Restrictive covenant agreements in Tennessee are about to get a major overhaul, and most employers haven’t heard about it yet. Legislation now sitting on Governor Bill Lee’s desk would establish the state’s first comprehensive statutory framework governing non-compete, non-solicitation, and other restrictive covenants. While it wouldn’t ban non-competes outright, it would create a $70K income threshold for those provisions and set clearer restrictions on the temporal scope of restrictive covenants generally. If it goes into law as expected, the new statutory framework would take effect on July 1 and apply to any agreement entered into, renewed, or amended on or after that date. What do you need to know about this new law and what four steps should you consider taking to prepare?

How We Got Here

The bill that ultimately passed on April 30 looks nothing like the one that started the process.

• HB 1034 was originally introduced as a flat-out ban on non-competes: a straightforward prohibition on enforcing any restriction on an employee’s or contractor’s right to practice their profession after leaving a job.
• That version passed the House on April 16 on a 74-8 vote.
• But Tennessee lawmakers ultimately stepped back from an outright ban and substituted a more targeted framework in the Senate, which passed it 28-4 on April 20.
• The House then agreed to the changes with an April 30 signature from the Speaker.

What the New Law Does

The legislation creates two new statutory provisions...

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