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package/skills/non-compete-contract-explainer/content/south-dakota.md

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+---
+jurisdiction: "South Dakota"
+slug: south-dakota
+countryCode: US
+snapshotAsOf: "2026-06-08"
+lastReviewed: "2026-06-02"
+canonicalUrl: https://openagreements.org/legal/non-compete/south-dakota
+license: CC BY 4.0
+stale: false
+---
+
+> [!IMPORTANT]
+> **Informational only — not legal advice.** This is a snapshot of an OpenAgreements practice note,
+> provided for general information. It is not legal advice, does not create an attorney-client
+> relationship, and is not a substitute for a licensed attorney in the relevant jurisdiction.
+> Laws change; verify against the canonical version before relying on it.
+>
+> **Canonical:** https://openagreements.org/legal/non-compete/south-dakota · **Snapshot as of:** 2026-06-08 · License: CC BY 4.0 · © UseJunior
+
+# Non-Competes in South Dakota[^about]
+
+A question-by-question summary of South Dakota non-compete law under SDCL chapter 53-9, including employee covenants, customer non-solicits, healthcare practitioners, sale-of-business covenants, independent contractors, and trade-secret alternatives.
+
+
+## At a glance
+
+| Question | South Dakota |
+| --- | --- |
+| **Are non-competes enforceable?** | Allowed if reasonable |
+| **Bottom line** | South Dakota voids restraints on a lawful profession, trade, or business unless they fit a narrowly construed statutory exception, and SDCL 53-9-11 permits an employee non-compete only within its two-year, geographic, existing-customer, and like-business limits. |
+| **Main law or case** | S.D. Codified Laws §§ 53-9-8 and 53-9-11 |
+| **Main exceptions** | Sale-of-goodwill (§ 53-9-9); partnership dissolution (§ 53-9-10); captive insurance agent contractors (§ 53-9-12); healthcare practitioner restrictions voidable for contracts on/after July 1, 2023 |
+| **Can a court narrow it?** | Yes — rewrites to reasonable |
+| **Applies to contractors?** | No |
+| **Restriction extended during a breach?** | Not addressed by statute |
+| **Maximum length set by law** | Two years or less for employee covenants (SDCL 53-9-11) |
+
+## Are employee non-compete agreements enforceable in South Dakota? {#employee-noncompetes}
+
+**Short answer.** Sometimes, but only inside the statutory exception. SDCL 53-9-8 voids restraints on a lawful profession, trade, or business[^sdcl-53-9-8-void-baseline] except for the chapter 53-9 exceptions, and SDCL 53-9-11 allows an employee covenant only within its time, geography, customer, and like-business limits [^sdcl-53-9-11-employee-exception].
+
+The practical rule is statutory first. South Dakota does not start with a free-floating reasonableness test for ordinary employee non-competes. A covenant must fit an exception, and South Dakota cases repeatedly say those exceptions are read narrowly [^american-rim-narrow-exception][^dolly-narrow-exception].
+
+For employees, the core drafting limits are two years or less, a specified county, first- or second-class municipality, or other specified area, existing customers only for a customer non-solicit, and a requirement that the employer continue a like business in the restricted area [^sdcl-53-9-11-employee-exception].
+
+> [!CAUTION]
+> **Drafting note.**
+>
+> Do not treat statutory compliance as optional style. If the covenant restrains work but does not fit an exception in SDCL chapter 53-9, the baseline statute voids it to that extent [^sdcl-53-9-8-void-baseline].
+
+## Are customer non-solicitation agreements enforceable in South Dakota? {#customer-nonsolicits}
+
+**Short answer.** Yes, if they are true solicitation restrictions within SDCL 53-9-11. They cannot be expanded into a ban on accepting unsolicited business from former customers [^miller-unsolicited-business].
+
+South Dakota draws a sharp line between soliciting a customer and accepting customer work that the former employee did not solicit. *Miller* applied SDCL 53-9-11 and held that none of the statutory exceptions permit a covenant barring acceptance of unsolicited business [^miller-unsolicited-business].
+
+That reading is consistent with *Dolly*, which interpreted the closely similar captive-insurance-agent statute. *Dolly* held that an agreement not to solicit is not the same as an agreement not to sell to customers who ask for service on their own [^dolly-solicit-not-sell].
+
+> [!CAUTION]
+> **Drafting note.**
+>
+> Avoid no-service, no-sale, and no-acceptance language in a South Dakota customer non-solicit. The safer clause targets affirmative solicitation of existing customers in the specified area and leaves unsolicited customer choice alone [^miller-unsolicited-business][^dolly-solicit-not-sell].
+
+## Can South Dakota independent contractors be bound by non-competes? {#independent-contractors}
+
+**Short answer.** Usually not under the employee exception. In *Aqreva*, South Dakota's Supreme Court refused to apply SDCL 53-9-11 where the agreement said the worker was an independent contractor and not an employee [^aqreva-employee-exception-limited].
+
+The contractor label does not solve every case by itself, but it can be fatal when the party seeking enforcement relies on the employee exception. *Aqreva* treated the contract language disclaiming an agency or employment relationship as controlling for SDCL 53-9-11 [^aqreva-employee-exception-limited].
+
+South Dakota does have a separate statutory exception for a narrow insurance category: captive insurance agents who are independent contractors and work exclusively for a single insurer or affiliated group. That exception is in SDCL 53-9-12, not the general employee statute [^sdcl-53-9-12-captive-agent].
+
+> [!NOTE]
+> **Practice note.**
+>
+> Do not assume that reclassifying a worker as a contractor preserves an employee non-compete. If the relationship is not employee-employer, the drafter needs a different statutory hook, and most contractors will not fit the captive-agent exception [^aqreva-employee-exception-limited][^sdcl-53-9-12-captive-agent].
+
+## Can a no-hire agreement with a customer or vendor restrict a South Dakota worker? {#no-hire-third-party}
+
+**Short answer.** Not as a backdoor employee restraint. A no-hire or no-recruit clause between two businesses is enforceable only where it supplements an employee covenant that is itself valid under SDCL 53-9-11; an employer cannot bind its own worker through a contract with a third party [^densmore-third-party-restraint].
+
+In *Densmore*, a company tried to keep a departing worker in place by relying on a clause in its services contract with another business that barred that business from hiring, soliciting, or recruiting its employees. The South Dakota Supreme Court treated the no-recruit clause as a variation on the covenant not to compete governed by SDCL 53-9-11 and the baseline rule of SDCL 53-9-8, and held that the employer could not use a third-party agreement to restrain an employee who had signed no valid covenant of his own [^densmore-third-party-restraint].
+
+> [!CAUTION]
+> **Drafting note.**
+>
+> Do not rely on a no-poach or no-hire clause in a customer, vendor, or services agreement to lock in a South Dakota worker. If the worker has signed no valid SDCL 53-9-11 covenant, the third-party clause will not supply one [^densmore-third-party-restraint].
+
+## What special non-compete rules apply to South Dakota healthcare practitioners? {#healthcare-practitioners}
+
+**Short answer.** For contracts entered into on or after July 1, 2023, covered practitioner restrictions are voidable if they restrict the practitioner from practicing or otherwise providing professional services after the relationship ends [^sdcl-53-9-11-2-practitioner-voidable].
+
+The healthcare rule is broader than a physician-only rule. SDCL 53-9-11.1 defines practitioner for section 53-9-11.2 and includes physicians, physician assistants, emergency medical personnel, respiratory care practitioners, nurses, dentists, pharmacists, psychologists, social workers, counselors, therapists, podiatrists, optometrists, chiropractors, and several other licensed roles [^sdcl-53-9-11-1-practitioner-list].
+
+The statute preserves two important categories. It does not apply to a contractual provision effective on the sale of a practice or an interest in a practice, and it does not bar a practitioner patient or client non-solicit if the solicitation restriction complies with the geographic and temporal limits referenced in SDCL 53-9-11 [^sdcl-53-9-11-2-practitioner-exceptions].
+
+> [!CAUTION]
+> **Drafting note.**
+>
+> Use the statutory word *voidable*, not *void*, for covered practitioner restrictions. Also separate a practice restriction from a compliant current-patient or current-client solicitation restriction because section 53-9-11.2 treats those differently [^sdcl-53-9-11-2-practitioner-voidable][^sdcl-53-9-11-2-practitioner-exceptions].
