Tennessee Non-Compete Agreements That Hold Up

When drafting a contract in Tennessee, one question that often arises is whether you can include a non-compete clause (also known as a covenant not to compete) that restricts a party from competing after the contract ends. The short answer is yes —but with significant limitations.

Tennessee courts regard non-compete agreements with suspicion because they restrain trade and limit an individual’s ability to work. To be enforceable, a non-compete clause must protect a legitimate business interest, be supported by consideration, and be reasonable in scope, duration, and geography. For tailored guidance, our employment law attorneys at Burch & Stewart can review your non-compete and advise on enforceability.

Legitimate Business Interest & Protectable Interests

A non-compete clause must aim to protect something more than general competition. The employer (or party seeking the restriction) must show that the employee or other counterparty had access to trade secrets, confidential information, or significant customer relationships, or that the employer invested in specialized training. Courts in Tennessee evaluate whether the restriction is necessary to prevent unfair competition —not merely to block someone from working in the same field. If the agreement seeks to restrain competition without a genuine, tangible interest to protect, a court is likely to refuse to enforce it.

Reasonableness in Time, Territory & Scope

Even where a valid business interest exists, a non-compete clause must be reasonable in its time limit, geographical reach, and the scope of restricted activities. Tennessee courts will closely scrutinize whether the constraints go beyond what is necessary to protect the employer. If the duration is too long, the geographic restriction too broad, or the prohibited activities too sweeping, the court may refuse to enforce it or “blue-pencil” (modify) it to what is reasonable. For example, courts have narrowed territorial or temporal limits when they find them excessive or against public policy.

Special Statutory Limits for Healthcare Providers

Tennessee imposes additional statutory rules for non-competes involving healthcare providers. Under Tennessee Code § 63-1-148, a covenant not to compete with a healthcare provider is considered reasonable only if it is in writing, is two years or less in duration, and confines geographic restrictions to either a ten-mile radius around the provider’s primary practice location or the county where the provider practiced while employed (or other narrower options). These limitations reflect the public policy interest in ensuring access to medical services while still allowing protection for legitimate business interests in that sector.

What to Watch Out For & Drafting Best Practices

Because non-compete clauses are inherently suspect, courts interpret any ambiguity in favor of the party restricted (usually the employee or contractor). To improve enforceability, consistently:

• Put the non-compete in writing and ensure both parties sign.
• Tie the clause to valid consideration (e.g., a job offer, promotion, new benefits).
• Tailor the time, territory, and prohibited activities narrowly.
• Avoid overreach—do not try to restrain general competition.
• For healthcare providers, adhere strictly to Tennessee’s statutory limitations under § 63-1-148.

When you’re negotiating a contract that includes—or you’re responding to one that provides for—a non-compete clause, it’s critical to get legal guidance. At Burch & Stewart Attorneys in Tennessee, we can review your agreement, advise whether a non-compete clause is likely enforceable under state law, and help you negotiate fair terms. Contact Burch & Stewart Attorneys today for a consultation and let us protect your rights and interests.