Shown verbatim: the complete text as captured from the official PDF posted by the Tennessee General Assembly, fetched 2026-09-25. Page and line markers are part of the official record; nothing is edited or removed. This is the chaptered version. The official bill page.
.. ··•;i;;RiL~
/-&,·f~~ 'il1i
: ~ i \ ~ :2.fi ! AG-RRII-CClL:1JJ._iTl/ifRE \.H:~\•:
~tate of \!tennessee
PUBLIC CHAPTER NO. 934
HOUSE BILL NO. 1034
By Representatives Alexander, Lamberth, Hemmer
Substituted for: Senate Bill No. 995
By Senators Bailey, Gardenhire, Bowling, Campbell
AN ACT to amend Tennessee Code Annotated, Title 50; Title 63 and Title 68, relative to
covenants not to compete.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Title 50, Chapter 1, Part 2, is amended by
adding the following as new sections:
50-1-210. Reasonableness in time of restrictive covenants - Rebuttable
presumptions.
(a) In determining the reasonableness in time of a restrictive covenant sought to
be enforced after the termination of an employment or business relationship, a court
shall apply the rebuttable presumptions established in this section. A court shall
presume that a time restraint greater than the applicable restraint described in
subdivision (b)(1), (b)(2), or (b)(3) is unreasonable.
(b)
(1) A court shall presume to be reasonable in time a restraint sought to be
enforced against a former employee or independent contractor that:
(A) Is two (2) years or less in duration, measured from the date
the employment or business relationship terminates; and
(B) Is not associated with the sale or ownership of all or a material
part of:
(i) The assets of a business, professional practice, or other
commercial enterprise;
(ii) The shares of a corporation;
(iii) A partnership interest;
(iv) A membership interest in a limited liability company; or
(v) Any other equity interest or right to receive profits in a
business, professional practice, or other commercial enterprise.
(2) A court shall presume to be reasonable in time a restraint three (3)
years or less in duration, measured from the date of termination of the business
relationship in the case of a restrictive covenant sought to be enforced against a
current or former distributor, dealer, franchisee, lessee of real or personal
property, or licensee of a trademark, trade dress, or service mark, and not
associated with the sale of all or a material part of:
(A) The assets of a business, professional practice, or other
commercial enterprise;
(8) The shares of a corporation;
HB1034
(C) A partnership interest;
(D) A membership interest in a limited liability company; or
(E) Any other equity interest or right to receive profits in a
business, professional practice, or other commercial enterprise.
(3) A court shall presume to be reasonable in time a restraint that is the
longer of five (5) years or less, or a period equal to the time during which
payments are made to the owner or seller, in the case of a restrictive covenant
sought to be enforced against the owner or seller of all or a material part of:
(A) The assets of a business, professional practice, or other
commercial enterprise;
(8) The shares of a corporation;
(C) A partnership interest;
(D) A membership interest in a limited liability company; or
(E) Any other equity interest or right to receive profits in a
business, professional practice, or other commercial enterprise.
(c) This section does not prohibit an employer from enforcing:
(1) A confidentiality or nondisclosure agreement;
(2) A client or customer nonsolicitation agreement; or
(3) An employee nonsolicitation agreement.
(d) A court may modify a restrictive covenant governed by this section to render it
reasonable and enforceable.
50-1-211. Prohibition on noncompete agreements for employees earning less than
seventy thousand dollars annually.
(a) Notwithstanding a law to the contrary, an employer shall not require, request,
or enforce a noncompete agreement against an employee whose annualized
compensation is less than seventy thousand dollars ($70,000).
(b) As used in this section:
(1) "Annualized compensation" means the total compensation an
employee earns from the employer, including wages, salary, commissions,
nondiscretionary bonuses, and other forms of remuneration, calculated on an
annualized basis; and
(2) Annualized compensation for an hourly employee must be calculated
by multiplying the employee's hourly rate by forty (40) and multiplying the product
by fifty-two (52).
(c) A noncompete agreement executed in violation of this section is void and
unenforceable as a matter of public policy.
SECTION 2. The headings in this act are for reference purposes only and do not
constitute a part of the law enacted by this act. However, the Tennessee Code Commission is
requested to include the headings in any compilation or publication containing this act.
SECTION 3. This act takes effect July 1, 2026, the public welfare requiring it, and
applies to proceedings occurring and agreements entering into, renewed, or amended, on or
after that date.
2
HOUSE BILL NO. 1034
PASSED: April 20, 2026
•
CAMERON SEXTON, SPEAKER
HOUSE OF REPRESENTATIVES
RANDY MCNA1¥-Y
PEAKER OF THE SENATE
APPROVED this rytJL day of (\/\, -40 2026
6,i,,
BILL LEE, GOVERNOREvery fact on this page links to its source, starting with the official bill record.