Monthly Archives: February 2024

Wisconsin-based workers often remark to me their belief that their non-compete agreements are “probably invalid.”

This belief is common, and understandable. 

But it’s usually incorrect. And that belief does not provide the workers with a silver bullet or an ace in the hole. Below, I’ll explain why. 

The origin of this belief, I believe, stems from Wisconsin’s non-compete statute at Wis. Stat. 103.465.

That statute provides as follows (bold emphasis mine):

“A covenant … not to compete with his or her employer or principal … within a specified territory and during a specified time 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…”

The Wisconsin Supreme Court further clarified these standards:

“This court … set forth five basic requirements necessary to enforcement of a restrictive covenant. … They are: (1) The agreement must be necessary for the protection of the employer or principal; (2) it must provide a reasonable time period; (3) it must cover a reasonable territory; (4) it must not be unreasonable as to the employee; and (5) it must not be unreasonable as to the general public.” See Chuck Wagon Catering, Inc. v. Raduege, 277 NW 2d 787, 88 Wis. 2d 740, 751 (1979).

To sum up the law above, a given non-compete agreement could be invalidated by a Court if, among other things, that agreement covers an unreasonable (too long) period of time, and/or an unreasonable (too broad) geographical territory.

Word of these legal standards, I believe, has dispersed among the Wisconsin business-masses, with workers becoming familiar with standards above, including the notion their own-noncompete agreements may be legally-invalid if they cover an unreasonable timeframe and/or territory. 

And if you look at your non-compete agreement and determine it is unreasonably lengthy and/or geographically broad, then your non-compete agreement is surely invalid and you don’t have to worry about it. Right?

Wrong.

The fundamental problem underlying the common “my non-compete is invalid” belief is this: it is a Court, not you (or me, as a lawyer) that gets to make that legal determination whether the agreement is in fact legally invalid or not.

Relatedly, it takes a process, i.e. an investment of time and money, in order to obtain that legal determination. And the Court may or not agree with your assessment (or mine). Thus, risk exists as to that legal process. Plus, the employer likely believes it is valid, and if they decide to sue you it will be based on their belief, not your (or your lawyer’s or others’) beliefs.

So there is no bird in the hand, or silver bullet, when it comes to one’s own beliefs about the invalidity of his or her non-compete agreement.

Do I say all this to claim your non-compete agreement is valid, and that your former employer is sure to win a legal dispute if they sue you based on that agreement? Not at all.

Rather, I’m saying that whether the agreement is valid is an open question, with a process necessary in order to get a (legally-binding) answer.

So, what should you do?

Consult with an employment lawyer. (And while I’m happy to talk, it doesn’t have to be me 🙂 ).

Furthermore: only consult with a lawyer when the time is right.

When is the time right?

In my opinion, the time is right when circumstances are such that it is most cost-effective, and risk-effective, for you to do so.

More specifically: once you have a new job offer, or a new business opportunity, consult with a lawyer at that time, i.e. before you accept or start the new work.

At that point in time, the lawyer can: (1) review your new job/business opportunity and the details of what business, work, duties, etc. will be involved; (2) review your non-compete agreement, and consider its terms as applied to the circumstances of your new opportunity; and (3) advise you about the safest, lowest-risk courses of action you can take in light of that agreement and those circumstances.

Usually, when I have consultations with clients about non-compete agreements, the consultations do not end with me telling the clients a legal opinion that they should not accept or work at the new job/business opportunity. Rather, the consultations usually involve discussions of (manageable) dos and don’ts and ways to mitigate/reduce risks.

During a consultation, I typically describe (in my opinion) the odds whether a Court would find the agreement enforceable. But that part of the discussion is just one issue among other, more important issues. 

Most important of all is deciding upon a plan and strategy to move forward with the new job opportunity, while doing (and not doing) certain things to avoid certain risks inherent to your particular non-compete agreement and circumstances.

Of the many persons I’ve had consultations with about non-compete agreements, I cannot recall a single instance where someone I had consulted with was later sued. 

While I have represented some persons defending non-compete lawsuits, those persons had first retained me after their employer-troubles/lawsuits had already occurred. They had not had a lawyer consultation, of the type I recommend above, before their new (allegedly competitive) work had begun.

In summary: Wisconsin workers should avoid relying on the (faulty) assumption that their non-compete agreements are “probably invalid”, and avoid basing important decisions (e.g. whether to accept a given new job) on that assumption. Instead, consider investing in a lawyer consultation at the point in time you’ve had a new and tangible opportunity arise, but you have not yet accepted or started that work. 

In my view, the old saying is quite true that an ounce of prevention (i.e. having a preventative legal consultation for a @$300 fee that helps you ward off future problems) is better than a pound of cure (i.e. paying a lawyer thousands of dollars after a lawsuit’s been filed against you).