Are Non-Competition Agreements Enforceable in Tennessee?
Yes. Contrary to what seems to be popular belief, non-competition agreements are generally enforceable in Tennessee.
For a non-competition agreement to be enforceable in Tennessee it must be sufficiently tailored to balance the employer’s interests with the employee’s right to work. Tennessee law recognizes the employer’s justification for protecting their business interests provided the non-competition agreement is reasonable. In determining whether a non-competition agreement is reasonable, the Tennessee courts have developed a non-exclusive list of factors which, among other things, take into consideration the time, geography and scope of the agreement.
When hiring a new employee who is, or may be subject to a non-competition agreement it is important for you to ask a qualified attorney to determine if the agreement is enforceable and if so what it prohibits. Furthermore, by developing an enforceable agreement that takes into account your company’s situation and particular trade or industry, you protect your organization’s future revenues, investment in human capital and confidential information.
On the other hand, penalties for disregarding non-competition agreements can be severe. As a prospective employee it is important for you know that the terms and provisions of non-competition agreements are commonly negotiable. And for an existing employee or former employee under a non-competition agreement it is important for you to know that some or all of the terms of your non-competition agreement may not be enforceable depending on your situation.
Rob Hazard is an attorney and CPA with GSRM. GSRM’s attorneys regularly advise employers and employees on the use and enforcement of non-competition agreements. If you have questions, we encourage you to reach out directly to us – after you have fully read and understand our disclaimer.