Pay-threshold ban
Tennessee Non-Compete Law (2026): Void below the pay floor
Tennessee moved in mid-2026 from a pure common-law state to a partly codified one. Employers can no longer enforce a non-compete against an employee whose annualized compensation falls below $70,000; such an agreement is void and unenforceable as a matter of public policy. Above that line, the statute does not shorten anything. It tells courts to presume that two years is reasonable in an ordinary employment covenant, three years in franchise and distribution settings, and five years or the payout period in a business sale, which in practice hands employers a defensible default rather than taking one away.
The rule
How Tennessee treats non-compete agreements
This is a mixed statute rather than a worker-protective one. The compensation floor is genuinely protective, but the duration presumptions codify terms Tennessee employers were already seeking and courts keep their power to modify an overbroad covenant rather than strike it. The Act is silent on geographic scope and on what counts as adequate consideration, so those remain common-law questions. Because the sections are new, the 2026 code is not yet posted on the free code portals; the citation therefore points to the verified bill record for HB 1034 rather than to a code page.
If you are an employer
Screen every new or renewed agreement against the $70,000 calculation, including commissions and nondiscretionary bonuses, and remember that the presumptions cut both ways: staying inside two years buys you a favorable starting position, while going past it puts the burden on you.
If you are a worker
If your total annualized pay is under $70,000 and you signed on or after July 1, 2026, the non-compete is void, though confidentiality clauses and customer or coworker non-solicitation clauses still bind you.
| Classification | Compensation-floor ban plus codified duration presumptions |
|---|---|
| Pay threshold | $70,000 in annualized compensation. Section 50-1-211 defines that as total compensation from the employer including wages, salary, commissions, nondiscretionary bonuses, and other remuneration, put on an annual basis; for hourly workers the hourly rate is multiplied by 40 and then by 52. The figure is fixed in the statute and carries no inflation index. |
| Maximum term | No hard ceiling. Section 50-1-210 supplies rebuttable presumptions instead: two years or less is presumed reasonable in employment and contractor relationships, three years or less for distributors, dealers, franchisees, trademark licensees, and real-property lessees, and the greater of five years or the duration of payments to the seller in a sale of a business or equity interest. Longer terms are presumptively unreasonable but can be defended. Licensed health-care providers remain separately capped at two years by Tenn. Code Ann. § 63-1-148. |
| Notice or consideration | None. The Act says nothing about advance notice, and it does not disturb Tennessee's common-law consideration rules. |
| Primary statute | Tenn. Code Ann. §§ 50-1-210 and 50-1-211 (2026 Pub. Ch. 934, HB 1034/SB 995); health-care providers additionally governed by Tenn. Code Ann. § 63-1-148 |
Detail
What has changed, and what is still moving
Legislation 2024–2026
House Bill 1034 of the 114th General Assembly, companion SB 995, sponsored by Representatives Rebecca Alexander, William Lamberth, and Caleb Hemmer. Signed by Governor Bill Lee on May 7, 2026 as Public Chapter 934, effective July 1, 2026, and expressly prospective, so it does not reach agreements already in place.
Bills to watch
No significant restrictive bills pending. HB 1034 is enacted rather than pending.
Leading cases
Agreements predating July 1, 2026 continue to be judged under Tennessee's pre-Act common law, which asks whether the employer has a legitimate protectable interest and whether the time, territory, and activity restrictions are no broader than that interest requires. The new statute does not disturb that framework; it layers presumptions on top of it and leaves geography and consideration entirely to the case law.
If you have one in hand
What can make a non-compete unenforceable in Tennessee
- You earn below the threshold. $70,000 in annualized compensation. Section 50-1-211 defines that as total compensation from the employer including wages, salary, commissions, nondiscretionary bonuses, and other remuneration, put on an annual basis; for hourly workers…
- The scope is wider than the interest behind it. A restriction that reaches beyond the customers, trade secrets or goodwill the employer can actually point to is the most common reason a covenant fails in Tennessee.
Whether any of these applies turns on the wording of your own agreement, your role and the case law your court follows. This page maps the statutory landscape; it does not replace advice on a specific contract.
FAQ
Tennessee non-compete questions
Are non-compete agreements enforceable in Tennessee?
Tennessee moved in mid-2026 from a pure common-law state to a partly codified one. Employers can no longer enforce a non-compete against an employee whose annualized compensation falls below $70,000; such an agreement is void and unenforceable as a matter of public policy. Above that line, the statute does not shorten anything. It tells courts to presume that two years is reasonable in an ordinary employment covenant, three years in franchise and distribution settings, and five years or the payout period in a business sale, which in practice hands employers a defensible default rather than taking one away.
How long can a non-compete last in Tennessee?
No hard ceiling. Section 50-1-210 supplies rebuttable presumptions instead: two years or less is presumed reasonable in employment and contractor relationships, three years or less for distributors, dealers, franchisees, trademark licensees, and real-property lessees, and the greater of five years or the duration of payments to the seller in a sale of a business or equity interest. Longer terms are presumptively unreasonable but can be defended. Licensed health-care providers remain separately capped at two years by Tenn. Code Ann. § 63-1-148.
Is there a minimum salary for non-competes in Tennessee?
$70,000 in annualized compensation. Section 50-1-211 defines that as total compensation from the employer including wages, salary, commissions, nondiscretionary bonuses, and other remuneration, put on an annual basis; for hourly workers the hourly rate is multiplied by 40 and then by 52. The figure is fixed in the statute and carries no inflation index.
What notice or consideration does Tennessee require?
None. The Act says nothing about advance notice, and it does not disturb Tennessee's common-law consideration rules.
Sources
How this entry was checked
- Primary source. Tenn. Code Ann. §§ 50-1-210 and 50-1-211 (2026 Pub. Ch. 934, HB 1034/SB 995); health-care providers additionally governed by Tenn. Code Ann. § 63-1-148 — the statutory text itself.
- Secondary sources consulted. LegiScan record for TN HB 1034, 114th General Assembly (Pub. Ch. 934), Littler, 'Thumb on the Scale' (Tennessee noncompete alert), Morgan Lewis HB 1034 analysis, Bricker Graydon Wyatt, 'Tennessee's New Noncompete Statute', Tenn. Code Ann. § 63-1-148 (Justia).
Check it against a third party
None of these is ours. If a figure here matters to a decision, verify it:
- Federal Trade Commission — non-compete hub
- Economic Innovation Group — State Noncompete Law Tracker
- Fair Competition Law (Beck Reed Riden) — 50-state legislation tracker
- GAO-23-103785 — Noncompete Agreements (May 2023)
This page is general legal information published by Jurizmo and is not legal advice, does not create an attorney-client relationship, and may not reflect amendments enacted after the review date above. Consult a licensed attorney in the relevant state before acting on any agreement.