Non-Solicitation Agreements in Tennessee: Enforceability Rules

Federal law does not directly regulate non-solicitation agreements. However, the enforceability of such agreements may implicate federal antitrust law (Sherman Act, 15 U.S.C. § 1), which prohibits unreasonable restraints of trade. The Federal Trade Commission (FTC) has challenged overly broad non-solicitation and non-compete provisions under the FTC Act (15 U.S.C. § 45) when they function as unlawful restraints on competition or worker mobility.

The National Labor Relations Act (29 U.S.C. § 151 et seq.) restricts employers' ability to enforce non-solicitation agreements against union organizing activities or protected concerted activity. Additionally, the WARN Act and COBRA do not directly address non-solicitation, but severance agreements containing non-solicitation clauses must not violate federal employment protections.

Federally, non-solicitation agreements are analyzed under general contract law principles of consideration, mutual assent, and public policy. Courts must balance employer protection against unreasonable restraints on employee mobility and market competition. The burden falls on the employer to prove the agreement is reasonable and necessary to protect legitimate business interests. No federal licensing or filing requirement exists for non-solicitation agreements.

Tennessee law governing non-solicitation agreements is codified primarily in Tennessee Code Annotated § 47-25-101, which addresses restrictive covenants including non-solicitation. Unlike some states that void all non-competes, Tennessee permits non-solicitation agreements but requires strict compliance with reasonableness standards.

Under T.C.A. § 47-25-202, Tennessee recognizes that employers may have legitimate protectable interests justifying non-solicitation provisions. These include: (1) trade secrets (as defined in the Tennessee Uniform Trade Secrets Act, T.C.A. § 47-25-1702); (2) confidential business information; (3) substantial relationships with prospective or existing customers; and (4) extraordinary or specialized training. The statute explicitly permits restriction of solicitation of employees and customers when tailored to protect these interests.

Tennessee's enforceability standard is more favorable to employers than some neighboring states. A non-solicitation agreement is enforceable if reasonable in: (1) duration (how long after termination), (2) geographic area (territorial scope), and (3) line of business. The 2011 amendments to T.C.A. § 47-25-101 modified the analysis, but courts continue applying the reasonableness test from Doughboy Industries, Inc. v. Pantasote Inc., 17 S.W.3d 216 (Tenn. 2000).

The statute applies to all employers in Tennessee. Unlike federal law, Tennessee law does not require a minimum employee count. Both at-will and contract employees may be bound by non-solicitation agreements, provided the agreement contains consideration and meets reasonableness standards.

Key distinction from federal law: Tennessee explicitly addresses non-solicitation in statute, whereas federal law treats it as a contract matter analyzed under antitrust and labor law principles. Tennessee permits broader restrictions on customer and employee solicitation than many states, provided geographic scope and duration are not indefinite.

Non-solicitation agreements cannot restrict an employee's right to solicit customers or employees after a reasonable time period without legitimate business justification. T.C.A. § 47-25-101 provides that an agreement is unenforceable if it: (1) is not reasonable in duration, geographic area, or line of business; (2) does not protect a legitimate protectable interest; or (3) is unduly burdensome to the employee.

An important exception exists for union-related activities. Under the National Labor Relations Act, non-solicitation clauses cannot prevent employees from soliciting union membership or engaging in protected concerted activity. The NLRB has held that broad no-solicitation rules that restrict employee organizing are unlawful, even in non-union workplaces.

Tennessee courts will not enforce non-solicitation agreements that are part of an unlawful scheme or that violate public policy. For example, if the agreement is used to retaliate against whistleblowers (protected under Tennessee common law and various federal whistleblower statutes), it will not be enforced. Similarly, agreements that violate the Americans with Disabilities Act (42 U.S.C. § 12101 et seq.) by preventing disabled workers from solicitation will be void as to that provision.

The at-will employment doctrine provides no exception—at-will employees can be bound by non-solicitation agreements if they contain adequate consideration (e.g., continued employment, bonus, promotion). However, agreements imposed after hire require additional consideration beyond mere continued employment in some contexts.

Trade secret protection is conditional: the employer must have taken reasonable measures to maintain secrecy. If customer or employee information is already in the public domain, the agreement cannot protect it. Additionally, non-solicitation cannot extend indefinitely; duration must be tied to the reasonable period during which the employer's interests need protection (generally 1-2 years for customer relationships, shorter for employee relationships).

Step 1 — Document Everything. Create a comprehensive record of the non-solicitation agreement itself (signed copy with date and consideration terms). Keep notes on: (1) when you received the agreement and under what circumstances; (2) any communications from your employer about the clause and its scope; (3) the context of your employment (at-will, contract, promotion, new hire); (4) any subsequent modifications to the agreement; (5) proof of consideration you received (e.g., continued employment letter, bonus, promotion documentation). Preserve all emails, signed agreements, and employee handbook pages mentioning the restriction.

Step 2 — Evaluate the Agreement's Reasonableness. Carefully review the non-solicitation clause for: (1) duration after termination (how many months/years); (2) geographic scope (state, region, specific areas); (3) definition of restricted parties (all customers, only existing clients, all employees, only managers); (4) definition of 'solicitation' (personal contact, advertising, responding to inquiries); (5) any carve-outs for permitted activities. Document any ambiguities or overly broad language that suggests unreasonableness. Research whether your employer's actual business scope matches the geographic restriction (e.g., if a local business claims statewide restriction, note this).

Step 3 — Consult an Employment Attorney Before Acting. File a lawsuit challenging enforceability BEFORE soliciting customers or employees if possible. Contact a Tennessee employment law attorney immediately (search 'Tennessee employment law attorney' or contact the Tennessee Bar Association's lawyer referral service at 615-383-7421). An attorney can file a declaratory judgment action asking the court to declare the agreement unenforceable. This protects you from breach-of-contract liability while the court assesses reasonableness. Provide your attorney with: (1) signed agreement, (2) all consideration documentation, (3) job description and employment records, (4) employer's scope of business and market territory, (5) details of any protected activity the employer is trying to prevent.

Step 4 — Understand the Court Challenge Process. Once filed, the case typically proceeds through: (1) discovery (both sides exchange documents and take depositions, usually 6-12 months); (2) possible motion for summary judgment (employer or you ask the judge to rule without trial based on undisputed facts); (3) trial if summary judgment is not granted (judge applies T.C.A. § 47-25-101 reasonableness test). The employer bears the burden of proving enforceability; you bear the burden of proving it is unreasonable. Expect the litigation to take 12-24 months and cost $5,000-$25,000 in attorney fees depending on complexity. During this period, courts may issue preliminary injunctions preventing you from solicitation pending trial outcome.

Step 5 — Determine If You Have Additional Claims. Beyond challenging the agreement's enforceability, investigate whether: (1) the employer breached the employment contract (e.g., wrongful termination); (2) the employer retaliated against you for protected activity (whistleblowing, workers' compensation claim, jury service); (3) the non-solicitation was applied discriminatorily (based on age, race, gender, disability, religion, or other protected class); (4) the restriction violates antitrust law by effectively creating a cartel preventing employee movement; (5) you received no consideration and the agreement was imposed after hire without additional benefit. If you identify additional claims, include them in your declaratory judgment action or bring them as counterclaims to any breach-of-contract lawsuit the employer files against you.