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Employee Restrictive Covenant Agreement

Cover Terms

The terms below are incorporated into and form part of this agreement.

Employer[Legal name of the employer]
Employee[Full legal name of the employee]
Employee Title / Position
Effective Date[Effective date of this agreement]
Governing LawTennessee
Confidentiality
Trade Secrets DurationPerpetual
Other Confidential Information Duration24 months
Employee Non-Solicitation
Duration24 months
Market benchmark 24 months · modal of 67 filed agreements

Reference only — not part of this agreement.

An employee non-solicitation agreement is expressly preserved from the 2026 Tennessee non-compete statute's rules, so it sits outside the statutory time presumptions and the $70,000 threshold. 24 months matches the modal employee non-solicit term observed in benchmarked, publicly-filed employee agreements; 12 months is the common lighter alternative, sized to the workforce actually protected.

View more details in benchmark survey (as of July 3, 2026) →
Customer Non-Solicitation
Duration12 months
Market benchmark 12 months · modal of 67 filed agreements

Reference only — not part of this agreement.

A client or customer non-solicitation agreement is expressly preserved from the 2026 Tennessee non-compete statute's rules. 12 months is the lighter side of the near-even 12/24-month split observed in benchmarked, publicly-filed employee agreements — a conservative duration counsel should size to the actual customer relationships protected so the covenant stays within the preserved category rather than functioning as a non-compete.

View more details in benchmark survey (as of July 3, 2026) →
Non-Competition
Duration12 months
State-law basis 12 months

Reference only — not part of this agreement.

For a covenant governed by the 2026 statute, a court presumes a restraint against a former employee or independent contractor reasonable in time when it is two years or less, measured from the date the relationship terminates, and presumes a longer term unreasonable. 12 months sits well within that window; counsel should size it to the actual role and market rather than default to the outer bound.

Restricted Territorythe geographic area in which Employee provided services
State-law basis the geographic area in which Employee provided services

Reference only — not part of this agreement.

Tied to the employee's actual service area. Geography stays a common-law question even after the 2026 statute: the ultimate test is whether the territorial limits are greater than required to protect the employer's business interest, so a footprint drawn to where the employee actually worked or served customers is far easier to defend than one drawn from corporate ambition.

Competitive Business[Description of the business activities that constitute competition with the employer.]
Specified Competitors
No Business with Covered Customers
Duration12 months
Non-Investment
Duration12 months
Non-Disparagement
Duration24 months

Standard Terms

1. Defined Terms

“Competitive Business” means the business activities described in Cover Terms under Competitive Business.

“Confidential Information” means non-public information relating to Employer's business, including trade secrets, customer lists, pricing, business processes, technical data, and strategic plans, but excluding information that becomes public through no fault of Employee and excluding the general knowledge, skill, and experience Employee acquired during employment.

“Covered Customers” means customers, vendors, referral sources, and business partners with whom Employee had material contact or for whom Employee had responsibility during the 12 months before termination of employment.

“Covered Employees” means employees with whom Employee worked or whom Employee managed during the 12 months before termination of employment.

“Passive Public Holdings” means ownership of securities of a publicly traded company representing less than five percent of any class of such company's securities, and interests in diversified mutual funds, index funds, and exchange-traded funds that may hold securities of a Competitive Business.

“Protected Interests” means the special facts, over and above ordinary competition, that a Tennessee covenant may protect, namely Employer's Confidential Information, Employer's trade secrets as protected by the Tennessee Uniform Trade Secrets Act (Tenn. Code Ann. §§ 47-25-1701 to 47-25-1709), Employer's investment in special training provided to Employee, and Employer's customer relationships in which Employee is the face of Employer's business, but not Employer's interest in avoiding ordinary competition.

“Restricted Period” means the duration specified in Cover Terms for each covenant, beginning on the date Employee's employment with Employer ends for any reason.

“Restricted Territory” means the geographic area described in Cover Terms under Restricted Territory.

“Solicit” means to directly or indirectly contact, approach, induce, encourage, or provide Confidential Information to any person or entity for the purpose of diverting business away from Employer, but does not include responding to general advertisements or unsolicited inquiries not initiated by Employee.

“Trade Secrets” has the meaning given in the Tennessee Uniform Trade Secrets Act, Tenn. Code Ann. § 47-25-1702.

