At a Glance
- New Tennessee law prohibits employers from requiring, requesting, or enforcing a noncompete agreement against an employee who earns under $70,000.
- Law includes 2-year reasonableness presumption, effectively swapping the plaintiff and defendant’s burden of proof.
Tennessee Governor Bill Lee signed House Bill 1034 on May 7, 2026, enacting Tennessee’s first noncompete law outside the healthcare industry. The law becomes effective July 1, 2026, with a strictly prospective application. Some may highlight the new ban on noncompetes for employees earning under $70,000 annually as a limitation on employers. But the law’s primary impact likely will be enhancing the consistency of court rulings enforcing restrictions of up to two years in the employment context—a practical boon for employers in noncompete litigation.
Tennessee Joins a Trend of States Imposing Minimum Pay Thresholds for Noncompetes
Curbing overuse of noncompetes with lower earners is a growing trend in statehouses across the county. Over a dozen states have imposed minimum income thresholds in recent years, and the Federal Trade Commission attempted to justify its failed 2024 nationwide noncompete ban by focusing on a perceived overuse of noncompetes for lower-paid employees. Tennessee’s new law sees it become the latest state to place a compensation floor on those who may properly be required to sign noncompetes.
The original text of Tennessee House Bill 1034 focused on further limiting the...
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