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When Are Non-Compete and Non-Solicitation Agreements Enforceable in Wisconsin?

Posted on in Employment Law

Wisconsin severance package attorneyBy: Attorney Jaclyn Kallie

Many employees encounter employment law issues involving a current or former employer, and these issues may affect their ability to find new job opportunities or earn income based on their skills and experience.  Employees are often asked to sign non-compete or non-solicitation agreements as part of an employment contract or severance package.  Before signing these agreements, employees should be sure to understand the types of restrictions that may be placed on them and whether an agreement will be enforceable if disputes should arise in the future.

Enforceability of Restrictive Covenants in Wisconsin

A non-compete agreement may prohibit an employee from working for a competitor, starting a competing business, or engaging in other competitive activities after leaving a company.  A non-solicitation agreement may prohibit a person from attempting to hire other employees of a company, or a former employee may be restricted from contacting a company’s customers and offering to provide them with goods or services that were provided by their former employer.  These agreements are known as “restrictive covenants” since they place restrictions on the types of business activities a person can engage in.

Wisconsin law (Wis. Stat. § 103.465) states that restrictive covenants are only enforceable if they impose restrictions that are reasonably necessary to protect an employer.  In Wisconsin, unlike many states, this is an “all or nothing” rule, and if any part of a restrictive covenant is determined to be unreasonable, the covenant as a whole may be unenforceable.  This does not mean, however, that the remaining covenants in the agreement are unenforceable.

When determining whether an agreement is reasonably necessary to protect the interests of an employer, courts will look at the time limits and geographic scope of the restrictions.  A restriction on competitive behavior or solicitation that lasts for two years or less is generally considered to be a reasonable time restriction, although exceptions may apply in certain situations.  Geographic restrictions may be reasonable if they apply to the areas or regions where a person worked while they were employed by a company or the areas where a company does business. 

The restrictions placed on an employee by a non-compete or non-solicitation agreement may be considered unreasonable if they severely limit a person’s employment opportunities or their ability to work in their field of expertise.  Generally, an agreement may be found to be unenforceable if its restrictions are overly broad.  For example, a non-solicitation agreement that prohibits a person from contacting any past, present, or future customers of their former employer would likely be unenforceable.  A non-compete agreement may be unenforceable if it restricts a person from working in any capacity for a competitor or if it restricts a person from offering services in a region that is outside of the geographical area where their former employer operates.

Contact Our Milwaukee Employment Law Attorneys

If you are unsure about whether you should sign a non-compete or non-solicitation agreement, if you are considering leaving your current employment for a competitor, or if you are involved in a dispute with a former employer about whether you have violated this type of agreement, the attorneys of Gimbel, Reilly, Guerin & Brown, LLP can advise you of your rights. We will provide you with legal representation when addressing these matters, ensuring that you will be able to maintain gainful employment and avoid unreasonable restrictions. Contact our Milwaukee employment dispute lawyers at 414-271-1440 to get the legal help you need.

Sources:

https://docs.legis.wisconsin.gov/statutes/statutes/103/465

http://www.wdc-online.org/application/files/8914/8027/4208/Backer_Outline.pdf


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