2. Recitals and Protectable Interests

Employer and Employee acknowledge that each restrictive covenant in this agreement is intended to protect one or more of Employer's Protected Interests and to impose no restraint greater than is required for that protection. The parties acknowledge that a covenant may not be used to restrain ordinary competition and that Employer relies on special facts present over and above ordinary competition — its Confidential Information and trade secrets, its investment in special training, and its customer relationships in which Employee is the face of the business — and would not provide Employee with access to these Protected Interests absent the protections in this agreement. Each covenant is intended to be no greater in time, territory, and scope than is required to protect Employer's business interest.

Drafting Note The special-facts threshold and the reasonableness factors

A Tennessee covenant not to compete is a disfavored restraint of trade that a court enforces only when reasonableness is established, so acknowledgments of reasonableness in the agreement do not carry the covenant on their own. The threshold question comes before the balancing: an employer cannot restrain ordinary competition, and only special facts over and above ordinary competition — confidential information or trade secrets, an investment in special training, or customer relationships in which the employee is the face of the business — support the restraint at all . Once a protectable interest exists, the covenant stands or falls on whether its time and territory are greater than required to protect that interest, weighed against the consideration, the threatened danger to the employer, the hardship on the employee, and the public interest — a covenant reaching further than the proven interest is exposed on the element that reaches too far .

3. Timing, Consideration, and Employee Acknowledgements

The parties acknowledge that this agreement is supported by adequate consideration and record the timing of its execution. If this agreement is signed at the outset of employment, the offer and commencement of employment is the consideration. If Employee is an existing employee signing after hire, the parties agree that Employee's continued employment for an appreciable length of time is consideration for the covenants; where continued employment is brief, the parties intend to identify separate consideration for the covenants. Employer has given Employee the opportunity to consult with independent legal counsel before signing this agreement. Employee acknowledges that the restrictions in this agreement are reasonable and necessary to protect Employer's Protected Interests, and understands that adequate consideration establishes only that the covenants are supported, not that they are reasonable, so each covenant must independently satisfy Tennessee's reasonableness requirements. This agreement is effective as of the Effective Date listed in Cover Terms.

Drafting Note Continued employment as consideration

A covenant an existing Tennessee employee signs after hire is supported when the employee then remains employed for an appreciable length of time; the length of the continued employment is what supplies the consideration, so a covenant paired with only a brief tenure after signing is on weaker ground . Adequate consideration establishes only that a covenant is supported, not that it is reasonable, so a covenant that clears the consideration question still has to satisfy the protectable-interest, time, territory, and scope limits on its own; where continued employment is brief, separate consideration identified in the agreement removes the doubt .

4. Confidential Information and Trade Secret Protection

Employee must treat all Confidential Information as strictly confidential. Employee must not use or disclose Confidential Information except as required to perform authorized job duties or with Employer's prior written consent. Employee's obligations regarding trade secrets continue in perpetuity, for as long as the information remains a trade secret. Employee's obligations regarding other Confidential Information continue for the period specified in Cover Terms. This confidentiality obligation is intended to operate alongside, and independent of, any restrictive covenant, and does not restrict Employee's use of the general knowledge, skill, and experience Employee acquired during employment.

5. Permitted Disclosures and Protected Conduct

Nothing in this agreement prohibits Employee from: (a) reporting possible violations of law to any government agency, including the Securities and Exchange Commission, the Equal Employment Opportunity Commission, the Occupational Safety and Health Administration, or any other federal, state, or local agency; (b) making disclosures protected under whistleblower provisions of any law; (c) discussing wages, hours, or other terms and conditions of employment as protected by applicable law, including Section 7 of the National Labor Relations Act (29 U.S.C. § 157); (d) testifying truthfully in legal proceedings; or (e) filing a sealed complaint in court using Confidential Information without liability. Pursuant to the Defend Trade Secrets Act (18 U.S.C. § 1833(b)), Employee may not be held criminally or civilly liable for disclosing a trade secret in confidence to a government official or attorney solely for the purpose of reporting or investigating a suspected violation of law, or in a sealed court filing.

6. Return, Deletion, and Certification of Company Property

Upon termination of employment, Employee must promptly return to Employer all documents, devices, files, credentials, and other materials containing or relating to Confidential Information. Where permitted, Employee must permanently delete electronic copies of Confidential Information from personal devices and accounts. Employee must certify compliance with this section in writing upon Employer's request. The parties intend that these return, deletion, and certification mechanics provide contemporaneous evidence of Employer's efforts to protect its Confidential Information and trade secrets.

