Labor & Employment Law Daily Wrap Up, STATE LEGISLATION—TENNESSEE—New law prohibits employers from requiring, requesting, or enforcing noncompete agreements for workers earning less than $70K, (May 8, 2026)
By Brandi O. Brown, J.D.
The law, which also provides courts with presumptively reasonable time restraints for enforcement of restrictive covenants, was signed by Governor Lee yesterday.
The Tennessee legislature passed, and yesterday Governor Bill Lee signed, HB1034/SB0995, 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 as a matter of law.
Rebuttable presumptions regarding time periods. The act 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, measured from the termination date, and that is not associated with the sale or ownership of all or a material part of the assets of a business, professional practice, or other 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 in a business, professional practice, or other commercial enterprise.
Other presumptive time periods apply to current or former distributors, dealers, franchisees, lessees of real or personal property, or licensees of a trademark, trade dress, or service mark (three years or less), as well as to the owner or seller in a sale (five years or less or the period of time during which payments are made).
The act takes effect July 1, 2026.
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