Tennessee Law on Non-Compete Agreements

Non-compete agreements are becoming increasingly popular in the state of Tennessee. These agreements are created to prevent employees from working for a competitor or starting a competing business for a specified period after leaving their current employer. While the law regarding non-compete agreements varies from state to state, in Tennessee, there are specific rules and regulations that must be followed when creating and enforcing non-compete agreements.

The first and most important thing to note is that non-compete agreements are only enforceable if they are reasonable in scope, duration, and geographic area. This means that the terms of the non-compete agreement must be reasonable and not overly restrictive. While there is no set-in-stone rule for what is considered reasonable, courts in Tennessee will generally consider the nature of the business, the employee`s position and responsibilities, the duration of the non-compete agreement, and the geographic area covered.

In Tennessee, non-compete agreements must also be supported by consideration. This means that the employer must provide some benefit to the employee in exchange for their agreement not to compete. The consideration could be a job offer, a bonus, or a promotion, among other things. Without consideration, a non-compete agreement is not enforceable in Tennessee.

It`s also important to note that Tennessee law prohibits non-compete agreements for certain types of employees. For example, non-compete agreements are not enforceable for employees who earn less than $500 per week. Additionally, non-compete agreements are not enforceable for employees in certain professions, such as doctors, lawyers, and accountants.

Finally, non-compete agreements in Tennessee must be in writing and signed by the employee. This means that verbal agreements are not enforceable, and employers who rely on verbal agreements may find themselves in a difficult legal position if they try to enforce the non-compete.

In conclusion, non-compete agreements are an important tool for employers to protect their business interests in Tennessee. However, it`s crucial that employers understand the rules and regulations surrounding non-compete agreements in the state. By ensuring that non-compete agreements are reasonable in scope, supported by consideration, and in writing, employers can protect their business interests effectively. Failure to comply with the rules surrounding non-compete agreements can result in legal challenges and potential financial loss.