7. Non-Solicitation of Employees

During the Restricted Period, Employee must not Solicit, recruit, hire, or attempt to hire any Covered Employee. This restriction does not prohibit Employee from providing a professional reference upon request or from hiring a person who responds to a general advertisement not directed specifically at Employer's employees. This covenant reaches only Covered Employees whom the departing Employee actually worked with or managed and does not operate as a workforce-wide hiring ban.

8. Non-Solicitation of Customers, Vendors, Referral Sources, and Business Partners

During the Restricted Period, Employee must not Solicit the business of any Covered Customer. This covenant reaches only Covered Customers with whom Employee had material contact and maps onto Employer's interest in the customer relationships in which Employee was the face of the business. It does not bar Employee from competing at all.

Drafting Note Preserved covenants operating as de facto non-competes

The 2026 statute preserves a confidentiality or nondisclosure agreement, a customer non-solicitation agreement, and an employee non-solicitation agreement from its non-compete rules, so a covenant tied to genuine confidential information, customers, or employees sits outside the time presumptions and the $70,000 threshold; together with the trade-secret protections, a customer non-solicit is often a more readily enforceable protection than a broad non-compete . That shelter depends on the covenant staying within its category: a non-solicitation or confidentiality clause drawn so broadly that it bars the worker from competing at all reads as a disguised non-compete and draws the same reasonableness scrutiny — and, for a below-threshold employee, the same voidness risk — as an express non-compete. A no-dealing covenant is not on the preserved list at all, so a court may test it under the disfavored-restraint framework rather than the carve-out, and a clock kept independently per covenant makes clear which covenants answer to the statute and which do not .

9. No Business with Covered Customers

During the Restricted Period, Employee must not accept, service, or do business with any Covered Customer, regardless of whether Employee or the Covered Customer first initiated contact. This restriction is broader than non-solicitation because it applies even if the Covered Customer approaches Employee. This covenant is sized to the customer relationships it protects and reaches only Covered Customers with whom Employee had material contact.

10. Non-Competition

During the Restricted Period, Employee must not engage in, be employed by, consult for, or have an active ownership interest in any Competitive Business within the Restricted Territory. This covenant exists to protect Employer's Protected Interests and not to restrain ordinary competition. The parties intend this covenant to be no greater in time and territory than is required to protect Employer's business interest. For a covenant governed by the 2026 statute — one entered into, renewed, or amended on or after July 1, 2026 — the Restricted Period is intended to stay within the applicable presumption window of Tenn. Code Ann. § 50-1-210. This covenant is also subject to the compensation threshold and worker exclusions stated below. If Employer has identified specific competitors in Cover Terms under Specified Competitors, the parties intend this covenant to be understood and, if necessary, enforced as limited to those named competitors. Passive Public Holdings are permitted.

Drafting Note Restricted-period duration presumption windows

For an employee covenant entered into, renewed, or amended on or after July 1, 2026, a duration at or under two years falls inside the statutory presumption of reasonableness in time, and a longer term is presumptively unreasonable — a court applies the window as a rebuttable presumption, so a term beyond it leaves the party seeking enforcement to rebut the presumption. A within-window term is presumed reasonable in time only; geography and the protectable-interest requirement remain to be tested under the common-law reasonableness analysis, so a covenant sized to the outer bound but untethered to a legitimate interest still fails .

11. Compensation Threshold and Workers Exempt from the Non-Compete

Notwithstanding any other provision of this agreement, and for a covenant governed by Tenn. Code Ann. § 50-1-211 — one entered into, renewed, or amended on or after July 1, 2026, or enforced in a proceeding occurring on or after that date — the non-compete restriction is not enforceable against, and Employer will not require, request, or enforce it against, Employee if Employee's annualized compensation is less than seventy thousand dollars ($70,000); a non-compete executed in violation of that bar is void and unenforceable as a matter of public policy (Tenn. Code Ann. § 50-1-211(a), (c)). For this purpose, annualized compensation includes wages, salary, commissions, nondiscretionary bonuses, and other remuneration, and for an hourly employee is calculated by multiplying the hourly rate by forty and the product by fifty-two (Tenn. Code Ann. § 50-1-211(b)(2)). In addition, and regardless of Employee's compensation, duration, or territory, the non-compete restriction does not apply to and is void against Employee if Employee is a physician who specializes in the practice of emergency medicine, who falls outside the health-care-provider safe harbor (Tenn. Code Ann. § 63-1-148(d)). The other restrictive covenants in this agreement remain in effect to the extent they are otherwise enforceable.

