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Non-Compete Statute Applies To No-Raiding Provisions

The enforcement of non-compete agreements in Wisconsin is governed by the provisions of Wis. Stat. § 103.466, which sets forth five requirements that must be met in order for the restriction to be enforceable. Over the years, the courts have found that these restrictions applied not just to traditional non-compete agreements, but also to agreements not to solicit customers, non-disclosure/confidentiality agreements, and no-hire agreements between two employers. It therefore comes as no surprise that the Wisconsin Supreme Court recently held that the restrictions found in § 103.465 also apply to “no-raiding” covenants, which restrict former employees from soliciting or “poaching” employees of their former employer.

In Manitowoc Company v. Lanning, 2018 WI 6 (January. 19, 2018), the Wisconsin Supreme Court held that such “no raiding” or “no poaching” restrictions constitute restraints of trade of the nature that Section 103.465 was intended to address. Therefore, in order to be enforceable, they must satisfy all the requirements of the statute. The court then held that the specific “no-raiding” provision at issue in the case before it was not enforceable because it was overly broad, barring the solicitation of “any employee,” which could be read to include every one of the company’s 13,000 employees world-wide, regardless of their position, relationship with the departing employee or geographic location.

As always, when drafting non-compete agreements and similar restrictive covenants, employers must take care to ensure that they are narrowly drafted and focus entirely on the competitive threat posed by the particular employee and the position that he/she occupies.

If you have any questions feel free to contact Attorney Alan E. Seneczko at (262) 560-9696, or alseneczko@wesselssherman.com.

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