Tennessee courts generally disfavor restraints on trade. However, Tennessee courts are also reluctant to interfere with parties' freedom to contract. Therefore, Tennessee courts will enforce non-compete agreements if they are reasonable.
In determining whether a non-compete agreement is reasonable, Tennessee courts consider the following:
- Whether the non-compete agreement was supported by sufficient consideration. When considering whether this factor has been satisfied, courts will examine what value the employee received in return for signing the non-compete agreement.
- Whether the employer has a legitimate business interest that needs to be protected. When reviewing this factor, courts will examine the following: (a) whether the employee received specialized training from the employer; (b) whether the employee had access to confidential information such as business secrets; and (c) whether the employer's customers tended to associate the business with the employee because of repeated contacts with the employee.
- Whether the non-compete agreement will cause economic hardship to the employee if it is enforced. When reviewing this factor, courts will weigh the hardship to the employer against the hardship to the employee.
- Whether the non-compete agreement violates public policy. This factor most often comes into play when courts consider non-compete agreements involving physicians, attorneys, and other professionals.
- Whether the non-compete agreement is reasonable in terms of its time and geographic limitations. When reviewing this factor, courts consider whether the time and geographical restrictions are greater than what is necessary to protect the interests of the employer.
Assuming the non-compete agreement satisfies the above factors, it will generally be enforced.