NEW TENNESSEE LAW PROHIBITS EMPLOYERS FROM REQUIRING, REQUESTING, OR ENFORCING NONCOMPETE AGREEMENTS FOR EMPLOYEES EARNING LESS THAN $70,000/YEAR

• The Tennessee legislature passed, and Governor Bill Lee has signed a bill that prohibits employers from requiring, requesting, or enforcing noncompete agreements for employees earning less than $70,000 annually. For hourly employees, the annualized compensation can be calculated based on 40 hours per week and 52 weeks per year. A noncompete agreement executed in violation of the prohibition is void and unenforceable.
• The bill also includes a provision regarding the reasonableness of time provisions in restrictive covenants. A court “shall presume to be reasonable in time a restraint sought to be enforced against a former employee or independent contractor” that is two years or less in duration.

• Effective date is July 1, 2026. The bill is not retroactive for existing, untouched agreements, but will apply to any agreement entered into, amended, or renewed on or after July 1, 2026.

If employers have any questions or concerns, we recommend they contact us to ensure compliance. For assistance, contact us at 423-764-4127 or by email at sesco@sescomgt.com.

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