What Information Can I Include in an Employee’s Non-Compete Agreement?

 Posted on March 10, 2018 in Business Law

As an “employment-at-will” state, Wisconsin provides employers and employees with the protection of an implied contract allowing either party to end employment at any point for any legally valid reason. However, many employers ask employees to sign employment contracts before they are hired or when they are terminated.

These contracts often contain a non-compete agreement (also known as a non-compete clause) which provides protections for an employer following an employee’s discharge. When creating these agreements, employers should be sure that they are correctly following Wisconsin employment law.

Creating Valid Non-Compete Agreements

A non-compete agreement can restrict an employee from taking certain actions after leaving a company, such as revealing the company’s trade secrets or other sensitive information, working for the company’s competitors, soliciting the company’s current or prospective customers, or contacting the company’s current employees. A noncompete agreement should include:

• The date the agreement takes effect;
• The amount of time the employee will be restricted from competing;
• The geographic area in which the employee is restricted from competing;
• The compensation provided to the employee in return for signing the agreement (known as “consideration”); and
• The competitive actions in which an employee is restricted from participating. Specific competitors or customers may be named, if necessary.

Ensuring that Non-Compete Agreements Are Enforceable in Wisconsin

While non-compete agreements can provide employers with protections, they may not be enforceable if they are too restrictive. Wisconsin law provides the following requirements for enforceability:

• The agreement must legitimately and reasonably protect an employer’s interests, meaning that it should only restrict unfair competitive practices;
• The time period of the agreement must be reasonable. While the law does not provide a specific time limit, agreements typically do not last more than two years;
• The agreement must only restrict competition within a reasonable geographic region. This region should not extend beyond the area the employee typically worked in while employed by the company, and restrictions within this region should only apply to competitive activities;
• The agreement must not unreasonably restrict an employee’s ability to use his or her skills to find future employment; and
  The agreement must not be against public policy, meaning that it should not lead to a shortage of employees who are able to provide needed services within a community. 

Contact a Milwaukee Employment Contracts Lawyer

Non-compete agreements are an essential tool for many modern companies, providing them with the confidence that their former employees will not be allowed to use unfair business practices against them. However, it is important to ensure that these agreements are valid and enforceable, and overly restrictive agreements may end up being invalidated if they are challenged in court.

The skilled attorneys of Gimbel, Reilly, Guerin & Brown, LLP can work with you to create a non-compete agreement that meets the requirements of Wisconsin law and provides you with the protections you need. Contact our Milwaukee, WI employment law attorneys today at 414-271-1440.

Sources:

https://www.wisbar.org/NewsPublications/WisconsinLawyer/Pages/Article.aspx?Volume=86&Issue=4&ArticleID=10765

https://www.thebalance.com/what-is-a-non-compete-agreement-2062045