+
+## Are sale-of-business non-competes enforceable in South Dakota? {#sale-of-business}
+
+**Short answer.** Yes, when they fit the sale-of-goodwill exception and stay within its limits. SDCL 53-9-9 allows a seller of goodwill to refrain from carrying on a similar business in a specified area while the buyer or successor carries on a like business there [^sdcl-53-9-9-goodwill-exception].
+
+The sale exception is still not open-ended. *Franklin* treated a restaurant-sale covenant as within the goodwill-sale framework, but narrowed overbroad language that reached isolated, insubstantial, or non-detrimental activity rather than carrying on a similar business [^franklin-overbroad-goodwill].
+
+The key drafting move is to tie the restriction to purchased goodwill. A buyer may protect against detrimental competition from the seller, but the covenant should not reach tangential roles, passive interests, or activities that do not fairly count as carrying on a similar competing business [^franklin-similar-business].
+
+South Dakota also recognizes a parallel exception for partnerships. On or in anticipation of dissolution, partners may agree not to carry on a similar business, though the permitted geography is tighter than the goodwill-sale rule, reaching only the same municipality where the partnership did business [^sdcl-53-9-10-partnership-dissolution].
+
+## Will South Dakota courts narrow an overbroad non-compete? {#overbroad-covenants}
+
+**Short answer.** Sometimes. South Dakota recognizes partial enforcement, but that does not let a drafter ignore the statute; the court modifies only to conform the covenant to statutory limits [^franklin-partial-enforcement].
+
+In *Franklin*, the court held that the sale-of-business covenant was broader than SDCL 53-9-9 allowed, but it did not invalidate the entire provision. It remanded for relief consistent with the narrower statutory construction [^franklin-partial-enforcement].
+
+For employment covenants, *Rezatto* also matters because SDCL 53-9-8 voids a contract only to the extent it restrains trade, and divisible nondisclosure or confidentiality promises can survive even when a non-compete fails [^rezatto-divisible-nda].
+
+> [!CAUTION]
+> **Drafting note.**
+>
+> Partial enforcement is a backstop, not a drafting strategy. South Dakota cases still construe exceptions narrowly and refuse to invent statutory exceptions that the Legislature did not adopt [^franklin-partial-enforcement][^miller-no-new-exception].
+
+## Does continued employment or termination status matter for South Dakota non-competes? {#consideration-termination}
+
+**Short answer.** Yes, but carefully. SDCL 53-9-11 permits an employee to agree at the time of employment or during employment, while older case law treats continued employment as sufficient consideration in that setting [^sdcl-53-9-11-during-employment][^zakinski-continued-employment].
+
+The continued-employment point comes from *Zakinski*, so it should be used with age and context in mind. The case also drew a practical distinction between employees who quit or are fired for cause and employees fired through no fault of their own. For the latter, the court required a reasonableness balancing inquiry [^zakinski-fired-no-fault].
+
+That makes discharge facts relevant to enforcement strategy. A covenant that appears statutory on paper can still face equitable limits if the employer terminated the employee through no fault of the employee and then seeks to restrain later work [^zakinski-fired-no-fault].
+
+> [!NOTE]
+> **Practice note.**
+>
+> Do not overstate *Zakinski* as a modern blank-check consideration rule. It is useful South Dakota authority for continued employment, but the same opinion requires more analysis when the employee was fired through no fault of their own [^zakinski-continued-employment][^zakinski-fired-no-fault].
+
+## Can an out-of-state choice-of-law clause save a South Dakota non-compete? {#choice-of-law}
+
+**Short answer.** Not if applying the other state's law would contravene South Dakota public policy. *Miller* applied South Dakota law despite an Iowa choice-of-law clause because the challenged non-solicit violated South Dakota policy in part [^miller-choice-law-public-policy].
+
+The public-policy point is important because SDCL 53-9-8 is not merely a private contract default. *Miller* relied on South Dakota's policy against restraints of a lawful profession, trade, or business, then refused to enforce a no-acceptance restriction under another state's law [^miller-choice-law-public-policy].
+
+For drafting, that means a South Dakota worker, South Dakota restricted territory, or South Dakota customer base should be analyzed under South Dakota chapter 53-9 even if the template names another state's law.
+
+## Are trade-secret and confidentiality protections still available in South Dakota? {#trade-secrets-ndas}
+
+**Short answer.** Yes. South Dakota non-compete limits do not eliminate confidentiality and trade-secret tools, and the South Dakota Uniform Trade Secrets Act includes fee-shifting and a three-year limitations period [^rezatto-confidentiality-public-policy][^sdcl-37-29-4-fees][^sdcl-37-29-6-limitations].
+
+*Rezatto* distinguishes nondisclosure restrictions from general non-competes and explains why confidential-information protection can support fair competition. That said, confidentiality covenants are still strictly construed and enforced only to the extent reasonably necessary to protect the employer's interest in confidential information [^rezatto-confidentiality-public-policy].
+
+The statutory trade-secret remedies can matter in both directions. Bad-faith misappropriation claims, bad-faith injunction fights, and willful and malicious misappropriation can trigger attorney-fee awards, and a misappropriation claim must be brought within three years after discovery or when reasonable diligence should have discovered it [^sdcl-37-29-4-fees][^sdcl-37-29-6-limitations].
+
+> [!CAUTION]
+> **Drafting note.**
+>
+> Do not use an NDA as a disguised work ban. South Dakota supports confidential-information protection, but *Rezatto* enforces those covenants only to the extent reasonably necessary to protect confidential information [^rezatto-confidentiality-public-policy].
+
+## What survival-drafting issue should South Dakota non-compete templates avoid? {#survival-drafting}
+
+**Short answer.** If the agreement has a fixed term, restrictive covenants need clear survival language. In *Wilbur-Ellis*, the Eighth Circuit held that the covenants ended with the agreement because they did not expressly survive its termination [^wilbur-ellis-no-survival].
+
+The case is a drafting warning, not a new statutory exception. In the acquisition setting, the covenants were meant to give the buyer time to transition the business and protect purchased goodwill during the specified duration [^wilbur-ellis-statutory-context].
+
+For templates, align the duration clause, agreement term, termination language, and restrictive-covenant survival clause. A covenant that appears enforceable under SDCL 53-9-11 may still fail if the contract itself ends before the restriction is triggered.
+
+[^about]: By Steven Obiajulu, J.D. Published by [openagreements.org](https://openagreements.org) · Maintained by [UseJunior](https://usejunior.com). Last reviewed 2026-06-02. License: CC BY 4.0. Steven Obiajulu, J.D. is admitted in New York, not South Dakota. This article synthesizes South Dakota primary law and is not legal advice from a South Dakota-admitted attorney. This article is for informational purposes only and does not create an attorney-client relationship.