Drafting Note The $70,000 threshold and the events that trigger it

From July 1, 2026, a non-compete against an employee whose annualized compensation is under $70,000 is void and unenforceable as a matter of public policy, and the bar reaches asking a below-threshold employee to sign, not only suing on the covenant . The threshold turns on the statutory definition of annualized compensation — wages, salary, commissions, nondiscretionary bonuses, and other remuneration, with an hourly rate annualized at forty hours times fifty-two weeks — so a covenant priced against base salary alone can misjudge who is covered . The trigger is not only a new signing: an agreement renewed or amended on or after that date is pulled into the same regime, so a notice to a future employer that rests on a non-compete has force only where the underlying covenant actually clears the threshold and the reasonableness analysis .

12. Non-Investment

During the Restricted Period, Employee must not acquire or hold any active ownership interest in, serve as a director, officer, manager, or advisor to, or have material economic participation in any Competitive Business. This restriction primarily targets active or material ownership in private competitors. Passive Public Holdings are permitted. Because this covenant restrains active roles at and material participation in a Competitive Business, it functions as a post-employment restraint. To the extent it operates as a non-compete governed by the 2026 statute, it is subject to the same compensation threshold and worker exclusions stated above.

13. Non-Disparagement

During the Restricted Period specified in Cover Terms for Non-Disparagement, Employee must not make statements that are intended to or reasonably likely to disparage Employer, its officers, directors, employees, products, or services. This section does not restrict Employee from making truthful statements in legal proceedings, providing truthful testimony, making disclosures to government agencies, or exercising rights protected by law, including rights protected under Section 7 of the National Labor Relations Act.

14. Physician and Health Care Provider Covenants

If Employee is a health-care provider licensed under chapters 3, 4, 5, 6, 8, 9, or 11 of Title 63 of the Tennessee Code, any covenant in this agreement restricting Employee's right to practice Employee's profession upon termination is intended to stay within the statutory safe harbor of Tenn. Code Ann. § 63-1-148(a): it must be set forth in a written document signed by Employee and Employer, run two years or less in duration, and stay within the greater of a ten-mile radius from Employee's primary practice site while employed or contracted or the county in which that primary practice site is located. This safe harbor does not reach a physician who specializes in the practice of emergency medicine (Tenn. Code Ann. § 63-1-148(d)); against such a physician the non-compete is void as provided in the Compensation Threshold and Workers Exempt from the Non-Compete section above, and the confidentiality and non-solicitation covenants in this agreement are not affected.

Drafting Note The health-care-provider safe harbor and its limits

For a provider licensed under the listed chapters of Title 63, a covenant deemed reasonable is one in writing, running two years or less, and within the greater of a ten-mile radius from the primary practice site or the county in which it sits; a covenant tied to the purchase or sale of the practice carries a rebuttable presumption that its agreed duration and area are reasonable . Meeting the safe harbor deems the covenant reasonable in time and area only — the protectable-interest requirement and the other common-law limits still apply, so a safe-harbor-compliant covenant untethered to a legitimate interest still fails. The safe harbor does not reach a physician who specializes in emergency medicine: no statute then authorizes the covenant, so it remains void, the same result the threshold section reaches for that physician .

15. No Conflicting Obligations

Employee represents that performing duties for Employer and complying with this agreement does not conflict with any prior agreement, court order, or legal obligation binding on Employee. Employee must promptly disclose to Employer any potential conflict that arises during employment.

16. Notice to Future Employers and Other Third Parties

Employer may disclose the existence and terms of this agreement to any prospective employer or business associate of Employee if Employer has a reasonable belief that Employee may breach this agreement. Employee consents to this disclosure. Employer will not assert a non-compete through such a notice against an Employee for whom the non-compete is void under the Compensation Threshold and Workers Exempt from the Non-Compete section above.

17. Tolling During Breach

If Employee breaches any restrictive covenant in this agreement, the Restricted Period for that covenant is extended by one day for each day of the breach, so that the full duration of the restriction runs from the date the breach ends. The parties intend this extension to be defined and bounded, not open-ended or indefinite, and to remain reasonable in duration.

