Tennessee has enacted a new statute limiting the use of noncompete agreements. The law took effect July 1, 2026, and applies to noncompetes entered into, renewed, or amended on or after that date.
The key change is a new compensation threshold. Employers may not require or enforce a noncompete against an employee whose annualized compensation is less than $70,000. Agreements that violate this requirement are void and unenforceable as a matter of public policy.
The law does not prohibit all restrictive covenants. Employers may still use properly drafted confidentiality agreements, nondisclosure agreements, customer nonsolicitation agreements, employee nonsolicitation agreements, and trade secret protections.
👉 Takeaway: Review Tennessee employment agreements. Noncompetes should not be used for employees below the compensation threshold, and any restrictive covenant should remain narrowly tailored to protect legitimate business interests, such as confidential pricing, estimating methods, customer relationships, and proprietary business information.
