Non Compete Agreement Wisconsin

A non compete agreement Wisconsin is used between Wisconsin employers and employees to prevent an employee from engaging in certain activities for a period of time in a particular geographical area after the employee stops working for the employer.

Non-compete agreements, also referred to as covenants not to compete or restrictive covenants, are employer-employee contracts that are used by employers to limit an employee’s ability to begin working for a competitor for a period of time after leaving the company. This will help prevent the disclosure of trade secrets and other confidential information that the former employee might have.

How Long Must the Employee Remain at the Company?

There is a common question as to how long the employee must remain at the employer before the employer can enforce such an agreement. Generally, Wisconsin will review such issues on a case-by-case basis, as the state court has previously found such non-compete agreements to be unenforceable due to the fact that the employee didn’t work for the company for a long period of time or the employee being forced into the non-compete agreement was being treated unfairly as other similarly situated employees were not forced into such an agreement.

When reviewing these types of cases, the court will look to the following factors:

  • The size of the company, i.e., how many employees
  • If the agreement is used for all employees
  • The type of business, i.e., industry
  • How long the non compete agreement prohibits the move to a competitor
  • What geographical restrictions apply
  • Whether consideration exists in the non-compete agreement

Wisconsin has a statute that covers such non-compete clauses (Section 103.465). The statute specifically indicates that, if the non-compete agreement is reasonably necessary to protect the employer and the scope of the agreement is reasonable in both geographical location and time restrictions, then it will be enforceable.

Enforceability of a Non-Compete Agreement

In addition to the above-mentioned factors, Wisconsin courts will look to the following five factors when determining whether or not the contract is enforceable:

  • The agreement must be necessary to protect the employer.
  • The contract must state a reasonable time restriction, i.e., one-year is usually the maximum period of time.
  • The contract must have a reasonable geographic restriction.
  • The contract cannot be too broad.
  • The contract must not violate public policy.

With regard to the above factors, the agreement itself must be necessary to protect the employer. Furthermore, the time restriction must be reasonable. If the employer tries to prevent its former employee from going to a competitors for a period of more than one year, that will usually not be enforceable. Most employers who have such agreements generally have a time restriction of between three months to one year.

The employer must be careful when placing restrictions on where the employee can go. For example, if the employee is leaving the telecommunications company to go work for a competitor that is located 100 miles away, then the former employer cannot prevent such movement. However, if the competitor is located down the street, then this would likely be a geographical restriction identified in the non-compete agreement.

The contract cannot be too broad. An example of this would be if the employer wants to prevent its employee from working for any other telecommunications company in the state of Wisconsin.

The contract itself cannot contradict public policy. For example, let’s assume a veterinary surgeon wants to leave the current vet’s office to go work for another vet that is located 10 miles away. There is currently no other veterinary surgeon operating within a 50-mile radius. But the agreement indicates that the surgeon cannot work in a competitor’s office within a 50-mile radius. This would simply contradict public policy, and therefore, the agreement would not be enforceable.

Lastly, the Wisconsin courts will always look for consideration of some kind in the agreement. Therefore, there must be some type of benefit provided to the employee in exchange for the employee’s agreement to sign the contract. An example of consideration in this situation would be the employer’s promise to continue employing the person for signing the agreement. Therefore, if the employee fails to sign the non-compete agreement, his or her employment would end.

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