Is My Employee Noncompete Agreement Still Enforceable in 2026?

You just used your standard noncompete template for a new VP hire in Nashville.

Everything looks familiar.

Then you discover that Tennessee and Virginia both changed their noncompete laws effective July 1, 2026.

That old template may no longer provide the protection you expected.

For a growing company, this is more than a paperwork issue. A noncompete is supposed to protect the business when an important employee leaves. If the agreement is unenforceable when you need it, the company’s leverage can disappear at exactly the wrong time.

Tennessee Now Has a $70,000 Wage Threshold

Tennessee’s new law bars noncompete agreements for employees earning under $70,000 per year, effective July 1, 2026. It also creates a two-year presumptively reasonable duration for covered noncompetes.

That creates two immediate issues for employers.

First, an employee below the $70,000 threshold cannot be protected by an enforceable noncompete under the new rule.

Second, a restriction lasting more than two years becomes harder to defend because it falls outside the new presumptive reasonableness period.

This matters for companies that use one standard agreement across their workforce.

A flat-rate template may no longer work for every Tennessee employee.

Virginia Changed the Rules for No-Cause Terminations

Virginia’s SB170 creates a different problem.

Under the new law, a noncompete is void against an employee who is terminated without cause unless disclosed severance tied to the restriction was paid.

That means the company’s own termination decision can affect whether its noncompete remains enforceable.

For example, suppose you terminate a Virginia employee without cause and expect the existing noncompete to prevent them from immediately joining a competitor.

If the required severance arrangement was not properly disclosed and paid, the restriction may disappear when the employment relationship ends.

The protection you thought you had can therefore be lost because of how the termination was handled.

One National Template Is No Longer Enough

Multi-state employers have a particular problem.

It is tempting to create one employment agreement and use it for every employee regardless of location.

But state-specific rules can change whether a noncompete is enforceable.

A template that worked in one state may fail when used for a Tennessee or Virginia employee because of their different wage and severance requirements.

Your employment agreements should therefore be reviewed based on where employees work, not simply where the company is incorporated.

This becomes even more important as startups hire remotely and expand into multiple states.

Old Agreements May Not Be Safe Forever

Another assumption founders should reconsider is that an old noncompete is automatically protected by the law that existed when it was signed.

An amendment, renewal, or new offer letter connected to a promotion after July 1, 2026 can trigger the new legal framework.

That means employment changes deserve attention.

A promotion may seem unrelated to the noncompete.

A revised offer letter may look like routine HR paperwork.

But if the agreement is amended or renewed, the company’s legal position may change.

Founders should not assume that an old agreement remains untouched simply because the employee originally signed it years ago.

Virginia Employers Need a Termination Plan

The Virginia rule creates an operational issue beyond drafting.

Your HR and legal teams need to know what happens when an employee covered by a noncompete is terminated without cause.

Failing to build the required severance approach into the termination process can void the noncompete and potentially expose the company to statutory damages and attorneys’ fees.

That makes the termination process part of noncompete compliance.

It is not enough for the employment agreement to contain appropriate language if the company does not follow the requirements when the employee leaves.

Review Your Existing Agreements Before You Need Them

The worst time to discover an unenforceable noncompete is after a key employee has already resigned.

By then, the employee may have accepted a competitor’s offer and begun preparing to leave.

A proactive review should identify which employees are covered, which state laws apply, whether the agreements contain restrictions that exceed applicable limits, and whether recent employment changes have affected enforceability.

Have a state-by-state review of every noncompete currently in force.

That review is particularly important for companies that have grown quickly through remote hiring.

Common Founder Mistakes

• Using one template in every state: Different state wage thresholds, duration rules, and termination requirements can make a national template unreliable.
• Assuming old agreements are automatically grandfathered: Amendments, renewals, and new offer letters connected to promotions after July 1, 2026 can bring existing arrangements under the new rules.
• Ignoring Virginia’s severance requirement: A no-cause termination without the required disclosed severance can eliminate the noncompete and potentially create additional financial exposure.
• Reviewing agreements only after an employee leaves: By then, it may be too late to fix an agreement that does not comply with the law applicable to that employee.

10-Minute Noncompete Self Check

Before relying on an existing noncompete or issuing a new one, ask:

• Which Tennessee employees earn less than $70,000 per year?
• Does any Tennessee noncompete exceed the new two-year presumptive reasonableness period?
• Does each applicable Virginia agreement address the required severance arrangement for a no-cause termination?
• Has any employee been promoted, renewed, or given a new offer letter since July 1, 2026?
• Have we completed a state-by-state review of existing noncompetes?
• Has our termination process been updated for Virginia employees?

If you cannot answer these questions confidently, do not assume the agreement will hold up when challenged.

Bottom Line

Noncompete law changed significantly in Tennessee and Virginia on July 1, 2026.

Tennessee now bars noncompetes for employees earning below $70,000 and creates a two-year presumptively reasonable duration. Virginia’s SB170 can void a noncompete after a no-cause termination when the required disclosed severance is not paid.

For companies hiring across multiple states, one national template is no longer a safe assumption.

Is Your Employment Paperwork Built for the States You’re Hiring In?

Our launch-ready legal package is tailored to your software, customers, employees, and the way your business actually operates. Schedule a free 30-minute discovery call to discuss your employment agreements and determine whether our team can help strengthen your legal foundation.

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