Non-compete agreements (also called restrictive covenants) protects employers by restricting a previous employee from working for a competing business or starting a similar company within a specified geographic area for a defined period of time. Non-compete agreements are enforceable in Wisconsin and are fairly common in roles with access to customer relationships, trade secrets, confidential information, or specialized skills. Common industries and job types include:
- Sales and account management (protecting client lists)
- Healthcare including doctors, nurses, therapists, especially in private practices or specialty clinics
- Technology, engineering, and manufacturing (protecting proprietary processes or IP)
- Executive or key employee roles with significant business knowledge
- Trades or service businesses such as HVAC and landscaping that involve client relationships
- Professional services such as finance, consulting, insurance, and real estate
Understanding Enforeceable Non-Compete Agreements: The 5-Point Test
For a non-compete agreement to “stick,” it must meet all these requirements (courts review them carefully, and if any part is unreasonable, the whole covenant can be voided or modified in part:
- Necessary to Protect a Legitimate Business Interest — Such as trade secrets, confidential information, or customer goodwill (not just general competition).
- Reasonable Time Duration — Often 6–24 months.
- Reasonable Geographic Scope — Must be limited (e.g., specific counties or radius where the employer actually operates—not the whole state or country unless justified.
- Not Excessively Oppressive to the Employee — Cannot unfairly prevent an employee from earning a living in their field
- Not Contrary to Public Policy — Cannot harm the public (e.g., creating a monopoly in essential services).
The agreement must also be supported by consideration (something of value, like a job offer, promotion, or bonus). Courts evaluate facts case-by-case basis.
Typically, an employer will issue a cease-and-desist letter as a formal warning notice to both you and your new employer. If this notice is ignored, the company may initiate a lawsuit seeking a court-ordered injunction to prevent you from working for the competitor, as well as potential financial damages.
How to Successfully Challenge a Non-Compete Agreement
- Challenge Enforceability: Contest the validity of the agreement by arguing that it fails to meet one or more of the five legal criteria—such as containing an overly broad duration or geographic scope, or lacking a legitimate business interest. This remains the most common and effective defense strategy.
- Identify a lack of consideration or procedural irregularities, such as agreements signed under duress or after the commencement of employment without additional benefits.
- Negotiation: Many cases are resolved through narrowed terms, a buyout, or a shortened non-compete period.
- Counterclaims: These may be pursued when the employer acted in bad faith or violated other labor laws, such as wage and hour regulations.
- Retain an employment attorney early to review the agreement and mitigate enforcement risks.
Consult Our Experienced Non-Compete Attorneys for Guidance
Courts may declare an agreement void or modify its terms if they are deemed unenforceable. However, if an employer prevails, individuals may be barred from their new role during the restricted period. They may also be liable for damages—such as actual losses or disgorgement of earnings—and attorney’s fees. Given these significant risks, it is essential to consult with our experienced employment law attorneys to discuss your case. Contact the Wisconsin employment law offices of Alan C. Olson & Associates for immediate assistance at 262-785-9606.
