Tennessee House Bill 1034 was signed into law on May 7, 2026, and took effect July 1, 2026. The law introduces two significant changes to employment-based non-compete agreements. First, the law bars non-competes for employees earning below $70,000 annually. Second, it establishes statutory presumptions of reasonableness for non-compete duration.
Under Tenn. Code Ann. § 50-1-211, non-compete agreements are prohibited for employees who earn less than $70,000 in “annualized compensation.” The statute defines the term “annualized compensation” broadly to include wages, salary, commissions, nondiscretionary bonuses, and other forms of remuneration. For hourly employees, annualized compensation is calculated by multiplying the hourly rate by 40, then by 52.
In enacting Tenn. Code Ann. § 50-1-211, Tennessee joins a growing number of states — including Virginia, Illinois, Maine, and Washington — that prohibit non-compete agreements for workers below a specified income threshold.
Tenn. Code Ann. § 50-1-210 also creates a statutory rebuttable presumption regarding
duration. A restriction that falls at or below the applicable presumption is presumed reasonable; a restriction that exceeds it is presumed unreasonable. The presumptive periods vary by relationship type:
Tenn. Code Ann. § 50-1-210 explicitly grants courts the discretion to modify non-compete agreements to...
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