Tennessee Enacts Non-Compete Law: $70K Income Threshold and Rebuttable Presumptions on Duration

Short summary

Tennessee's House Bill 1034, effective July 1, 2026, prohibits non-compete agreements for employees earning below $70,000 annually and establishes rebuttable presumptions of reasonableness for non-compete durations: 2 years for employees, 3 years for distributors/dealers, and 5 years for sale-of-business. Courts retain discretion to modify overly long restrictions rather than voiding them. Employers should review covenant templates for compliance, as the law is not retroactive.

• •Non-competes banned for Tennessee employees earning under $70K annualized compensation
• •Statutory presumptions: 2-year (employees), 3-year (distributors), 5-year (sale-of-business) durations presumed reasonable
• •Law applies only to agreements entered on or after July 1, 2026; not retroactive

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