WI Case Finds Pro-Worker WI Non-Compete Statute Does Not Apply to an Employee’s Stock Agreement

This Wisconsin Court of Appeals case, The Selmer Company v. Rinn, found that Wisconsin’s non-compete statute (Wis. Stat. § 103.465, which protects workers’ mobility, and invalidates overly-restrictive non-compete agreements) did not apply to an employee’s stock option agreement with his employer. According to the Court:

[U]nlike typical restrictive covenants, upon which a prospective employee’s position may depend, there were no consequences attached to Rinn’s refusal to accept the agreement. The circuit court found Rinn was not pressured to sign the stock option agreement, nor was his employment conditioned upon his doing so. Indeed, the circuit court found Rinn’s refusal would not have affected his employment in any way.

Because the non-compete statute did not apply, the agreement’s non-solicitation and confidentiality provisions were scrutinized under law that was better for the employer. The agreement was found enforceable. The employee’s competitive actions were found in violation of the (enforced) agreement’s provisions. This case is also notable because the Courts involved found sanctions (penalties) should be made against the employee for continuing competitive activities that a court prohibited, and also for violating legal procedural rules (specifically, discovery rules). Bottom lines for WI workers: (1) do not assume that WI’s pro-worker non-compete statute will apply to and/or invalidate your non-compete agreement; (2) with non-competes, an ounce of prevention is worth a pound of cure– have an attorney review your situation BEFORE you take a new job and/or engage in activities the employer may allege are non-competitive; (3) there are additional risks to you if you violate a court order (or put yourself in a position where your opponent could argue that to be the case).

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