Tennessee

/in

Tennessee: Noncompete Ban for Low Wage Workers and Changes for Healthcare Providers

APPLIES TO

All Employers with Employees in TN

EFFECTIVE

JUL 1, 2026

QUESTIONS?

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Quick Look

  • HB 1034 broadly prohibits an employer from requiring, requesting, or enforcing a noncompete agreement against an employee who earns less than $70,000 per year.
  • The law also amends healthcare provider noncompete agreements to require a court to apply rebuttable presumptions when determining the reasonableness in time of a restrictive covenant sought to be enforced after the termination of an employment or business relationship.

Discussion

HB 1034 broadly prohibits an employer from requiring, requesting, or enforcing a noncompete agreement against an employee who earns less than $70,000 per year. This includes total wages, salary, commissions, nondiscretionary bonuses, and other forms of remuneration.

 

The law also amends healthcare provider noncompete agreements to require a court to apply rebuttable presumptions when determining the reasonableness in time of a restrictive covenant sought to be enforced after the termination of an employment or business relationship. A court will presume a noncompete to be reasonable in time if the following are met:

 

  • A restraint sought to be enforced against a former employee or independent contractor that (i) is two years or less in duration, measured from the date the employment or business relationship terminates; and (ii) is not associated with the sale or ownership of a business.
  • A restraint three years or less in duration, measured from the date of termination of the business relationship in the case of a restrictive covenant sought to be enforced against a current or former distributor, dealer, franchisee, or lessee of real or personal property, or licensee of a trademark, trade dress, or service mark and unconnected to the sale of a business.
  • A restraint that is the longer of five years or less, or a period equal to the time during which payments are made to the owner or seller, in the case of a restrictive covenant sought to be enforced against the owner or seller of all or a material part of the assets of a business or commercial enterprise, the shares of a corporation, a partnership interest, a membership interest in a limited liability company, or any other equity interest or right to receive profits.

 

For time restraints that are greater than what is provided for above, the court can modify the noncompete to make it reasonable and enforceable.

 

Action Items

  1. Have noncompete agreements reviewed by legal counsel.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2026 ManagEase