Make a Tennessee Non-Compete Agreement

Applicable State Laws - None 

Although non-compete agreements are generally disfavored in Tennesee because they cause restraints on trade, they are still legally enforceable documents. Non-compete agreements protect trade secrets, confidential information, information about the employer's customers, retention of existing customers, and investment in training or enhancing the employee's skills and experience.

The restrictions must be reasonable and cannot create an undue economic hardship on the employee. It also cannot be adverse to the public interest. In certain circumstances, physicians are exempt from non-compete agreements.

Protect your Tennessee business by also using a Tennessee non-disclosure agreement form. Download a Tennessee non-disclosure agreement form now! 

How to Write a Tennessee Non-Compete Agreement

To write a Tennessee non-compete agreement, include the following clauses:

• Purpose. This clause explains the purpose of the clause: to protect the legitimate interests of the business. It also identifies the parties and their roles. It also includes an effective date.
• Non-compete. This clause explains the restrictions the employee must adhere to per the terms of the contract: time period, geographic scope, general and specific business practices, working for general or specific competitors, and non-solicitation of employees, customers, and clients.
• Time period. This clause states when the time period restriction begins: either when the employment relationship begins or when it ends.
• Purchase option. This clause explains whether the employer allows the employee to buy out their obligations. If so, the amount that must be paid is documented in this clause.
• Jurisdiction. This clause states that the non-compete agreement is governed by Tennessee law.
• Confidential information. This clause defines "confidential information” as used throughout the non-compete agreement as any and all technical and non-technical information provided by the employer that includes, and is not limited to, products, inventions, plans, methods, processes, developmental products, experimental products, intellectual property, software, databases, customer lists, vendor lists, supplier lists, marketing information, reports, business plans, financial information, or other information related to the employer or any of the employer's customers, clients, or consultants that is disclosed to the employer under the terms of the agreement.
• Permitted disclosure. This clause explains when it is permitted to disclose information that is considered confidential without violating the terms of this agreement. Examples include when the employer provides written consent to release specific information to the public, when information is released with no fault of the employee, and when the employee discovers information on their own without a breach of another party.
• Confidentiality. This clause explains that the employee acknowledges that the information they may access is confidential. It also states that they will not directly or indirectly disclose the information to another party without receiving written consent from the employer. The clause also states that the employee will not use the information for any reason except to further the business without the written consent of the employer.
• Consultants and employees bound. This clause states that both consultants and employees are bound to strict confidentiality about the information they may access. It also states that they are on a need-to-know basis for the information.
• Return of materials. This clause states that when the relationship between the parties ends or when requested by the employer, the employee must promptly return any documents or tangible materials representing confidential information of the employer and any copies that exist. This clause also states that the employer will notify the employee of any unauthorized loss of confidential information.
• Remedies. This clause explains the legal remedies the employer is entitled to pursue under Tennessee law in the event the employee violates the terms of the non-compete agreement. Examples include the recovery of court costs and reasonable attorney fees, the award by a Tennessee court of a temporary restraining order or preliminary injunction against the unauthorized use, as well as all other remedies available under Tennessee law or as a matter of equity.
• Choice of law. This clause explains that the parties agree to choose Tennessee law to govern the agreement and any disagreements that arise from it.
• Entire agreement. This clause is the final one in the non-compete agreement. It states that the final agreement can be amended in writing if both parties sign the amendment.

The employer and the employee should sign and print their names. The signatures should be dated. Finally, each party should receive a copy of the executed contract for their records.