Product ID: 102287RPT

Covenants Not to Compete in Tennessee

Thomas J. Gallo — Attorney, Barnes & Thornburg LLP
Covenants Not to Compete in Tennessee

Covenants not to compete are disfavored in Tennessee because they are deemed to be in restraint of trade. Murfreesburo Medical Clinic, P.A. v. Udom, 166 S.W.3d 674, 678 (Tenn. 2005). Tennessee does not have a statute governing all covenants not to compete. However, Tenn. Code Ann. §47-25-101, which governs Tennessee’s public policy, provides: All arrangements, contracts, agreements, trusts, or combinations between persons or corporations with a view to lessen, or which tend to lessen, full and free competition in the importation or sale of articles imported into this state, or in the manufacture or sale of articles of domestic growth or of domestic raw material. . . are declared to be against public policy, unlawful, and void.8 The remainder of restrictive covenants in Tennessee are governed under common law principles. These covenants are viewed as restraints on trade and are not favored in Tennessee, but will be enforced where reasonable under the circumstances of the case. Money & Tax Help, Inc. v. Moody, 180 S.W.3d 561, 564 (Tenn. App. 2005); Murfreesboro, 166 S.W.3d at 674;H&R Block Eastern Tax Services, Inc. v. Bates, 2002 Tenn. App. LEXIS 632, * 24 (Tenn. App. 2002); Central Adjustment Bureau v. Ingram, 678 S.W.2d 28 (Tenn. 1984); Hasty v. Rent-ADriver, Inc., 671 S.W.2d 471 (Tenn. 1984). Tennessee courts strictly construe covenants in favor of the employee. Vantage Technology, LLC v. Cross, 17 S.W.3d 637, 643 (Tenn. Ct. App. 2000); Brasfield v. Anesthesia Services, P.C., 1999 WL 817507 (Tenn. Ct. App. 1999); See, Murfreesboro Medical Clinic, P.A. v. Udom, 166 S.W.3d 674 (Tenn. 2005). As such, employers must “take responsibility” for ambiguous provisions of the agreement. Sawyer, 2006 U.S. Dist. LEX IS 37059 at 37.

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