A non-competition contract, also known as a covenant not to compete, has become popular among employers in our knowledge-based economy. These white collar contracts are designed to protect the employer from competition – specifically, from former employees with privileged knowledge of its trade secrets, techniques and markets – by placing time and/or regional limits on the use of this knowledge.
A non-compete contract does not mean your professional career is over.
Tennessee courts have become increasingly lenient in their enforcement of non-compete contracts, finding that competition is necessary to a healthy economy.
Negotiating a Non-Compete Agreement
Your professional life is not over because a former employer is threatening to enforce a non-compete clause. If you have signed a covenant not to compete, the burden of proof still remains on the Tennessee employer to establish that your new position violates your non-compete contract. Working with an employment law attorney can help you identify the validity and scope of your non-compete contract.
Most non-compete agreements are legal and binding so long as the agreement is reasonable. Many employers, even those with attorneys, misinterpret Tennessee non-compete law, making non-competes too exclusionary or extensive. A valid Tennessee non-compete agreement requires two elements:
1) the contract must protect a legitimate business interest (a “protectable interest”), &
2) the non-compete’s time and territorial limitations must be reasonable.
Either can be challenged.
Challenging the Non-Compete’s Protectable Interest
The protectable interest protected by a non-compete requires a unique knowledge and/or skill. A non-compete can be challenged by expert testimony or otherwise showing the protectable interest is generally known by competitors. A non-compete’s protectable interest can also be challenged by how valuably your employer protected or treated this information or by the value of this information (both in developing the information and its value to the business) to your employer.
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Other Challenges to a Non-Compete Agreement
Barring some act of gross and obvious misconduct by the employee, Tennessee courts are generally reluctant to enforce non-compete agreements. Again, Tennessee judges look closely at the reasonableness of the agreement.
Some factors Tennessee courts consider are if:
 your employer has violated its end of the contract (such as not paying contracted compensation package),
you were terminated for whistleblowing or otherwise retaliated against,
you were employed for only a short time
former coworkers with similar non-compete agreements were allowed to breach their non-competes without the employer enforcing the contract.
There are many and various other circumstances that may be specific to your contract and situation. Even if the non-compete cannot be nullified, Tennessee courts have historically “blue penciled" or modified unfair parts of the contract.
Reasons for Legal Representation
A noncompetition agreement is not a pact with the devil. These employment contracts try to do what is fair for both parties by placing specific restrictions on competition, especially those involving the employee’s ability to use his or her employer’s knowledge, clients and/or training to the competitive detriment of the employer.
Still, acting on your own or breaking your non-compete agreement carries serious penalties or risks. Your former employer can sue you for monetary losses and can be granted an injunction against you while the lawsuit is pending. This means that not only might you have to pay legal fees and a monetary award to your former employer, you will also not be able to work while you wait for your case to settle or have its day(s) in court.
Legal Help for Tennessee Employees
Nashville employment attorney Jim Higgins can help negotiate better terms in your non-compete contract before you are brought to trial or help protect you if your former employer is filing a non-compete injunction. Trust the name hundreds of Tennesseans have trusted. Trust Attorney Jim Higgins.
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