+
+[^sdcl-53-9-8-void-baseline]: **S.D. Codified Laws § 53-9-8** — "Any contract restraining exercise of a lawful profession, trade, or business is void to that extent, except as provided by §§ 53-9-9 to 53-9-12, inclusive." *S.D. Codified Laws § 53-9-8.* <https://sdlegislature.gov/Statutes/53-9-8>
+
+[^sdcl-53-9-11-employee-exception]: **S.D. Codified Laws § 53-9-11** — "Except as otherwise provided in § 53-9-11.2, an employee may agree with an employer at the time of employment or at any time during employment not to engage directly or indirectly in the same business or profession as that of the employer for any period not exceeding two years from the date of termination of the agreement and not to solicit existing customers of the employer within a specified county, first- or second-class municipality, or other specified area for any period not exceeding two years from the date of termination of the agreement, if the employer continues to carry on a like business therein." *S.D. Codified Laws § 53-9-11.* <https://sdlegislature.gov/Statutes/53-9-11>
+
+[^american-rim-narrow-exception]: **American Rim & Brake, Inc. v. Zoellner** — "In reading the exception, we must construe it narrowly so as to promote the proscription against general restraints on trade." *American Rim & Brake, Inc. v. Zoellner, 382 N.W.2d 421, 424 (S.D. 1986).* <https://www.courtlistener.com/opinion/1585102/american-rim-brake-inc-v-zoellner/#:~:text=In%20reading%20the%20exception%2C%20we,against%20general%20restraints%20on%20trade.>
+
+[^dolly-narrow-exception]: **Farm Bureau Life Ins. Co. v. Dolly** — "As such, SDCL 53-9-12 ‘must be construed narrowly so as to promote the prohibition against contracts in restraint of trade.’" *Farm Bureau Life Ins. Co. v. Dolly, 2018 S.D. 28, ¶ 13, 910 N.W.2d 196.* <https://www.courtlistener.com/opinion/4479790/farm-bureau-life-ins-co-v-dolly/#:~:text=As%20such%2C%20SDCL%2053%2D9%2D12%20%E2%80%9Cmust,contracts%20in%20restraint%20of%20trade.%E2%80%9D>
+
+[^miller-unsolicited-business]: **Miller v. Honkamp Krueger Financial Services, Inc.** — "None of the enumerated statutory exceptions allow for agreements not to accept unsolicited business." *Miller v. Honkamp Krueger Fin. Servs., Inc., 9 F.4th 1011, 1019 (8th Cir. 2021).* <https://www.courtlistener.com/opinion/5040408/cara-miller-v-honkamp-krueger-financial/#:~:text=None%20of%20the%20enumerated%20statutory,not%20to%20accept%20unsolicited%20business.>
+
+[^dolly-solicit-not-sell]: **Farm Bureau Life Ins. Co. v. Dolly** — "The circuit court’s conclusion that SDCL 53-9-12 permits an agreement not to solicit—rather than not to sell to—an insurer’s existing customers is the only reasonable interpretation of that statute." *Farm Bureau Life Ins. Co. v. Dolly, 2018 S.D. 28, ¶ 10, 910 N.W.2d 196.* <https://www.courtlistener.com/opinion/4479790/farm-bureau-life-ins-co-v-dolly/#:~:text=The%20circuit%20court%E2%80%99s%20conclusion%20that,reasonable%20interpretation%20of%20that%20statute.>
+
+[^aqreva-employee-exception-limited]: **Aqreva, LLC v. Eide Bailly, LLP** — "Per the plain language of SDCL 53-9-11, the Legislature has limited the provisions of this statute to an ‘employee’s covenant not to compete with his employer.’" *Aqreva, LLC v. Eide Bailly, LLP, 2020 S.D. 59, ¶ 32, 950 N.W.2d 774.* <https://www.courtlistener.com/opinion/9507869/aqreva-llc-v-eide-bailly-llp/#:~:text=Per%20the%20plain%20language%20of,to%20compete%20with%20his%20employer.%E2%80%9D>
+
+[^sdcl-53-9-12-captive-agent]: **S.D. Codified Laws § 53-9-12** — "Any independent contractor who is an insurance producer as defined in subdivision 58-1-2(16) and is a captive agent who is not an independent agent and who works exclusively for a single insurance company or an affiliated group of insurance companies, even if the single insurance company allows its captive agents to market the products of another insurance company pursuant to contract, may agree with an insurer at the time of contracting or at any time during the term of the contract:" *S.D. Codified Laws § 53-9-12.* <https://sdlegislature.gov/Statutes/53-9-12>
+
+[^densmore-third-party-restraint]: **Communication Technical Sys., Inc. v. Densmore** — "Instead, CTS sought to bind its employee through an agreement with a third party. As we have stated, this it may not do." *Communication Technical Sys., Inc. v. Densmore, 1998 S.D. 87, ¶ 27, 583 N.W.2d 125.* <https://www.courtlistener.com/opinion/1882124/communication-technical-systems-inc-v-densmore/#:~:text=Instead%2C%20CTS%20sought%20to%20bind,this%20it%20may%20not%20do.>
+
+[^sdcl-53-9-11-2-practitioner-voidable]: **S.D. Codified Laws § 53-9-11.2** — "Notwithstanding § 53-9-11, a provision of a contract, entered into on or after July 1, 2023, is voidable if it restricts a practitioner, as defined in § 53-9-11.1, from practicing or otherwise providing professional services in accordance with the applicable scope of practice, after the conclusion of the practitioner's employment or after the dissolution of a partnership or other form of professional relationship." *S.D. Codified Laws § 53-9-11.2.* <https://sdlegislature.gov/Statutes/53-9-11.2>
+
+[^sdcl-53-9-11-1-practitioner-list]: **S.D. Codified Laws § 53-9-11.1** — "For purposes of § 53-9-11.2, a practitioner means: (1) A physician licensed in accordance with chapter 36-4; (2) A physician assistant licensed in accordance with chapter 36-4A; (3) A paramedic or emergency medical technician licensed in accordance with chapter 36-4B; (4) A respiratory care practitioner licensed in accordance with chapter 36-4C; (5) A chiropractor licensed in accordance with chapter 36-5;" *S.D. Codified Laws § 53-9-11.1.* <https://sdlegislature.gov/Statutes/53-9-11.1>
+
+[^sdcl-53-9-11-2-practitioner-exceptions]: **S.D. Codified Laws § 53-9-11.2** — "This section does not apply to any contractual provision that: (1) Is effective upon the sale of a practice or interest in a practice; or (2) Restricts a practitioner from soliciting current patients or clients of the former employer, partnership, or other professional relationship, provided the solicitation complies with the geographic and temporal limitations as referenced in § 53-9-11." *S.D. Codified Laws § 53-9-11.2(1)-(2).* <https://sdlegislature.gov/Statutes/53-9-11.2>
+
+[^sdcl-53-9-9-goodwill-exception]: **S.D. Codified Laws § 53-9-9** — "Any person who sells the good will of a business may agree with the buyer to refrain from carrying on a similar business within a specified county, city, or other specified area, as long as the buyer or person deriving title to the good will from the seller carries on a like business within the specified geographical area." *S.D. Codified Laws § 53-9-9.* <https://sdlegislature.gov/Statutes/53-9-9>
+
+[^franklin-overbroad-goodwill]: **Franklin v. Forever Venture, Inc.** — "Therefore, to the extent that the agreement may restrain Franklin from activities which could not fairly be characterized as ‘carrying on a similar business,’ it is void as against public policy." *Franklin v. Forever Venture, Inc., 2005 S.D. 53, ¶ 14, 696 N.W.2d 545.* <https://www.courtlistener.com/opinion/901375/franklin-v-forever-venture-inc/#:~:text=Therefore%2C%20to%20the%20extent%20that,void%20as%20against%20public%20policy.>
+
+[^franklin-similar-business]: **Franklin v. Forever Venture, Inc.** — "We conclude that a determination of what constitutes ‘carrying on a similar business’ in SDCL 53-9-9 should not include businesses or activities that are isolated, insubstantial, or non-detrimental." *Franklin v. Forever Venture, Inc., 2005 S.D. 53, ¶ 13, 696 N.W.2d 545.* <https://www.courtlistener.com/opinion/901375/franklin-v-forever-venture-inc/#:~:text=We%20conclude%20that%20a%20determination,are%20isolated%2C%20insubstantial%2C%20or%20non%2Ddetrimental.>
+
+[^sdcl-53-9-10-partnership-dissolution]: **S.D. Codified Laws § 53-9-10** — "Partners may, upon or in anticipation of a dissolution of the partnership, agree that none of them will carry on a similar business within the same municipality where the partnership business has been transacted or within a specified part thereof." *S.D. Codified Laws § 53-9-10.* <https://sdlegislature.gov/Statutes/53-9-10>
+
+[^franklin-partial-enforcement]: **Franklin v. Forever Venture, Inc.** — "Yet, despite the covenant being overbroad in its restraint, we need not invalidate the entire provision." *Franklin v. Forever Venture, Inc., 2005 S.D. 53, ¶ 15, 696 N.W.2d 545.* <https://www.courtlistener.com/opinion/901375/franklin-v-forever-venture-inc/#:~:text=Yet%2C%20despite%20the%20covenant%20being,not%20invalidate%20the%20entire%20provision.>
