Crafting noncompete agreements under Wisconsin law 101

A noncompete agreement is one of the most significant employment-related documents an employer may ask an employee to sign. It can help protect customer relationships, confidential information, trade secrets, goodwill, and other legitimate business interests when an employee leaves the company. At the same time, a noncompete can restrict an employee’s ability to earn a living. For that reason, Wisconsin courts scrutinize these agreements carefully and won’t enforce restrictions that go further than Wisconsin law permits.

Why is Wisconsin law so important?

Wisconsin isn’t a state that prohibits noncompetes altogether. However, it has a strict statute governing restrictive covenants in employment contracts. Under Wis. Stat. § 103.465, a covenant not to compete is lawful and enforceable only if the restrictions are reasonably necessary for the employer’s protection. If a restriction is unreasonable, the covenant is illegal, void, and unenforceable even for any portion that might otherwise have been reasonable.

Wisconsin law treats noncompete agreements with caution because they restrain trade and limit employee mobility. The fact that an employer wants protection from competition isn’t enough. The employer must be able to identify a legitimate business interest that justifies the restriction, such as protecting confidential information, trade secrets, specialized customer relationships, or other competitive information that gives it a real business advantage.