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Tennessee Non-Compete Agreement

Tennessee voids non-competes for employees earning under $70,000 a year under a 2026 law but enforces reasonable ones above it. Attorney review available.

Introduction

Effective July 1, 2026, Tennessee draws a line most states do not: under Public Chapter 934 (HB 1034, 114th General Assembly), a non-compete is void as a matter of public policy against any employee whose annualized compensation is less than $70,000 a year. That single figure, written into new Tennessee Code Annotated Section 50-1-211, is the first thing to check before drafting one here. A non-compete is a contract in which one person, usually an employee, promises not to compete with a business for a set period and within a set area after the job ends. For a Tennessee worker at or above the $70,000 floor, that promise is enforceable when it is reasonable and guards a legitimate business interest such as trade secrets, confidential information, or special customer relationships; below the floor, no amount of careful drafting saves it. The 2026 statute, Section 50-1-210, adds rebuttable presumptions that a time restraint is unreasonable past two years for most employees and independent contractors, three years for distributors, dealers, franchisees, and licensees, and five years in a sale of business. It also lets a court modify an overbroad covenant instead of discarding it. These rules layer onto Tennessee common law, which the courts built in Central Adjustment Bureau, Inc. v. Ingram and Hasty v. Rent-A-Driver. This page walks through what Tennessee allows and offers a template scoped to it. Treat it as a state-law overview, not a guarantee that any one clause will survive a challenge.

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Key Things to Know

  1. 1

    Tennessee's headline rule is a pay floor no generic template carries: effective July 1, 2026, an employer may not require, request, or enforce a non-compete against an employee whose annualized compensation is less than $70,000, and any such agreement is void as a matter of public policy (Tennessee Code Annotated Section 50-1-211). Confirm the worker's pay first, and do not import another state's number.

  2. 2

    A non-compete is a contract in which one party, usually an employee, agrees not to compete with a business for a set time and area after the relationship ends. For a Tennessee worker at or above the $70,000 floor it is enforceable when reasonable and tied to a legitimate business interest such as trade secrets, confidential information, or special customer relationships. Public Chapter 934 (Sections 50-1-210 and 50-1-211) codifies that framework, and Tennessee is not a ban state.

  3. 3

    Tennessee Code Annotated Section 50-1-210(b) presumes a time restraint unreasonable once it runs past two years for most employees and independent contractors, three years for distributors, dealers, franchisees, and licensees, and five years in a sale-of-business context. For a rank-and-file employee, keep the term at or under two years.

  4. 4

    Geography carries no bright-line rule in Tennessee and is judged case by case. A court weighs the duration, the territory, and the hardship on the worker against the employer's interest, and favors a restraint tied to the specific work the employee did and the area where the employee worked or had customer contact over a statewide ban on a whole profession.

  5. 5

    Tennessee is employer-favorable on consideration. The Tennessee Supreme Court has held that continued at-will employment can be enough consideration for a non-compete an existing employee signs, at least where the employment continues for an appreciable time afterward (Central Adjustment Bureau, Inc. v. Ingram, 678 S.W.2d 28 (Tenn. 1984)). Pairing the covenant with a raise, bonus, or promotion still strengthens the exchange.

  6. 6

    Rather than void an overbroad covenant, a Tennessee court may rewrite it: Section 50-1-210(d) lets the court modify a restrictive covenant to make it reasonable and enforceable, codifying Tennessee's long-standing blue-pencil rule. That rescue never reaches a covenant void for sub-$70,000 pay. Physicians and other healthcare providers face separate statutory limits on duration and geography.

  7. 7

    When a worker earns under the floor or a non-compete would be unreasonable, Tennessee employers guard confidential information with a confidentiality or non-disclosure agreement and the Tennessee Uniform Trade Secrets Act rather than a non-compete, letting the business sue over misuse of trade secrets without dictating where a former employee may work.

Key decisions before you file

Before you file a Non-Compete Agreement in Tennessee, a few decisions shape the document: which option to choose and what each one means. The Non-Compete Agreement guide walks through them.

Open the Non-Compete Agreement guide

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TENNESSEE COVENANT NOT TO COMPETE (For an employee earning at least $70,000 in annualized compensation)

TENNESSEE THRESHOLD NOTICE: Before using this template, confirm the worker's pay. Under Tennessee Code Annotated Section 50-1-211 (effective July 1, 2026), an employer may not require, request, or enforce a non-compete against an employee whose annualized compensation is less than $70,000, and any such agreement is void as a matter of public policy. Use this template only for a worker at or above that floor. To protect confidential information from a lower-paid worker, use a confidentiality or trade-secret agreement instead.