+
+[^rezatto-divisible-nda]: **1st American Systems, Inc. v. Rezatto** — "The trial court erred in completely voiding the instant contract since it is divisible and paragraph 7 is not a general restraint on trade." *1st American Systems, Inc. v. Rezatto, 311 N.W.2d 51, 57 (S.D. 1981).* <https://www.courtlistener.com/opinion/2193337/1st-american-systems-inc-v-rezatto/#:~:text=The%20trial%20court%20erred%20in,a%20general%20restraint%20on%20trade.>
+
+[^miller-no-new-exception]: **Miller v. Honkamp Krueger Financial Services, Inc.** — "We will not read into the statute an exception that the South Dakota legislature did not adopt." *Miller v. Honkamp Krueger Fin. Servs., Inc., 9 F.4th 1011, 1019 (8th Cir. 2021).* <https://www.courtlistener.com/opinion/5040408/cara-miller-v-honkamp-krueger-financial/#:~:text=We%20will%20not%20read%20into,Dakota%20legislature%20did%20not%20adopt.>
+
+[^sdcl-53-9-11-during-employment]: **S.D. Codified Laws § 53-9-11** — "Except as otherwise provided in § 53-9-11.2, an employee may agree with an employer at the time of employment or at any time during employment not to engage directly or indirectly in the same business or profession as that of the employer for any period not exceeding two years from the date of termination of the agreement and not to solicit existing customers of the employer within a specified county, first- or second-class municipality, or other specified area for any period not exceeding two years from the date of termination of the agreement, if the employer continues to carry on a like business therein." *S.D. Codified Laws § 53-9-11.* <https://sdlegislature.gov/Statutes/53-9-11>
+
+[^zakinski-continued-employment]: **Central Monitoring Service, Inc. v. Zakinski** — "That the Non-Compete and Confidentiality Agreement executed by Zakinski on June 9, 1992, required no additional consideration to be binding and enforceable." *Central Monitoring Serv., Inc. v. Zakinski, 1996 S.D. 116, 553 N.W.2d 513.* <https://www.courtlistener.com/opinion/899991/central-monitoring-service-inc-v-zakinski/#:~:text=That%20the%20Non%2DCompete%20and%20Confidentiality,to%20be%20binding%20and%20enforceable.>
+
+[^zakinski-fired-no-fault]: **Central Monitoring Service, Inc. v. Zakinski** — "However, if an employee is fired for no fault of his own, the court needs to go further to determine whether the agreement is reasonable." *Central Monitoring Serv., Inc. v. Zakinski, 1996 S.D. 116, 553 N.W.2d 513.* <https://www.courtlistener.com/opinion/899991/central-monitoring-service-inc-v-zakinski/#:~:text=However%2C%20if%20an%20employee%20is,whether%20the%20agreement%20is%20reasonable.>
+
+[^miller-choice-law-public-policy]: **Miller v. Honkamp Krueger Financial Services, Inc.** — "Under South Dakota law, courts honor contractual choice-of-law provisions unless they contravene South Dakota public policy." *Miller v. Honkamp Krueger Fin. Servs., Inc., 9 F.4th 1011, 1018 (8th Cir. 2021).* <https://www.courtlistener.com/opinion/5040408/cara-miller-v-honkamp-krueger-financial/#:~:text=Under%20South%20Dakota%20law%2C%20courts,contravene%20South%20Dakota%20public%20policy.>
+
+[^rezatto-confidentiality-public-policy]: **1st American Systems, Inc. v. Rezatto** — "Because this dialectic exists, covenants, like paragraph 7, are strictly construed and enforced only to the extent reasonably necessary to protect the employer’s interest in confidential information." *1st American Systems, Inc. v. Rezatto, 311 N.W.2d 51, 57 (S.D. 1981).* <https://www.courtlistener.com/opinion/2193337/1st-american-systems-inc-v-rezatto/#:~:text=Because%20this%20dialectic%20exists%2C%20covenants%2C,employer%E2%80%99s%20interest%20in%20confidential%20information.>
+
+[^sdcl-37-29-4-fees]: **S.D. Codified Laws § 37-29-4** — "If (i) a claim of misappropriation is made in bad faith, (ii) a motion to terminate an injunction is made or resisted in bad faith, or (iii) willful and malicious misappropriation exists, the court may award reasonable attorney's fees to the prevailing party." *S.D. Codified Laws § 37-29-4.* <https://sdlegislature.gov/Statutes/37-29-4>
+
+[^sdcl-37-29-6-limitations]: **S.D. Codified Laws § 37-29-6** — "An action for misappropriation must be brought within three years after the misappropriation is discovered or by the exercise of reasonable diligence should have been discovered." *S.D. Codified Laws § 37-29-6.* <https://sdlegislature.gov/Statutes/37-29-6>
+
+[^wilbur-ellis-no-survival]: **Wilbur-Ellis Co. v. Erikson** — "Here, however, Erikson and Wilbur-Ellis performed the obligations they owed each other, and thus, the Agreement terminated on March 31, 2019, as did the Restrictive Covenants." *Wilbur-Ellis Co. v. Erikson, 103 F.4th 1352, 1357 (8th Cir. 2024).* <https://www.courtlistener.com/opinion/9511796/wilbur-ellis-company-v-kevin-erikson/#:~:text=Here%2C%20however%2C%20Erikson%20and%20Wilbur%2DEllis,as%20did%20the%20Restrictive%20Covenants.>
+
+[^wilbur-ellis-statutory-context]: **Wilbur-Ellis Co. v. Erikson** — "This gives Wilbur-Ellis time to transition the business and protects the goodwill it purchased should an employee leave during the specified duration." *Wilbur-Ellis Co. v. Erikson, 103 F.4th 1352, 1356 (8th Cir. 2024).* <https://www.courtlistener.com/opinion/9511796/wilbur-ellis-company-v-kevin-erikson/#:~:text=This%20gives%20Wilbur%2DEllis%20time%20to,leave%20during%20the%20specified%20duration.>

package/skills/non-compete-contract-explainer/content/tennessee.md

@@ -0,0 +1,251 @@
+---
+jurisdiction: "Tennessee"
+slug: tennessee
+countryCode: US
+snapshotAsOf: "2026-06-08"
+lastReviewed: "2026-06-03"
+canonicalUrl: https://openagreements.org/legal/non-compete/tennessee
+license: CC BY 4.0
+stale: false
+---
+
+> [!IMPORTANT]
+> **Informational only — not legal advice.** This is a snapshot of an OpenAgreements practice note,
+> provided for general information. It is not legal advice, does not create an attorney-client
+> relationship, and is not a substitute for a licensed attorney in the relevant jurisdiction.
+> Laws change; verify against the canonical version before relying on it.
+>
+> **Canonical:** https://openagreements.org/legal/non-compete/tennessee · **Snapshot as of:** 2026-06-08 · License: CC BY 4.0 · © UseJunior
+
+# Non-Competes in Tennessee[^about]
+
+Tennessee enforces non-competes that are reasonable and protect a legitimate business interest, and a 2026 statute effective July 1, 2026 adds rebuttable time-reasonableness presumptions and voids non-competes against employees earning under $70,000 a year.
+
+
+## At a glance
+
+| Question | Tennessee |
+| --- | --- |
+| **Are non-competes enforceable?** | Allowed if reasonable |
+| **Bottom line** | Tennessee enforces a non-compete that is reasonable and protects a legitimate business interest; a 2026 statute effective July 1, 2026 will void covenants against employees earning under $70,000 and add rebuttable time-reasonableness presumptions. |
+| **Main law or case** | common law (Hasty v. Rent-A-Driver, Inc., 671 S.W.2d 471 (Tenn. 1984)); Tenn. Code Ann. §§ 50-1-210, 50-1-211 (2026 Tenn. Pub. Acts, ch. 934, eff. July 1, 2026) |
+| **Main exceptions** | Coming July 1, 2026 — $70,000 pay-threshold ban; health-care-provider safe harbor (§ 63-1-148; emergency-medicine physicians excluded, covenants void under Udom); sale-of-business longer presumption; non-solicits/NDAs preserved |
+| **Can a court narrow it?** | Yes — rewrites to reasonable |
+| **Applies to contractors?** | Yes |
+| **Restriction extended during a breach?** | Open question — 2026 statute silent |
+| **Maximum length set by law** | Rebuttable presumptions: 2 yrs employee/contractor; 3 yrs distributor; 5 yrs+ seller; health-care safe harbor 2 yrs |
+
+## Are employee non-compete agreements enforceable in Tennessee? {#enforceability}
+
+**Short answer.** Sometimes. Tennessee enforces a non-compete that is reasonable and protects a legitimate business interest, but it treats the covenant as a disfavored restraint of trade. A new statute effective July 1, 2026 adds rebuttable time-reasonableness presumptions and makes a non-compete void against any employee earning less than $70,000 a year [^hasty-disfavored][^s50-1-211-threshold][^s50-1-210-presumptions].
