Tennessee enforces non-compete agreements under common law, balancing the employer's legitimate business interest against the employee's right to work. The state applies a reasonableness test similar to most southeastern states, examining time, geographic scope, scope of activity, consideration, and public interest. Tennessee courts may blue-pencil overbroad covenants, narrowing them to a reasonable scope. Tennessee also has a specific statute, Tenn. Code Ann. 63-1-148, governing non-competes for physicians, which sets statutory limits on duration and geographic scope and requires the employer to choose between enforcement and providing a buy-out option. Tennessee's general approach is moderately employer-friendly, but the doctor-specific statute carves out important protections that healthcare workers must understand.
What is a Enforceability?
A non-compete in Tennessee is governed primarily by common law, with the reasonableness analysis articulated in Allright Auto Parks, Inc. v. Berry, 219 Tenn. 280 (1966) and refined in subsequent decisions. The factors are: (1) consideration supporting the covenant; (2) threatened danger to the employer absent the covenant; (3) economic hardship to the employee; and (4) effect on the public interest. For physicians, Tenn. Code Ann. 63-1-148 caps duration at 2 years and geographic scope at the greater of 10 miles or the county where the employer's primary office is located, and requires the employer to either enforce the covenant or pay a statutory buy-out. Non-competes for veterinarians, advanced practice nurses, and certain other healthcare workers have similar specific statutory frameworks.
Red flags to watch for
Tennessee courts routinely uphold non-competes of 1-2 years for sales and executive roles with customer contact, but durations longer than 2 years are increasingly scrutinized. For physicians, 2 years is the statutory cap under Tenn. Code Ann. 63-1-148.
Tennessee requires geographic scope to be tied to the area where the employee actually worked or where the employer's customer relationships exist. Statewide or regional restrictions for a local employer will be narrowed.
Tenn. Code Ann. 63-1-148(a)(2) requires that a physician non-compete either be within the statutory limits or include a buy-out provision. A physician covenant missing this is unenforceable under the statute.
Tennessee case law (Central Adjustment Bureau, Inc. v. Ingram, 678 S.W.2d 28) requires consideration to support a non-compete. While continued employment may suffice in limited circumstances if employment continues for a substantial period, specific consideration — bonus, raise, promotion — is the safer practice and more enforceable.
Tennessee non-solicits must be tied to customers the employee actually serviced or learned about. Restrictions covering the employer's entire customer base will be narrowed.
Vague activity scope language is narrowed by Tennessee courts. The restriction must specifically identify the work the employee is barred from doing.
Tennessee public policy may invalidate forum selection clauses that try to send employment disputes to states with more employer-friendly non-compete law. Watch for forum selection that contradicts your work location.
Your legal rights
Tennessee non-compete enforcement is governed by common law as articulated in Allright Auto Parks, Inc. v. Berry, 219 Tenn. 280 (1966), Central Adjustment Bureau, Inc. v. Ingram, 678 S.W.2d 28 (Tenn. 1984), and Hasty v. Rent-A-Driver, Inc., 671 S.W.2d 471 (Tenn. 1984). Physician non-competes are specifically regulated under Tenn. Code Ann. 63-1-148, which caps duration at 2 years, restricts geographic scope, and provides for statutory buy-outs. The Tennessee Uniform Trade Secrets Act (Tenn. Code Ann. 47-25-1701 et seq.) provides independent trade secret protection. Tennessee courts blue-pencil overbroad covenants where the parties have agreed to allow modification, but may decline to do so where the covenant is severely overbroad or shows bad faith drafting.
Questions to ask before you sign
- 1Does the duration exceed 1-2 years, and what specific protectable interest justifies it?
- 2Is the geographic scope tied to the area where you actually worked?
- 3If you are a physician, does the covenant comply with Tenn. Code Ann. 63-1-148, including duration, geography, and buy-out?
- 4What consideration was provided for signing this restriction?
- 5Is the non-solicit limited to customers you actually had material contact with?
- 6What specific activities are restricted, and is the description precise?
- 7Does any forum selection clause try to send disputes outside Tennessee?
Disclaimer: This guide is for educational purposes only and does not constitute legal advice. Contract law varies by jurisdiction and individual circumstances. Always consult a qualified legal professional before making decisions based on this information.