  1. PARTIES. This Covenant Not to Compete is made on [DATE] between [EMPLOYER NAME] (Company) and [EMPLOYEE NAME] (Employee), whose annualized compensation is at least $70,000.

  2. LEGITIMATE BUSINESS INTEREST. The Company gives the Employee access to trade secrets, confidential information, and customer relationships. This covenant protects those legitimate business interests and nothing more.

  3. CONSIDERATION. The Employee signs in exchange for [employment or continued employment and access to the Company confidential information, or a raise, bonus, or promotion of [DESCRIBE]]. Tennessee recognizes continued at-will employment as consideration where the employment continues for an appreciable time.

  4. NON-COMPETE. For [PERIOD, not to exceed two (2) years] after employment ends, the Employee will not perform services that compete with the Company within [SPECIFIED GEOGRAPHIC AREA where the Employee worked or had customer contact]. The restraint reaches only the type of work the Employee actually did for the Company.

  5. NON-SOLICITATION. For the same period, the Employee will not solicit the Company customers the Employee served or learned about, or recruit the Company employees to leave, within the geographic area stated above. Tennessee courts often enforce a narrow non-solicitation clause more readily than a broad non-compete.

  6. REASONABLENESS. The parties intend the time and territory to be reasonable under Tennessee law and no broader than needed to protect the Company legitimate business interests. Under Tennessee Code Annotated Section 50-1-210, a time restraint longer than two years is presumed unreasonable for an employee, so keep the term at or under two years.

  7. TRADE SECRETS AND CONFIDENTIALITY. The Employee will not use or disclose the Company confidential information or trade secrets, consistent with the Tennessee Uniform Trade Secrets Act. This duty stands apart from the covenant above and has no time limit for trade secrets.

  8. ACKNOWLEDGMENT, REFORMATION, AND GOVERNING LAW. The Employee acknowledges that annualized compensation is at least $70,000 and that the Employee had a chance to review this agreement. Tennessee law governs. If a court finds the time or territory overbroad, the Employee agrees the court may modify this covenant to make it reasonable and enforceable rather than void it (Section 50-1-210(d)). Any clause that cannot be made reasonable is severed, and the rest remains in effect.

[EMPLOYER NAME] [EMPLOYEE NAME]

Signature and date Signature and date

Note: Tennessee enforces a non-compete only when it is reasonable and protects a legitimate business interest, and it is void against any employee earning under $70,000 a year (Tennessee Code Annotated Section 50-1-211). Healthcare providers face separate statutory limits. Confirm the worker and the restraint qualify before using this template in Tennessee. For the generic template and other states, see the full Non-Compete Agreement template hub.

Tennessee Requirements for Non-Compete Agreement

Compensation Floor of $70,000

Tennessee's threshold question comes first. Effective July 1, 2026, Tennessee Code Annotated Section 50-1-211 bars an employer from requiring, requesting, or enforcing a non-compete against an employee whose annualized compensation is less than $70,000, and makes any such agreement void as a matter of public policy. Annualized compensation includes wages, salary, commissions, and nondiscretionary bonuses. This is Tennessee's own figure; do not substitute any other state's salary threshold.

Enforceable If Reasonable

For a worker at or above the $70,000 floor, Tennessee enforces an employee non-compete that is reasonable and protects a legitimate business interest such as trade secrets, confidential information, or special customer relationships. Public Chapter 934, effective July 1, 2026 (Tennessee Code Annotated Sections 50-1-210 and 50-1-211), codifies this reasonableness framework alongside long-standing common law (Central Adjustment Bureau, Inc. v. Ingram, 678 S.W.2d 28 (Tenn. 1984)). Tennessee is not a ban state, but an overbroad covenant will not be enforced.

Reasonable-Duration Presumptions

Tennessee Code Annotated Section 50-1-210(b) presumes a time restraint unreasonable once it exceeds two years for most employees and independent contractors, three years for distributors, dealers, franchisees, and licensees, and five years in a sale-of-business context. Keep an employee term at or under two years. Geographic scope has no bright-line rule and is judged case by case.

Legitimate Business Interest Required

A Tennessee non-compete must protect a legitimate business interest, such as trade secrets, confidential information, or special customer relationships, and be no broader than necessary in time and territory. Courts weigh the duration, the geographic area, and the hardship on the employee against the employer's interest. Tie the restraint to the specific work the employee did and the area where the employee worked or had customer contact.