+
+Tennessee has no general statute banning all ordinary employee non-competes; enforceability is governed by common law, supplemented by the 2026 statute's time presumptions and its bar on covenants for employees earning under $70,000. Under that common law, covenants not to compete are *not favored* because they restrain trade, but they are not void on their face and will be enforced when reasonable under the circumstances [^hasty-disfavored]. Tennessee's general restraint-of-trade statute separately declares competition-lessening combinations void as a matter of public policy, which is the policy backdrop courts invoke when they call non-competes disfavored [^s47-25-101-restraint].
+
+The 2026 legislation does not displace that reasonableness analysis. It layers two statutory rules on top of it: time presumptions a court must apply, and an outright bar on non-competes for lower-paid employees. Both take effect July 1, 2026 and apply to proceedings occurring and to agreements entered into, renewed, or amended on or after that date [^s50-1-210-presumptions].
+
+"They are not, however, invalid per se and may be enforced, provided, they are reasonable under the particular circumstances."[^hasty-disfavored]
+
+## What makes a non-compete reasonable in Tennessee? {#reasonableness-test}
+
+**Short answer.** A protectable business interest plus terms no broader than needed to protect it. Tennessee courts ask whether the time and territory of the covenant are greater than necessary to protect the employer's legitimate business interest, weighing the consideration given, the danger to the employer without the covenant, the hardship to the employee, and the public interest [^allright-ultimate-question][^allright-factors].
+
+There is a threshold requirement before the factors even matter: the employer must have a legitimately protectable interest, something beyond ordinary competition. An employer cannot use a covenant to restrain ordinary competition, and the general knowledge, skill, and experience an employee brings or develops on the job belong to the employee, not the employer [^hasty-no-ordinary-competition][^hasty-special-facts]. The special facts that qualify typically involve trade secrets or confidential information, an employer's investment in special training, or customer relationships in which the employee is the face of the business [^hasty-special-facts].
+
+Once a protectable interest exists, reasonableness is fact-specific and turns on the balance of the four considerations rather than any fixed formula [^allright-factors].
+
+"An employer, however, cannot by contract restrain ordinary competition."[^hasty-no-ordinary-competition]
+
+## Can a Tennessee employer use a non-compete against an employee earning under $70,000? {#income-threshold}
+
+**Short answer.** No, for enforcement proceedings occurring on or after July 1, 2026 and for agreements entered into, renewed, or amended on or after that date. New Tenn. Code Ann. § 50-1-211 prohibits an employer from requiring, requesting, or enforcing a non-compete against an employee whose annualized compensation is less than $70,000, and a non-compete signed in violation is void as a matter of public policy [^threshold-rule][^threshold-void].
+
+Annualized compensation is defined broadly to include wages, salary, commissions, nondiscretionary bonuses, and other remuneration; for an hourly employee it is calculated as the hourly rate times 40 times 52 [^threshold-hourly]. The bar reaches more than enforcement: an employer may not even *request* that a below-threshold employee sign a covenant [^threshold-rule].
+
+> [!NOTE]
+> **Practice note.**
+>
+> The prohibition attaches to asking a below-threshold employee to sign, not only to suing on the covenant. Before presenting a Tennessee non-compete on or after July 1, 2026, confirm the employee's annualized compensation clears $70,000 using the statutory definition, and recalculate for hourly workers using the rate-times-40-times-52 formula [^threshold-rule][^threshold-hourly].
+
+"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)."[^threshold-rule]
+
+## How long can a Tennessee non-compete last? {#time-limits}
+
+**Short answer.** For agreements governed by the 2026 statute, a court presumes a restraint is unreasonable in time if it runs longer than the period set for the relevant relationship: two years for a former employee or independent contractor, three years for a distributor, dealer, franchisee, lessee, or licensee, and the longer of five years or the payout period for the seller of a business [^time-presumption-rule][^time-employee-2yr][^time-distributor-3yr][^time-seller-5yr].
+
+These are rebuttable presumptions, not hard caps. A court must presume that a time restraint longer than the applicable period is unreasonable, but a party can try to overcome the presumption, and a covenant within the period is not automatically reasonable on its other terms [^time-presumption-rule]. The presumptions address only the time dimension; geographic scope and the protectable-interest requirement still come from the common-law reasonableness analysis [^allright-ultimate-question-time].
+
+> [!CAUTION]
+> **Drafting note.**
+>
+> For employee covenants entered into, renewed, or amended on or after July 1, 2026, draft the duration at or under two years to stay inside the presumption of reasonableness in time. A longer term is presumptively unreasonable, so the party seeking enforcement should expect to rebut that presumption, on top of the separate requirement that the covenant protect a legitimate interest and be reasonable in geography [^time-employee-2yr][^time-presumption-rule].
+
+## Is continued at-will employment enough consideration for a Tennessee non-compete? {#consideration}
+
+**Short answer.** Yes, when the employment actually continues. Under *Central Adjustment Bureau, Inc. v. Ingram*, a covenant an existing employee signs is supported by consideration where the employee then remains employed for an appreciable period, so a non-compete signed after hire does not fail for lack of fresh consideration [^central-consideration].
+
+The court enforced covenants signed after employment began because each employee continued working for the company; the length of the continued employment supplied the consideration [^central-consideration]. Tennessee has not fixed how long the continued employment must last, so the question is fact-specific: a very short tenure after signing weakens the argument, and the safer course is still to pair the covenant with employment that continues for an appreciable time or with separate consideration [^central-consideration].
+
+## Will a Tennessee court narrow or reform an overbroad non-compete? {#court-narrowing}
+
+**Short answer.** Often yes, but not always. Tennessee follows the *rule of reasonableness* rather than the strict blue-pencil rule, so a court may modify an unreasonable covenant to make it reasonable instead of striking it — but it can refuse and void the covenant entirely when the employer drafted it in a deliberately unreasonable or oppressive way [^central-reasonableness][^central-oppressive][^vantage-modify].
+
+In *Central Adjustment Bureau*, the Tennessee Supreme Court adopted the rule of reasonableness, under which a court may enforce an overbroad covenant to the extent it is reasonable rather than rewriting only severable words [^central-reasonableness]. *Vantage Technology, LLC v. Cross* shows the rule in action: the court modified an overbroad territory and limited the restriction to the customer locations where the employee had actually worked [^vantage-modify]. The 2026 statute carries the same idea forward for covenants it governs, expressly authorizing a court to modify a restrictive covenant to render it reasonable and enforceable [^s50-1-210-modify].
+
+Reformation is discretionary, not guaranteed. A court may decline to save an oppressive covenant, and it may refuse enforcement entirely where the hardship to the employee and the harm to the public outweigh the employer's interest, as the court did in *Columbus Medical Services, LLC v. Thomas* [^central-oppressive][^columbus-refused].
+
+> [!CAUTION]
+> **Drafting note.**
+>
+> Do not rely on a Tennessee court to rewrite an aggressive covenant. A deliberately unreasonable or oppressive covenant can be voided rather than trimmed, so draft duration, geography, and scope to the minimum the legitimate interest actually requires [^central-oppressive][^vantage-modify].
+
+"The most recent trend, therefore, has been to abandon the ‘blue pencil’ rule in favor of a rule of reasonableness."[^central-reasonableness]
+
+## Are non-competes enforceable against Tennessee physicians and healthcare providers? {#health-care-providers}
+
+**Short answer.** Yes, within statutory limits. A healthcare-provider covenant is deemed reasonable if it is in writing, runs two years or less, and stays within the greater of a 10-mile radius or the provider's county (or a facility-based limit). Emergency-medicine physicians fall outside that statutory authorization, so their covenants remain void under *Udom* [^s63-1-148-deemed-reasonable][^s63-1-148-emergency][^udom-void].
+
+Before the statute, Tennessee voided physician non-competes outright as contrary to public policy. In *Murfreesboro Medical Clinic, P.A. v. Udom*, the Tennessee Supreme Court held that, except as specifically allowed by statute, physician covenants not to compete are unenforceable and void [^udom-void]. The legislature responded with Tenn. Code Ann. § 63-1-148, which authorizes covenants for covered providers within the duration and geographic limits above and applies to providers licensed under Title 63, chapters 3, 4, 5, 6, 8, 9, and 11 [^s63-1-148-deemed-reasonable][^s63-1-148-scope]. A covenant tied to the sale of a provider's practice gets a rebuttable presumption that its agreed duration and area are reasonable [^s63-1-148-sale]. Meeting the safe harbor makes a covenant deemed reasonable in time and area; it does not by itself guarantee enforcement, because the covenant must still rest on a legitimate interest and satisfy the other common-law limits [^s63-1-148-deemed-reasonable].
