Employers commonly require their employees to sign a non-compete agreement as part of the terms of their employment. Generally speaking, they are a popular practice in situations where the employee will have access to sensitive or confidential business information as part of their daily job duties.
Although it may be impracticable to prevent someone from leaving a particular job, a non-compete agreement can be used to restrict the employee from working for a competing company. If you need assistance with your company’s current legal issues in the Milwaukee area, McDonald & Kloth, LLC can help you prepare non-compete agreements and other business contracts.
What is a Non-compete Agreement?
A non-compete agreement is a contract between an employer and the employee. Its purpose is to prevent the employee from entering into markets or professions that directly compete with the employer during or after employment. Employers may require a non-compete agreement for a variety of reasons, including protecting trade secrets or preventing the misuse of intellectual property.
However, courts are frequently against non-compete agreements as it can limit a former employee’s right to earn a living. Consequently, when non-compete agreements are made the subject of a legal dispute, they are closely examined in the court system.
Enforceability of a Non-compete Contract in Wisconsin
It’s especially important for non-compete agreements to be written very carefully so as not to be overly restrictive. If a court finds that the agreement is too restrictive, it could potentially be declared invalid. According to the Wisconsin statue Section 103.465, a non-compete agreement is lawful and enforceable only if the restrictions imposed are reasonably necessary for the protection of the employer or principal. Any covenant imposing an unreasonable restraint is illegal, void and unenforceable.
In short, a non-compete is enforceable if:
- It’s reasonably necessary to protect the employer.
- It’s reasonable in geographic scope.
- It’s reasonable in duration.
- The restriction isn’t unnecessarily hard on the employee.
Non-compete Agreements Must be Fair and Equitable for All Parties
In general, a non-compete requires certain information in order to be considered legally binding. The agreement must include:
- A date in which the agreement goes into effect.
- A justifiable reason for establishing the agreement.
- Specific locations and dates during which the employee will be prohibited from working for a competing company.
- Compensation to which the employee was not previously or otherwise entitled.
How We Can Help with Legal Agreements
If you have questions or concerns about a non-compete agreement that you’re asked to sign, immediately speak with an experienced corporate & business lawyer. McDonald & Kloth, LLC has in-depth knowledge of non-compete agreements and all other aspects of employment contracts. Contact us today to discuss how our experienced attorneys can help.