Practice area
Non-compete law
Meridian Law advises employers and employees on Tennessee non-compete law, drafting, reviewing, enforcing and challenging agreements tied to employment, business sales, franchises, partnerships and health care. We work from our office in Franklin.
Non-compete law overview
Tennessee is one of approximately 28 states that allow non-competes to be enforced against discharged employees. Tennessee, unlike some other states, also does not prevent non-competes from being enforced against lower-wage workers and independent contractors. So there is no bright-line rule that invalidates non-competes even in the midst of a pandemic.
How do Tennessee courts determine whether a non-compete agreement is reasonable?
- Whether the non-compete agreement was supported by sufficient consideration
- Whether the employer has a legitimate business interest that needs to be protected
- Whether the non-compete agreement will cause economic hardship to the employee if it is enforced
- Whether the non-compete agreement violates public policy
- Whether the non-compete agreement is reasonable in terms of its time and geographic limitations.
Assuming the non-compete agreement satisfies the above factors, it will generally be enforced.
Was the agreement supported by sufficient consideration?
When considering whether this factor has been satisfied, courts will examine what value the employee received in return for signing the non-compete agreement.
Are non-competes enforceable in Tennessee?
Often, yes, but not automatically. Tennessee courts generally enforce a non-compete that protects a legitimate business interest and is reasonable in time, geography and scope, using the factors above. Courts typically look closely at whether the employer is protecting something real, such as confidential information, customer relationships or specialized training, rather than simply avoiding ordinary competition.
For agreements signed on or after July 1, 2026, a new state law adds further requirements.
What changed in Tennessee non-compete law in 2026?
Tennessee's HB 1034 took effect on July 1, 2026. For agreements signed on or after that date, it generally:
- Bars an employer from requiring, requesting or enforcing a non-compete against an employee whose annualized compensation is less than $70,000
- Sets rebuttable presumptions about reasonable length: two years or less for former employees and independent contractors, three years or less for distributors, dealers and franchisees, and the longer of five years or the payment period for the sale of a business
- Allows a court to modify an overbroad agreement to make it reasonable rather than void it
The law is not retroactive, so agreements signed before July 1, 2026 are judged under the earlier rules. Non-solicitation and confidentiality agreements are not subject to the new non-compete requirements, which is where our trade secret work often comes in. Every agreement is different, so have yours reviewed rather than relying on a summary.
Non-compete review for employers and employees
Employers need agreements that protect what matters and will hold up under the current rules. Employees need to know what they are agreeing to, ideally before they sign. We draft and review non-competes in employment contracts, asset purchase, franchise, partnership and health care agreements, and severance agreements, and our litigation attorneys handle disputes when someone seeks to enforce or escape one.
For more background, read why the FTC's nationwide non-compete ban was abandoned and how attorney's fees alone can be damages when a competitor induces a breach.
FAQs
Non-compete law: common questions
Is a non-compete enforceable in Tennessee?
It can be. Tennessee courts generally enforce non-competes that are supported by consideration, protect a legitimate business interest and are reasonable in duration and geographic scope. Courts also weigh hardship to the employee and public policy.
For agreements signed on or after July 1, 2026, HB 1034 generally bars non-competes for employees earning less than $70,000 in annualized compensation and sets presumed time limits. Whether yours is enforceable depends on its terms and when it was signed.
How do you get out of a non-compete agreement?
The most common route is negotiation. Your employer may agree to release you, or to narrow or shorten the restriction, sometimes in exchange for other assurances. A severance negotiation can also be an opportunity to address an existing non-compete.
If that fails, you may be able to challenge the agreement as unenforceable. A lawyer can review it against the factors Tennessee courts apply and, if it was signed on or after July 1, 2026, against HB 1034.
How do you fight a non-compete agreement?
If a former employer threatens to enforce a non-compete, defenses often focus on whether the agreement protects a legitimate business interest, whether its time, geographic and activity limits are reasonable, and whether it was supported by consideration. For newer agreements, the employee's pay may also matter.
Courts can narrow an overbroad agreement rather than discard it, so the goal is often a realistic resolution. Respond promptly to a cease-and-desist letter, and before starting work that might be covered.
How long can a non-compete last in Tennessee?
There is no single maximum; courts ask whether the length is reasonable for the interest being protected. For agreements signed on or after July 1, 2026, HB 1034 presumes two years or less is reasonable for former employees and independent contractors, with longer presumptions for franchise and distribution relationships and for the sale of a business.
A presumption can be rebutted, and scope and geography still matter.
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