+
+> [!NOTE]
+> **Practice note.**
+>
+> Do not impose a non-compete on an emergency-medicine physician. Section 63-1-148(d) removes them from the statute's safe harbor, and because no statute then authorizes the covenant, it remains void under *Udom*. For other covered providers, keep the term at or under two years and the area within the greater of a 10-mile radius or the county of the primary practice site to stay within the statutory safe harbor [^s63-1-148-emergency][^udom-void][^s63-1-148-deemed-reasonable].
+
+"We hold that except for those specifically prescribed by statute, physicians' covenants not to compete are unenforceable and void."[^udom-void]
+
+## Are customer non-solicits, employee non-solicits, and confidentiality agreements still allowed in Tennessee? {#non-solicitation-confidentiality}
+
+**Short answer.** Yes. The 2026 statute that regulates non-competes expressly preserves an employer's ability to enforce a confidentiality or nondisclosure agreement, a customer non-solicitation agreement, and an employee non-solicitation agreement [^s50-1-210-carveouts].
+
+Section 50-1-210(c) preserves these covenants from the time-presumption rules, and the $70,000 bar in § 50-1-211 applies only to *noncompete* agreements — so a true non-solicit or confidentiality clause sits outside both [^s50-1-210-carveouts][^threshold-rule-nonsolicit]. They are not automatically enforceable, though: a non-solicit or confidentiality clause that operates as a de facto non-compete can still be attacked as an unreasonable restraint, and a confidentiality clause that protects trade secrets is backed by the Tennessee Uniform Trade Secrets Act.
+
+> [!CAUTION]
+> **Drafting note.**
+>
+> Keep a confidentiality or non-solicitation covenant tied to genuine confidential information, customers, or employees rather than drafting it so broadly that it bars the worker from competing at all. A clause that functions as a disguised non-compete invites the same reasonableness scrutiny — and, for a below-threshold employee, the same voidness risk — as an express non-compete [^s50-1-210-carveouts][^threshold-rule-nonsolicit].
+
+"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."[^s50-1-210-carveouts]
+
+## How does the Tennessee Uniform Trade Secrets Act interact with non-competes? {#trade-secrets}
+
+**Short answer.** It runs alongside them. The Tennessee Uniform Trade Secrets Act displaces overlapping tort remedies for trade-secret misappropriation but expressly preserves contractual remedies, and it confirms that a confidentiality duty is not void merely for lacking a time or geographic limit [^tutsa-contractual].
+
+That preservation matters for drafting: an employer can protect trade secrets through both a contract covenant and a TUTSA claim, and a contractual duty to protect a trade secret is not void merely for lacking the durational and geographic limits a non-compete needs — though a broader confidentiality clause reaching non-trade-secret information is still tested under ordinary contract and restraint principles [^tutsa-contractual]. Where misappropriation is willful and malicious, the Act allows exemplary damages of up to twice the compensatory award, which can make a trade-secret claim a stronger remedy than enforcing a marginal non-compete [^tutsa-exemplary].
+
+## Are sale-of-business non-competes treated differently in Tennessee? {#sale-of-business}
+
+**Short answer.** Yes, more generously. For a covenant enforced against the owner or seller of a business, the 2026 statute presumes a restraint reasonable in time for the longer of five years or the period during which sale payments are made — well beyond the two-year presumption for ordinary employees [^sale-seller-5yr].
+
+This fits the sale-of-business context, where a buyer paying for a business is protecting purchased goodwill rather than merely restraining a former employee. In the healthcare setting, a covenant tied to the purchase or sale of a provider's practice likewise gets a rebuttable presumption that its agreed duration and area are reasonable [^sale-healthcare].
+
+## Does a Tennessee non-compete toll or extend during a breach or while litigation is pending? {#tolling-extension}
+
+**Short answer.** This is an open question in Tennessee. No Tennessee statute or appellate decision squarely endorses automatically tolling or extending the restricted period while the employee is in breach or while enforcement litigation is pending, and the 2026 statute does not address tolling [^tolling-statute-silent][^tolling-reasonableness].
+
+Because Tennessee measures reasonableness in time and may reform an unreasonable term, an extension-on-breach clause is best treated as unsettled rather than reliably enforceable. The 2026 statute fixes the start of the period at the date the relationship terminates and is otherwise silent on tolling, so an extension-on-breach theory has no clear statutory footing either way; an overlong effective restraint would also face the same reasonableness scrutiny as any other duration [^tolling-statute-silent][^tolling-reasonableness].
+
+> [!NOTE]
+> **Practice note.**
+>
+> Open question: Tennessee law does not clearly resolve whether a clause that tolls or extends the restricted period during breach or litigation is enforceable. Do not assume a court will extend an expired Tennessee covenant; if an extension provision matters, draft a defined, reasonable cap rather than an open-ended tolling clause, and expect a court to test the total effective duration for reasonableness [^tolling-reasonableness][^tolling-statute-silent].
+
+## Can another state's law or court govern a Tennessee worker's non-compete? {#choice-of-law}
+
+**Short answer.** Sometimes, if the choice is genuine. A Tennessee court honors a contractual choice of another state's law only when certain requirements are met, beginning with the requirement that the choice-of-law provision be executed in good faith [^vantage-choice-intent][^vantage-good-faith].
+
+Those requirements limit the common tactic of using an out-of-state choice-of-law clause to escape Tennessee's reasonableness rules. A clause picking the law of a state with no genuine connection to the parties, or one used to override Tennessee's protections — including the new $70,000 bar — is vulnerable [^vantage-choice-intent][^vantage-good-faith].
+
+## What are the key recent developments in Tennessee non-compete law? {#recent-developments}
+
+**Short answer.** The headline change is the 2026 statute that, effective July 1, 2026, voids non-competes for employees earning under $70,000 and sets rebuttable time presumptions for the rest [^dev-enacted][^dev-effective].
+
+- 
+- 
+- 
+
+> [!NOTE]
+> **Practice note.**
+>
+> Treat July 1, 2026 as a hard line. Agreements entered into, renewed, or amended on or after that date are subject to the new $70,000 bar and the time presumptions, so review form non-competes and any covenant up for renewal before that date, and confirm each covered employee clears the compensation threshold [^dev-effective][^dev-threshold].
+
+[^about]: By Steven Obiajulu, J.D. Published by [openagreements.org](https://openagreements.org) · Maintained by [UseJunior](https://usejunior.com). Last reviewed 2026-06-03. License: CC BY 4.0. Steven Obiajulu, J.D. is admitted in New York, not Tennessee. This article synthesizes Tennessee primary law and is not legal advice from a Tennessee-admitted attorney. This article is for informational purposes only and does not create an attorney-client relationship.
