Tennessee committee pauses noncompete reform after sponsors, lawyers seek clarifications
Get AI-powered insights, summaries, and transcripts
Subscribe
Summary
An amended noncompete bill (HB 1034) that would set rebuttable presumptions for covenant durations and bar noncompetes for workers earning under $70,000 was presented and amended; the committee rolled the measure two weeks to allow cleanup and legal review.
Representative Alexander presented an amended version of House Bill 1034 on restrictive covenants, telling the Commerce Committee the measure "establishes rebuttal presumptions for how long [a] restrictive covenant is considered reasonable" and setting example thresholds: two years for employees, three years for distributors/franchisees/dealers/licensees and five years for covenants tied to sale of a business.
The sponsor said the bill "prohibits noncompete agreements for employees earning under $70,000 annually," preserves employers' ability to enforce confidentiality and nonsolicitation agreements, and lets courts "modify, not automatically void agreements" so judges can tailor covenants rather than discard them wholesale.
The committee pressed the sponsor and legal staff on scope. Chairman Clem Clemons asked whether the bill "eliminates any consideration of the duration, the geographic scope or the employer type" and emphasized those variables can be significant, especially in specialized fields such as medicine. Representative Alexander said the measure is intended as a starter framework and "does not get into the weeds" on matters such as hospital or doctor noncompetes.
Representative Lynn praised the bill's $70,000 exclusion but warned fixed maximums could lead employers to choose the longest allowable term. Legal counsel Levin Crutchfield told the committee the text "doesn't specify" whether independent contractors paid on 1099s are included; he said they "could be included under business relationships" but the bill does not define that point.
The committee attached amendment 012379 to the bill and, by unanimous consent, rolled HB 1034 for two weeks to give the sponsor and legal staff time to draft cleanup language and consider indexing the $70,000 threshold to avoid erosion over time. No final vote was taken; the sponsor said he expected to return with refinements.
Next step: sponsor and legal staff will confer and the committee will revisit the bill when it returns to the calendar.