WeVote
Log In

Bill

Bill

SB 995

Contracts - As introduced, prohibits the enforcement of any restriction on the right of an employee or contractor to practice the employee's or contractor's profession upon termination or conclusion of the employment or contractual relationship. - Amends TCA Title 50; Title 63 and Title 68.

114th Regular Session (2025-2026) Introduced by Paul Bailey

Tennessee prohibits non-compete clauses for employees and contractors, making such restrictions void and unenforceable from July 1, 2025, with limited exceptions.

Senate Reset on calendar for 4/20/2026
#contracts
0
WeVote Research Nonpartisan
Bill Summary · SB 995

Summary of Bill: SB 995 / HB 1034 (Tennessee, 114th General Assembly)

Overall purpose

  • Prohibits non-compete restrictions for employees and contractors in Tennessee. The bill aims to void enforceability of covenants that restrict an individual from practicing their profession after termination or conclusion of employment or contractual relationships.
  • Applies broadly to contracts entered into or amended on or after July 1, 2025, with limited exceptions and transitional adjustments to existing statutes.

Key provisions and changes

  • Section 1 (New prohibition):

    • Adds a new provision stating that, unless otherwise provided in specific law, a restriction on the right of an employee or contractor to practice their profession after the end of the relationship is void and unenforceable in Tennessee.
    • This creates a general ban on non-compete covenants for employees and contractors, subject to exceptions in the law.

  • Section 2–7 (Statutory alignment and repeal/adjustments):

    • Repeals or significantly modifies several existing provisions that previously allowed non-compete restrictions in certain contexts (notably in healthcare and other professional settings). Specifically:
    • Eliminates Tennessee Code § 63-1-148 (which historically governed covenants not to compete and related provisions).
    • Removes cross-references in § 63-6-204 and § 68-11-205 that previously allowed non-competes under certain conditions, effectively removing most carve-outs.
    • Adjusts formatting and references to ensure the new regime is uniform across sections.

  • Section 8 (Enforcement timing for certain other restrictions):

    • Modifies existing language to reflect the broader prohibition and remove conditional language tied to § 63-1-148, ensuring consistency with the new policy.

  • Section 9 (Effective date and applicability):

    • Takes effect July 1, 2025.
    • Applies to contracts entered into or amended on or after July 1, 2025.

  • Additional amendments (as reflected in amended fiscal notes):

    • A later amended version (SB 995 as amended) adds a concrete test for reasonableness of the time period for any restrictive covenant and sets an income-based threshold for non-compete enforceability:
    • Prohibits non-compete agreements between an employer and an employee whose annual compensation is less than $70,000.
    • Establishes criteria a court must follow to determine the reasonableness of the duration of a restrictive covenant.

Who is affected

  • Employees and contractors: The core group affected by the general prohibition on non-compete restrictions.
  • Employers and entities that hire or contract with professionals: Businesses must revise or remove non-compete clauses in new and amended contracts.
  • Healthcare providers and facilities: Previously existing carve-outs and exemptions related to medical professions are removed or limited; however, detailed alignment with physicians in hospital-affiliated settings may be preserved or adjusted by the amended language.
  • State agencies and regulatory bodies: No significant new enforcement or oversight duties are anticipated; fiscal analysis indicates no substantial state cost.

Procedural and timeline aspects

  • Effective date: July 1, 2025.
  • Applicability: Contracts executed or amended on or after July 1, 2025.
  • Legislative path:
    • Introduced as HB 1034 (Alexander) and SB 995 (Bailey), with cross-chamber sponsorship.
    • Underwent committee reviews and scheduling in 2025-2026, with amendments to reflect the reasonableness standard and the $70,000 income threshold.
    • Passed several committee votes and progressed toward floor action as of the latest action history.

Fiscal and commerce impact (as assessed in fiscal notes)

  • Fiscal impact: Not significant. No new state enforcement or ongoing oversight duties are anticipated; private contracts are primarily affected without requiring additional state resources.
  • Commerce impact: Not significant. The bill does not ban confidentiality, non-solicitation, or client/customer restrictions; it mainly eliminates non-compete enforceability for most workers while allowing other contractual protections to remain.

If you’d like, I can tailor this into a one-page briefing for policymakers or a comparison table showing pre- vs. post-provision language.

Compiled from official sources — confirm details with the bill’s official record.

Sign in to ask a question.