In Tennessee, a covenant not to compete usually requires that, upon leaving the company, an employee agrees not to be employed by their employer's competitors. A covenant not to compete may also be called a "non-compete clause". An employee who signs a covenant not to compete may receive compensation for the agreement, or in some cases the agreement is a condition for their being hired.
When are Covenants not to Compete Unenforceable?
Whether or not a judge will conclude that the covenant is enforceable can be difficult to know beforehand. Even though the interests of an employer are important, Tennessee courts value a person's freedom to select the type of employment that they desire. Thus, courts will typically uphold only those covenants not to compete that they conclude to be reasonable. Those provisions that courts have seen to be unreasonable include those that last for an prolonged period of time or cover geographic areas around Dunlap that are unreasonably large.
Non-compete clauses are also limited in that they can only apply to competitors who are reasonably related to the industry of the employer. Lastly, the employer needs to have an acceptable business interest which justifies their motives in requiring their employee to sign a covenant not to compete.
Do I Need an Attorney when Dealing with a Covenant not to Compete?
Before you sign any provisions that could restrict your rights, you may consider hiring a Dunlap, Tennessee attorney who can review the covenant. The attorney can negotiate modifications to the contract if they are needed, and can draft a new clause which is acceptable to the parties involved. An attorney can also give valuable advice when it comes to suing employees for breaching covenants, or counseling employees who have signed one about whether they can accept a different job.