18. Remedies

Employee acknowledges that a breach of this agreement may cause Employer irreparable harm for which money damages would be inadequate. Employer may seek injunctive or other equitable relief in addition to any other remedies available at law, including remedies under the Tennessee Uniform Trade Secrets Act for misappropriation of a trade secret (Tenn. Code Ann. § 47-25-1704). If this agreement provides for attorney's fees, the parties intend any such provision to be mutual and prevailing-party based; absent such a provision, the American Rule applies and each party bears its own fees.

19. Enforceability and Severability

If any provision of this agreement is found to be unenforceable, the remaining provisions remain in full force and effect. Each restrictive covenant in this agreement is intended to be independently enforceable, so that a court's refusal to enforce one covenant, or a court's decision to enforce a covenant only to a reasonable extent, does not affect the others.

20. Reformation

Employer requests reformation if any restraint in this agreement is found to be overbroad. Accordingly, each restrictive covenant in this agreement is drawn as a reasonable, severable restraint sized to the Protected Interests from the start and is intended to be enforceable as written rather than in reliance on judicial revision.

Drafting Note No reliance on judicial reformation

A Tennessee court is not a backstop that rewrites an aggressive covenant into a reasonable one. Tennessee follows a rule of reasonableness rather than the strict blue-pencil rule, so a court may modify an overbroad covenant to render it reasonable — and for a covenant governed by the 2026 statute that modification power is now express — but the power is discretionary and bounded . A covenant shown by credible evidence to be deliberately unreasonable and oppressive is voided rather than trimmed, and a court may refuse enforcement entirely — even for a covenant backed by a legitimate protectable interest — where the hardship to the employee and the harm to the public interest outweigh the employer's interest . A restraint whose duration, geography, and scope are sized to the minimum the legitimate interest requires stands on its own terms rather than on judicial rescue .

21. Survival and Expiration of Each Covenant

Each restrictive covenant in this agreement survives the termination of Employee's employment for the Restricted Period specified in Cover Terms. Obligations under the Confidential Information and Trade Secret Protection section survive indefinitely to the extent they relate to trade secrets. All other provisions survive to the extent necessary to enforce rights that arose during employment. Each covenant's Restricted Period runs independently of the others.

22. Assignment and Successors

Employee may not assign this agreement or any rights or obligations under it. Employer may assign this agreement to any affiliate, successor, or acquirer of all or substantially all of Employer's business or assets. This agreement is binding on and inures to the benefit of the parties and their respective heirs, successors, and permitted assigns.

23. Governing Law, Venue, and Dispute Process

This agreement is governed by the law listed in Cover Terms. Disputes will be resolved in the courts of the Governing Law state, subject to non-waivable rights under applicable law. If the law of a state other than Tennessee is selected for an agreement with a Tennessee worker, the parties intend that selection to be executed in good faith and to rest on a genuine connection to the parties. The parties intend that the governing-law and venue choices match where Employee actually lives and works.

Drafting Note A good-faith basis for an out-of-state choice of law

A Tennessee court honors a contractual choice of another state's law only when certain requirements are met, beginning with good-faith execution and a genuine connection between the chosen state and the parties . A clause picking a state with no real connection, or one deployed to escape Tennessee's protections — including the $70,000 bar — is vulnerable, so a covenant with a Tennessee worker that leans on foreign law to survive is exposed if that choice cannot be defended as genuine; governing-law and venue that track where the worker actually lives and works leave the covenant measured against the law it was drafted for .

24. Entire Agreement, Amendment, Waiver, and Electronic Signatures

This agreement constitutes the entire agreement between the parties regarding its subject matter and supersedes all prior agreements, understandings, and negotiations on this subject. This agreement may be amended only in writing signed by both parties. A party's failure to enforce any provision does not waive that party's right to enforce it later. This agreement may be executed in counterparts, including by electronic signature, each of which is an original.

Signatures

By signing this agreement, each party acknowledges and agrees to the restrictive covenant obligations above. Employee confirms having read and understood each provision, including the Cover Terms.

Employer

Employer: [Legal name of the employer]

Signature:

Signatory Name: [Full name of the authorized signatory signing for the employer]

Title: [Title of the authorized signatory signing for the employer]

Date:

Employee

Signature:

Print Name: [Full legal name of the employee]

Date:

Authored by OpenAgreements contributors. Tennessee-specific analysis informed by the quote-verified Tennessee practice note. Licensed under CC BY 4.0.