Are Non-Compete Clauses Enforceable in Tennessee?

The economy is booming in Knoxville and the state of Tennessee. As business continues to expand, employers have more incentive than ever to protect their business interests. One of the most common ways they do this is to require their employers to sign non-compete agreements, or contracts that have a non-compete clause in them. So, if your employer has asked you to agree to a non-compete clause, must you sign it? And can your employer enforce such an agreement in court? Below, our Knoxville contract attorney explains further.

What is a Non-Compete Clause? 

Non-compete clauses are also known as restrictive covenants and they are quite common in business. In these clauses, one party agrees not to start a similar business, or enter into a similar trade or profession that is in direct competition with the other party. Typically, employers include terms such as trade secrets, the length of the non-compete, and the scope of employment covered by the non-compete clause.

Non-Compete Clauses and Protectable Business Interests 

When deciding whether to enforce a non-compete agreement, the court will first consider whether the employer has a protectable business interest. To meet this requirement, employers must establish certain facts beyond ordinary competition. The courts will consider the following factors when making a decision, including:

• Whether the employer provided specialized training to the employee,
• Whether the employee had access to business or trade secrets or other confidential business information, and
• Whether the employee had regular contact with customers, to the point where customers would view the employee as the face of the business.

Are Non-Compete Agreements Enforceable in Tennessee?

 Generally speaking, non-compete agreements are considered unfavorable under the law, particularly if they prevent an employee from earning a living. Still, there are specific circumstances when an employer may establish that an employee violated the different provisions of their employer or a non-compete agreement. After determining whether an employer has protectable business interests, the courts will consider the reasonableness of all restrictions in the agreement, as well as the interest of the public.

When is Litigation Necessary to Enforce or Contest a Non-Compete Clause? 

When a non-compete clause is in place, there may come a time when either the employee or the employer disputes it. An employer may argue that the worker has violated the terms of the agreement, while an employee may argue that the terms are unfair. As with all legal disputes, it is usually best when the two parties can reach an agreement. For example, an employer may approach an employee to talk about a certain violation of the terms. An employee, on the other hand, may state that they will comply but they may also ask to have the terms modified.

If the two parties cannot reach an agreement, litigation will be necessary. During litigation, the parties will go to court and argue their case in front of a judge, who will make the final decision.

Call Our Contract Attorney in Knoxville for Help with Your Case 

Disputes involving non-compete agreements can become very complex. At Atkins Brezina, PLLC, our Knoxville contract attorney can help you resolve your dispute and give you the best chance of a successful outcome. Call us now at 865-500-3121 or contact us online to schedule a consultation and to get the legal help you need.

Source:

federalregister.gov/documents/2023/01/19/2023-00414/non-compete-clause-rule