+
+[^hasty-disfavored]: **Hasty v. Rent-A-Driver, Inc.** — "They are not, however, invalid per se and may be enforced, provided, they are reasonable under the particular circumstances." *Hasty v. Rent-A-Driver, Inc., 671 S.W.2d 471, 472 (Tenn. 1984).* <https://www.courtlistener.com/opinion/2366827/hasty-v-rent-a-driver-inc/#:~:text=They%20are%20not%2C%20however%2C%20invalid,reasonable%20under%20the%20particular%20circumstances.>
+
+[^s50-1-211-threshold]: **2026 Tenn. Pub. Acts, ch. 934 (HB 1034)** — "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)." *Tenn. Code Ann. § 50-1-211(a) (2026 Tenn. Pub. Acts, ch. 934) (eff. July 1, 2026).* <https://publications.tnsosfiles.com/acts/114/pub/pc0934.pdf>
+
+[^s50-1-210-presumptions]: **2026 Tenn. Pub. Acts, ch. 934 (HB 1034)** — "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." *2026 Tenn. Pub. Acts, ch. 934, § 3.* <https://publications.tnsosfiles.com/acts/114/pub/pc0934.pdf>
+
+[^s47-25-101-restraint]: **Tenn. Code Ann. § 47-25-101** — "All arrangements, contracts, agreements, trusts, or combinations between persons or corporations made with a view to lessen, or which tend to lessen, full and free competition in trade or commerce affecting this state, and all arrangements, contracts, agreements, trusts, or combinations between persons or corporations designed or which tend to advance, reduce, or control the price or the cost to the producer or the consumer of any product or service in trade or commerce affecting this state, are declared to be against public policy, unlawful, and void." *Tenn. Code Ann. § 47-25-101 (2024 Tenn. Pub. Acts, ch. 776).* <https://publications.tnsosfiles.com/acts/113/pub/pc0776.pdf>
+
+[^allright-ultimate-question]: **Allright Auto Parks, Inc. v. Berry** — "Based upon the foregoing, the ultimate question presented in the case sub judice appears to be whether or not the time and territorial limits of the noncompetition agreement are greater than is required to protect the business interest of the complainant." *Allright Auto Parks, Inc. v. Berry, 409 S.W.2d 361, 363 (Tenn. 1966).* <https://www.courtlistener.com/opinion/1784276/allright-auto-parks-inc-v-berry/#:~:text=Based%20upon%20the%20foregoing%2C%20the,business%20interest%20of%20the%20complainant.>
+
+[^allright-factors]: **Allright Auto Parks, Inc. v. Berry** — "Among these are: the consideration supporting the agreements; the threatened danger to the employer in the absence of such an agreement; the economic hardship imposed on the employee by such a covenant; and whether or not such a covenant should be inimical to public interest." *Allright Auto Parks, Inc. v. Berry, 409 S.W.2d 361, 363 (Tenn. 1966).* <https://www.courtlistener.com/opinion/1784276/allright-auto-parks-inc-v-berry/#:~:text=Among%20these%20are%3A%20the%20consideration,be%20inimical%20to%20public%20interest.>
+
+[^hasty-no-ordinary-competition]: **Hasty v. Rent-A-Driver, Inc.** — "An employer, however, cannot by contract restrain ordinary competition." *Hasty v. Rent-A-Driver, Inc., 671 S.W.2d 471, 473 (Tenn. 1984).* <https://www.courtlistener.com/opinion/2366827/hasty-v-rent-a-driver-inc/#:~:text=An%20employer%2C%20however%2C%20cannot%20by%20contract%20restrain%20ordinary%20competition.>
+
+[^hasty-special-facts]: **Hasty v. Rent-A-Driver, Inc.** — "In order for an employer to be entitled to protection, there must be special facts present over and above ordinary competition." *Hasty v. Rent-A-Driver, Inc., 671 S.W.2d 471, 473 (Tenn. 1984).* <https://www.courtlistener.com/opinion/2366827/hasty-v-rent-a-driver-inc/#:~:text=In%20order%20for%20an%20employer,over%20and%20above%20ordinary%20competition.>
+
+[^threshold-rule]: **2026 Tenn. Pub. Acts, ch. 934 (HB 1034)** — "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)." *Tenn. Code Ann. § 50-1-211(a) (2026 Tenn. Pub. Acts, ch. 934) (eff. July 1, 2026).* <https://publications.tnsosfiles.com/acts/114/pub/pc0934.pdf>
+
+[^threshold-void]: **2026 Tenn. Pub. Acts, ch. 934 (HB 1034)** — "A noncompete agreement executed in violation of this section is void and unenforceable as a matter of public policy." *Tenn. Code Ann. § 50-1-211(c) (2026 Tenn. Pub. Acts, ch. 934) (eff. July 1, 2026).* <https://publications.tnsosfiles.com/acts/114/pub/pc0934.pdf>
+
+[^threshold-hourly]: **2026 Tenn. Pub. Acts, ch. 934 (HB 1034)** — "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)." *Tenn. Code Ann. § 50-1-211(b)(2) (2026 Tenn. Pub. Acts, ch. 934) (eff. July 1, 2026).* <https://publications.tnsosfiles.com/acts/114/pub/pc0934.pdf>
+
+[^time-presumption-rule]: **2026 Tenn. Pub. Acts, ch. 934 (HB 1034)** — "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." *Tenn. Code Ann. § 50-1-210(a) (2026 Tenn. Pub. Acts, ch. 934) (eff. July 1, 2026).* <https://publications.tnsosfiles.com/acts/114/pub/pc0934.pdf>
+
+[^time-employee-2yr]: **2026 Tenn. Pub. Acts, ch. 934 (HB 1034)** — "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" *Tenn. Code Ann. § 50-1-210(b)(1) (2026 Tenn. Pub. Acts, ch. 934) (eff. July 1, 2026).* <https://publications.tnsosfiles.com/acts/114/pub/pc0934.pdf>
+
+[^time-distributor-3yr]: **2026 Tenn. Pub. Acts, ch. 934 (HB 1034)** — "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:" *Tenn. Code Ann. § 50-1-210(b)(2) (2026 Tenn. Pub. Acts, ch. 934) (eff. July 1, 2026).* <https://publications.tnsosfiles.com/acts/114/pub/pc0934.pdf>
+
+[^time-seller-5yr]: **2026 Tenn. Pub. Acts, ch. 934 (HB 1034)** — "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:" *Tenn. Code Ann. § 50-1-210(b)(3) (2026 Tenn. Pub. Acts, ch. 934) (eff. July 1, 2026).* <https://publications.tnsosfiles.com/acts/114/pub/pc0934.pdf>
+
+[^allright-ultimate-question-time]: **Allright Auto Parks, Inc. v. Berry** — "Based upon the foregoing, the ultimate question presented in the case sub judice appears to be whether or not the time and territorial limits of the noncompetition agreement are greater than is required to protect the business interest of the complainant." *Allright Auto Parks, Inc. v. Berry, 409 S.W.2d 361, 363 (Tenn. 1966).* <https://www.courtlistener.com/opinion/1784276/allright-auto-parks-inc-v-berry/#:~:text=Based%20upon%20the%20foregoing%2C%20the,business%20interest%20of%20the%20complainant.>
+
+[^central-consideration]: **Central Adjustment Bureau, Inc. v. Ingram** — "We find that because of the length of employment of each defendant, the covenant is binding against them." *Central Adjustment Bureau, Inc. v. Ingram, 678 S.W.2d 28, 35 (Tenn. 1984).* <https://www.courtlistener.com/opinion/2437065/central-adjustment-bureau-inc-v-ingram/#:~:text=We%20find%20that%20because%20of,covenant%20is%20binding%20against%20them.>
+
+[^central-reasonableness]: **Central Adjustment Bureau, Inc. v. Ingram** — "The most recent trend, therefore, has been to abandon the ‘blue pencil’ rule in favor of a rule of reasonableness." *Central Adjustment Bureau, Inc. v. Ingram, 678 S.W.2d 28, 33 (Tenn. 1984).* <https://www.courtlistener.com/opinion/2437065/central-adjustment-bureau-inc-v-ingram/#:~:text=The%20most%20recent%20trend%2C%20therefore%2C,of%20a%20rule%20of%20reasonableness.>
+
+[^central-oppressive]: **Central Adjustment Bureau, Inc. v. Ingram** — "If there is credible evidence to sustain a finding that a contract is deliberately unreasonable and oppressive, then the covenant is invalid." *Central Adjustment Bureau, Inc. v. Ingram, 678 S.W.2d 28, 33 (Tenn. 1984).* <https://www.courtlistener.com/opinion/2437065/central-adjustment-bureau-inc-v-ingram/#:~:text=If%20there%20is%20credible%20evidence,then%20the%20covenant%20is%20invalid.>
+
+[^vantage-modify]: **Vantage Technology, LLC v. Cross** — "Hence, a court may modify an unreasonable covenant so as to render it reasonable." *Vantage Technology, LLC v. Cross, 17 S.W.3d 637, 647 (Tenn. Ct. App. 1999).* <https://www.courtlistener.com/opinion/1561156/vantage-technology-llc-v-cross/#:~:text=Hence%2C%20a%20court%20may%20modify,as%20to%20render%20it%20reasonable.>
