In addressing the enforcement of noncompete agreements between an employer and an employee, Wisconsin law has attempted to strike a balance between: (a) ensuring that employees are not unduly restricted in their rights to compete with their former employers and to seek and obtain gainful employment; and (b) the rights of employers to not have former employees exploit either their inside knowledge or their relationships developed while employed, to unfairly compete.
In order to be enforceable under Wisconsin law, noncompete agreements must generally: (1) be necessary for the employer’s protection; (2) provide a reasonable time period; (3) cover a reasonable territory; (4) not be unreasonable as to the employee; and (5) not be unreasonable as to the general public.
The recent Wisconsin Supreme Court decision in The Manitowoc Company, Inc. v. Lanning, reinforces the danger that Wisconsin courts will strike down overly broad noncompete agreements/provisions that unduly restrict the rights of former employees to compete with the former employer or to seek and obtain gainful employment. In Manitowoc, the Wisconsin Supreme Court found that the employer could not enforce a broad nonsolicitation provision that prohibited its former employee from soliciting any of its 13,000 employees for two years following termination of his employment. Proceed with care when drafting such agreements to increase the likelihood that the terms of such agreements will be enforced when your company needs it the most.
[Legal advice not only involves an understanding of the law, but the application of the law to a particular set of circumstances or facts. Blog posts are imperfect tools to address the subtlety and exceptions of the law that may apply in particular situations. As a result, the information in this blog post does not represent legal advice. If you are in a situation where you need or desire legal advice, we would be happy to help. Call Paul at 608-358-9413 to set-up your no-charge initial consultation.]