Noncompete agreements—also known as restrictive covenants—are contracts between employers and employees that restrict the employee’s ability to work in competing businesses after leaving a job. While employers argue that these agreements protect investments in training, trade secrets, and client relationships, they can significantly limit an employee’s career mobility and earning potential. If you’re currently working under one—or are being asked to sign one—it’s essential to understand your rights and how enforceable these agreements really are.

The Federal Perspective

In recent years, the federal government has taken steps toward limiting noncompetes. The Federal Trade Commission (FTC) proposed a rule that would broadly ban them for most workers. Unfortunately this rule was blocked by a federal court before it ever took effect. The National Labor Relations Board (NLRB) also issued guidance suggesting that noncompetes may violate workers’ rights under the National Labor Relations Act. Given the change in administration, however, it is unlikely that the NLRB will act in accordance with that guidance in the near future. To date, proposed federal legislation to limit noncompetes has not been enacted.  For now, noncompete enforceability is governed primarily by state law.

Tennessee Law

Tennessee courts view noncompetes with scrutiny, recognizing them as restraints on trade. They are disfavored but enforceable if they are reasonable in scope and protect a legitimate business interest. To enforce a noncompete in Tennessee, an employer must show that the noncompete is necessary to protect something beyond normal competition—such as confidential business information, trade secrets, or customer relationships.

Even then, the agreement must be reasonable in three respects: duration, geographic scope, and the nature of the restricted activity. Courts generally uphold restrictions lasting up to two years, but agreements lasting longer than that are harder for employers to justify. Tennessee courts allow “blue penciling,” which means judges can modify overly broad agreements to make them enforceable.

Healthcare professionals in Tennessee are subject to special rules. By statute, noncompetes for healthcare providers are limited in both duration (no more than two years) and geographic scope (no more than 10 miles or within the same county as the prior practice). 

Virginia Law

Virginia also requires noncompetes to be reasonable, but it’s far less forgiving than Tennessee when it comes to poorly drafted agreements. Virginia courts do not allow blue penciling, meaning that if a noncompete is too broad or unreasonable, the entire agreement is thrown out.

A major distinction in Virginia is the 2020 law banning noncompetes for “low-wage” workers—defined currently as those earning less than $76,081.14 per year. This law applies to most hourly workers and even some salaried employees, offering substantial protections to a large segment of the workforce. It does not apply to workers who earn most of their money from commissions, nor does it apply to certain types of exempt employees like executives, learned professionals (think scientists, teachers, accountants, etc.), and creative professionals (actors, musicians, etc.). 

Practical Takeaways

If you’re presented with a noncompete agreement, don’t assume it’s enforceable just because it’s in writing. Carefully review the terms—or better yet, have an experienced employment attorney do so before you sign. If you’re facing enforcement of a noncompete, whether through a cease-and-desist letter or a lawsuit, legal counsel can help assess whether the agreement is valid and whether negotiation or litigation is your best path forward.

Noncompetes are powerful legal tools, but they’re not ironclad. Understanding your rights is the first step toward protecting your career.