Tennessee’s non-compete law changes on July 1. If you haven’t audited your agreements yet, you’re running out of time. Governor Bill Lee signed House Bill 1034 on May 7, 2026, the state’s first non-compete law outside the healthcare industry.
The $70,000 floor. The law prohibits employers from requiring, requesting, or enforcing a non-compete against any employee whose annualized compensation is less than $70,000, including wages, salary, commissions, and non-discretionary bonuses. The threshold applies regardless of an employee’s title, access to confidential information, or perceived competitiveness. A title doesn’t get you around it. For hourly workers, the calculation is straightforward: multiply the hourly rate by 40, then by 52. Run that math on your workforce before July 1.
What the law doesn’t touch. The ban applies only to non-compete agreements. Confidentiality agreements, customer non-solicitation provisions, and employee non-solicitation provisions are all preserved.
The retroactivity question. The law is not retroactive. It applies only to agreements entered into, renewed, or amended on or after July 1, 2026. Existing agreements aren’t automatically void, but any renewal or amendment will automatically trigger compliance.
New Reasonableness Presumptions. Think about your agreements today. The more consequential change for litigation may be the new reasonableness presumptions. Prior to this law, Tennessee courts had wide discretion in assessing duration, leading to inconsistent outcomes. Going forward, the type of work an employee performs will dictate the presumptive “reasonable” duration, ranging from two to five years. If a non-compete exceeds the applicable statutory duration, it’s presumed unreasonable and the burden shifts to the party seeking enforcement to prove otherwise.
In the sale-of-business context, restrictions up to five years are presumed reasonable, measured from the time of sale or the period during which payments are made to the seller, whichever is longer.
The bottom line: pull your non-compete templates, check compensation against the $70,000 threshold, and think carefully about duration. Contact your employment attorney today to see if you need to update any of your agreements.