+
+[^s50-1-210-modify]: **2026 Tenn. Pub. Acts, ch. 934 (HB 1034)** — "A court may modify a restrictive covenant governed by this section to render it reasonable and enforceable." *Tenn. Code Ann. § 50-1-210(d) (2026 Tenn. Pub. Acts, ch. 934) (eff. July 1, 2026).* <https://publications.tnsosfiles.com/acts/114/pub/pc0934.pdf>
+
+[^columbus-refused]: **Columbus Medical Services, LLC v. Thomas** — "We reverse, concluding that, while the plaintiff agency had a legitimate protectable business interest, the non-compete covenants are not enforceable in light of the hardship to the defendant therapists and the adverse impact on the public interest." *Columbus Medical Services, LLC v. Thomas, 308 S.W.3d 368, 374 (Tenn. Ct. App. 2009).* <https://www.courtlistener.com/opinion/1050674/columbus-medical-services-llc-v-thomas/#:~:text=We%20reverse%2C%20concluding%20that%2C%20while,impact%20on%20the%20public%20interest.>
+
+[^s63-1-148-deemed-reasonable]: **Tenn. Code Ann. § 63-1-148** — "A restriction on the right of an employed or contracted healthcare provider to practice the healthcare provider's profession upon termination or conclusion of the employment or contractual relationship shall be deemed reasonable if: (1) The restriction is set forth in an employment agreement or other written document signed by the healthcare provider and the employing or contracting entity; and (2) The duration of the restriction is two (2) years or less and either: (A) The maximum allowable geographic restriction is the greater of: (i) A ten-mile radius from the primary practice site of the healthcare provider while employed or contracted; or (ii) The county in which the primary practice of the healthcare provider while employed or contracted is located;" *Tenn. Code Ann. § 63-1-148(a).* <https://advance.lexis.com/document/?pdmfid=1000516&pddocfullpath=/shared/document/statutes-legislation/urn:contentItem:563H-T9F0-R03M-50DW-00008-00>
+
+[^s63-1-148-emergency]: **Tenn. Code Ann. § 63-1-148** — "This section shall not apply to physicians who specialize in the practice of emergency medicine." *Tenn. Code Ann. § 63-1-148(d).* <https://advance.lexis.com/document/?pdmfid=1000516&pddocfullpath=/shared/document/statutes-legislation/urn:contentItem:563H-T9F0-R03M-50DW-00008-00>
+
+[^udom-void]: **Murfreesboro Medical Clinic, P.A. v. Udom** — "We hold that except for those specifically prescribed by statute, physicians' covenants not to compete are unenforceable and void." *Murfreesboro Medical Clinic, P.A. v. Udom, 166 S.W.3d 674, 684 (Tenn. 2005).* <https://www.courtlistener.com/opinion/1058272/murfreesboro-medical-clinic-pa-v-udom/#:~:text=We%20hold%20that%20except%20for,compete%20are%20unenforceable%20and%20void.>
+
+[^s63-1-148-scope]: **Tenn. Code Ann. § 63-1-148** — "This section shall apply to healthcare providers licensed under chapters 3, 4, 5, 6, 8, 9 and 11 of this title." *Tenn. Code Ann. § 63-1-148(c).* <https://advance.lexis.com/document/?pdmfid=1000516&pddocfullpath=/shared/document/statutes-legislation/urn:contentItem:563H-T9F0-R03M-50DW-00008-00>
+
+[^s63-1-148-sale]: **Tenn. Code Ann. § 63-1-148** — "There shall be a rebuttable presumption that the duration and area of restriction agreed upon by the parties in such an agreement are reasonable." *Tenn. Code Ann. § 63-1-148(b).* <https://advance.lexis.com/document/?pdmfid=1000516&pddocfullpath=/shared/document/statutes-legislation/urn:contentItem:563H-T9F0-R03M-50DW-00008-00>
+
+[^s50-1-210-carveouts]: **2026 Tenn. Pub. Acts, ch. 934 (HB 1034)** — "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." *Tenn. Code Ann. § 50-1-210(c) (2026 Tenn. Pub. Acts, ch. 934) (eff. July 1, 2026).* <https://publications.tnsosfiles.com/acts/114/pub/pc0934.pdf>
+
+[^threshold-rule-nonsolicit]: **2026 Tenn. Pub. Acts, ch. 934 (HB 1034)** — "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)." *Tenn. Code Ann. § 50-1-211(a) (2026 Tenn. Pub. Acts, ch. 934) (eff. July 1, 2026).* <https://publications.tnsosfiles.com/acts/114/pub/pc0934.pdf>
+
+[^tutsa-contractual]: **Tenn. Code Ann. § 47-25-1708** — "a contractual duty to maintain secrecy or limit use of a trade secret shall not be deemed to be void or unenforceable solely for lack of durational or geographical limitation on the duty" *Tenn. Code Ann. § 47-25-1708(b)(1).* <https://publications.tnsosfiles.com/acts/101/pub/pc647.pdf>
+
+[^tutsa-exemplary]: **Tenn. Code Ann. § 47-25-1704** — "If willful and malicious misappropriation exists, the court may award exemplary damages in an amount not exceeding twice any award made under subsection (a)." *Tenn. Code Ann. § 47-25-1704(b).* <https://publications.tnsosfiles.com/acts/101/pub/pc647.pdf>
+
+[^sale-seller-5yr]: **2026 Tenn. Pub. Acts, ch. 934 (HB 1034)** — "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:" *Tenn. Code Ann. § 50-1-210(b)(3) (2026 Tenn. Pub. Acts, ch. 934) (eff. July 1, 2026).* <https://publications.tnsosfiles.com/acts/114/pub/pc0934.pdf>
+
+[^sale-healthcare]: **Tenn. Code Ann. § 63-1-148** — "There shall be a rebuttable presumption that the duration and area of restriction agreed upon by the parties in such an agreement are reasonable." *Tenn. Code Ann. § 63-1-148(b).* <https://advance.lexis.com/document/?pdmfid=1000516&pddocfullpath=/shared/document/statutes-legislation/urn:contentItem:563H-T9F0-R03M-50DW-00008-00>
+
+[^tolling-statute-silent]: **2026 Tenn. Pub. Acts, ch. 934 (HB 1034)** — "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" *Tenn. Code Ann. § 50-1-210(b)(1) (2026 Tenn. Pub. Acts, ch. 934) (eff. July 1, 2026).* <https://publications.tnsosfiles.com/acts/114/pub/pc0934.pdf>
+
+[^tolling-reasonableness]: **Vantage Technology, LLC v. Cross** — "Hence, a court may modify an unreasonable covenant so as to render it reasonable." *Vantage Technology, LLC v. Cross, 17 S.W.3d 637, 647 (Tenn. Ct. App. 1999).* <https://www.courtlistener.com/opinion/1561156/vantage-technology-llc-v-cross/#:~:text=Hence%2C%20a%20court%20may%20modify,as%20to%20render%20it%20reasonable.>
+
+[^vantage-choice-intent]: **Vantage Technology, LLC v. Cross** — "If the parties manifest an intent to instead apply the laws of another jurisdiction, then that intent will be honored provided certain requirements are met." *Vantage Technology, LLC v. Cross, 17 S.W.3d 637, 650 (Tenn. Ct. App. 1999).* <https://www.courtlistener.com/opinion/1561156/vantage-technology-llc-v-cross/#:~:text=If%20the%20parties%20manifest%20an,provided%20certain%20requirements%20are%20met.>
+
+[^vantage-good-faith]: **Vantage Technology, LLC v. Cross** — "The choice of law provision must be executed in good faith." *Vantage Technology, LLC v. Cross, 17 S.W.3d 637, 650 (Tenn. Ct. App. 1999).* <https://www.courtlistener.com/opinion/1561156/vantage-technology-llc-v-cross/#:~:text=The%20choice%20of%20law%20provision,be%20executed%20in%20good%20faith.>
+
+[^dev-enacted]: **2026 Tenn. Pub. Acts, ch. 934 (HB 1034)** — "AN ACT to amend Tennessee Code Annotated, Title 50; Title 63 and Title 68, relative to covenants not to compete." *2026 Tenn. Pub. Acts, ch. 934 (HB 1034).* <https://publications.tnsosfiles.com/acts/114/pub/pc0934.pdf>
+
+[^dev-effective]: **2026 Tenn. Pub. Acts, ch. 934 (HB 1034)** — "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." *2026 Tenn. Pub. Acts, ch. 934, § 3.* <https://publications.tnsosfiles.com/acts/114/pub/pc0934.pdf>
+
+[^dev-threshold]: **2026 Tenn. Pub. Acts, ch. 934 (HB 1034)** — "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)." *Tenn. Code Ann. § 50-1-211(a) (2026 Tenn. Pub. Acts, ch. 934) (eff. July 1, 2026).* <https://publications.tnsosfiles.com/acts/114/pub/pc0934.pdf>