Consideration Can Be Continued Employment

Tennessee is employer-favorable on consideration: the Tennessee Supreme Court has held that continued at-will employment can be sufficient consideration for a non-compete an existing employee signs, at least where the employment continues for an appreciable time afterward (Central Adjustment Bureau, Inc. v. Ingram, 678 S.W.2d 28 (Tenn. 1984)). To reduce risk, pair a new non-compete with a raise, bonus, or promotion so the exchange is clear.

Courts May Modify an Overbroad Covenant

Tennessee follows a blue-pencil or reasonable-modification approach. The 2026 statute expressly allows a court to modify a restrictive covenant to render it reasonable and enforceable rather than void it entirely (Tennessee Code Annotated Section 50-1-210(d)), codifying long-standing Tennessee law. A court cannot, however, save a covenant that is void because the employee earns under $70,000. Physicians and other healthcare providers face separate statutory duration and geography limits.

Protect Trade Secrets Instead

For a worker below the $70,000 floor, or where a non-compete would be unreasonable, Tennessee employers protect confidential information with a confidentiality or non-disclosure agreement and the Tennessee Uniform Trade Secrets Act (Tennessee Code Annotated Section 47-25-1701 et seq.). This lets a business sue over misuse of trade secrets without restraining where a former employee may work, which keeps it lawful in Tennessee.

Federal FTC Rule Is Not in Force

The 2024 Federal Trade Commission non-compete rule was set aside by a federal court before it took effect, so it is not currently binding, and its status remains unsettled. Tennessee does not depend on it: Tennessee's own statute (Public Chapter 934, Tennessee Code Annotated Sections 50-1-210 and 50-1-211) and common law independently govern non-competes in Tennessee regardless of what happens with the federal rule.

Frequently Asked Questions

Yes, and it is the first thing to check. Effective July 1, 2026, Tennessee Code Annotated Section 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 makes any such agreement void as a matter of public policy. Annualized compensation counts wages, salary, commissions, and nondiscretionary bonuses. The $70,000 figure is Tennessee's own; do not borrow another state's number.

Yes, for workers who clear the pay floor. Tennessee enforces an employee non-compete that is reasonable in time and territory and protects a legitimate business interest such as trade secrets, confidential information, or special customer relationships, a framework Public Chapter 934 (Sections 50-1-210 and 50-1-211) confirmed effective July 1, 2026. Tennessee is not a ban state. But the same law voids any non-compete against an employee earning under $70,000, and courts still refuse to enforce a covenant broader than the employer's legitimate interest.

There is no fixed number, but Tennessee Code Annotated Section 50-1-210(b) presumes a time restraint unreasonable once it exceeds two years for most employees and independent contractors, three years for distributors, dealers, franchisees, and licensees, and five years in a sale-of-business context. Most enforceable employee non-competes in Tennessee run two years or less, and a shorter term paired with a narrow territory is easier to defend.

Reasonableness in Tennessee turns on protecting a legitimate business interest, such as trade secrets or special customer relationships, with a restraint no broader than necessary in time and geography. A court weighs the duration, the geographic area, and the hardship on the employee against the employer's interest. A covenant tied to the specific work the employee performed and the area where the employee worked holds up far better than a blanket, statewide ban on an entire occupation.

Usually, yes. Tennessee follows a blue-pencil or reasonable-modification approach, and Section 50-1-210(d) expressly lets a court modify a restrictive covenant to make it reasonable and enforceable instead of striking it whole. This has long been Tennessee law under Central Adjustment Bureau, Inc. v. Ingram. What a court cannot do is revive a covenant that is void because the employee earns under $70,000.

It can. Unlike some states, Tennessee has held that continued at-will employment can be sufficient consideration for a non-compete an existing employee signs, at least where the person keeps working for an appreciable time afterward (Central Adjustment Bureau, Inc. v. Ingram, 678 S.W.2d 28 (Tenn. 1984)). Even so, many Tennessee employers pair a new covenant with a raise, bonus, or promotion so the exchange is unmistakable.

They rely on a confidentiality or non-disclosure agreement and the Tennessee Uniform Trade Secrets Act, which lets a business sue over the misuse of trade secrets. That approach guards confidential information and customer data without dictating where a former employee may work, and it is the lawful route for a worker who earns under $70,000 and therefore cannot be bound by a non-compete in Tennessee.

No. The Federal Trade Commission issued a 2024 rule that would have banned most non-competes nationwide, but a federal court set it aside before it took effect, so it is not in force and its status has stayed unsettled. Either way, Tennessee's own law controls here, so a Tennessee employer should follow the $70,000 floor and the reasonableness rules in Tennessee Code Annotated Sections 50-1-210 and 50-1-211.