FAQ: Are Non-Compete Agreements Enforceable in Wisconsin

We continue to see an uptick in questions and searches on this topic, so we wanted to take some time to answer the question that always comes up: “Are non-compete agreements enforceable in the State of Wisconsin?” Queue the lawyer talk eye roll because the answer is: “They are if they are done right.”  

Currently (more on this in a bit), in order for a non-compete agreement to be enforceable in Wisconsin, it must:

1. Be necessary for the protection of the employer;
2. Have a reasonable time restriction;
3. Have a reasonable territorial limit (distance from the employer, geographical area, or limited to specific clients or customers);
4. Not be harsh or oppressive to the employee (i.e., not be too overbroad); and
5. Not contradict public policy (e.g., avert your eyes cat people – eliminating the only certified cat surgeon in a 50-mile radius from being a cat surgeon within a 50-mile radius)

In order for a non-compete to be valid/enforceable it has to meet all five requirements. Simply hitting on 4/5 will not suffice.

Further, “consideration” (some sort of benefit) must be provided to the employee in exchange for signing the agreement. “Consideration” does not necessarily mean “money.” While it can take the form of a bonus or stock options or something similarly, notably, the Wisconsin Supreme Court held that gainful employment can also be sufficient consideration for a non-compete agreement.This means employers can condition an individual’s hiring or an employee’s continued employment on him/her signing the non-compete. Of course, and as we consistently find ourselves explaining to people, this means that you as the employer have to be prepared to not hire an individual or to fire a current employee if he/she does not sign.

So, assuming that there’s consideration and that the non-compete agreement is necessary for the employer’s protection, contains reasonable time and geographic restrictions, is not overly oppressive to the employee, and does not contradict public policy, the agreement will be enforceable in the State of Wisconsin. If not, then it will not be enforceable.

It is also important to note that what is “enforceable” can be fluid, in that it will likely change over time. For example, just last year the Wisconsin Supreme Court held that non-solicitation agreements are subject to the same five requirements for enforceability. Prior to that, it was an open question. For this reason, and as much as employers love attorneys, we do recommend that they find an attorney to partner with to have their non-compete agreements reviewed each year and also to be kept abreast of any developments in the law. So happens we know some.

For further questions and guidance on non-compete agreements in your workplace, do not hesitate to contact any of the fine attorneys at Walcheske & Luzi.

Representing clients in all aspects of the employment relationship, our attorneys have been recognized and commended by clients and colleagues alike for their past accomplishments, straightforward advice, practical approach, and zealous advocacy.

Walcheske & Luzi, LLC vigorously litigates discrimination, harassment, wage & hour, retaliation, disability, and FMLA cases (among many others) and also provides consultative advice to ensure that proper and effective policies and preventative measures are in place – not only to avoid liability, future litigation, and to ensure compliance with federal and state laws, but also to guarantee that all employees are treated fairly at work. Our legal skills, experience, thoughtfulness, and personalities allow us to provide the best possible advice and representation for our clients.

At Walcheske & Luzi, Your Work is Our Work. Let’s work together to create practical, cost-effective solutions to your workplace issues.