Tennessee Bars Non-Competes Below $70,000, Sets 2-Year Presumption for Workers
Updated
Updated · The National Law Review · Jul 20
Tennessee Bars Non-Competes Below $70,000, Sets 2-Year Presumption for Workers
2 articles · Updated · The National Law Review · Jul 20
Summary
Tennessee’s new non-compete law took effect July 1, banning employment-based non-compete agreements for workers with annualized compensation below $70,000.
House Bill 1034 also sets rebuttable duration presumptions: 2 years for employees and independent contractors, 3 years for distributors and franchisees, and 5 years for sale-of-business deals.
Annualized compensation is defined broadly to include wages, salary, commissions and nondiscretionary bonuses; for hourly workers, it is calculated as hourly pay times 40 hours times 52 weeks.
Courts can still modify overly long restrictions to make them enforceable, and the law applies only to agreements signed on or after July 1 because it is not retroactive.
The measure puts Tennessee alongside states including Virginia, Illinois, Maine and Washington that limit non-competes for lower-paid workers.