1-211 .
Treat July 1, 2026 as a hard line. Agreements entered into, renewed, or amended on or after that date are subject to the new $70,000 bar and the time presumptions, so review form non-competes and any covenant up for renewal before that date, and confirm each covered employee clears the compensation threshold.
Sources for this answer
Primary law · 2026-05-07
M.1 2026 Tenn. Pub. Acts, ch. 934 (HB 1034)PDFPublic Chapter 934 supports the enactment of new non-compete rules amending Titles 50, 63, and 68 (House Bill 1034, substituted for Senate Bill 995).
AN ACT to amend Tennessee Code Annotated, Title 50; Title 63 and Title 68, relative to covenants not to compete.
See 2026 Tenn. Pub. Acts, ch. 934 (HB 1034).
Primary law · 2026-05-07
M.2 2026 Tenn. Pub. Acts, ch. 934 (HB 1034)PDFSection 3 supports the July 1, 2026 effective date and its application to proceedings occurring and to agreements entered into, renewed, or amended on or after that date.
This act takes effect July 1, 2026, the public welfare requiring it, and applies to proceedings occurring and agreements entering into, renewed, or amended, on or after that date.
See 2026 Tenn. Pub. Acts, ch. 934, § 3.
Primary law · 2026-05-07
M.3 2026 Tenn. Pub. Acts, ch. 934 (HB 1034)PDFSection 50-1-211(a) supports the new bar on non-competes for employees earning less than $70,000 annually that takes effect with the act.
Notwithstanding a law to the contrary, an employer shall not require, request, or enforce a noncompete agreement against an employee whose annualized compensation is less than seventy thousand dollars ($70,000).
See Tenn. Code Ann. § 50-1-211(a) (2026 Tenn. Pub. Acts, ch. 934) (eff. July 1, 2026).