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Wisconsin Court of Appeals Requires Non-Solicitation of Employees Clauses be Drafted with the same Limitations as Non-Compete Agreements

Businesses in Wisconsin with a non-solicitation of employees clause as part of its post-employment agreements may want to read up on the Wisconsin Court of Appeals decision in The Manitowoc Company, Inc. v. Lanning.

The Court of Appeals held non-solicitation of employees clauses are subject to the same strict enforceability requirements that already exist in Wisconsin for non-compete agreements. Under the decision, non-solicitation clauses written in a significantly limited manner are more likely to be deemed enforceable than those that cover all employees.

Wisconsin currently requires non-compete agreements be written narrowly, only covering certain employees, for a limited amount of time and within a limited geographic area. The decision inManitowoc would require non-solicitation of employees clauses be written in a substantially similar manner. Wisconsin Statute § 103.465 purports to limit restrictive covenants in employment contracts, previously interpreted to mean only covenants not-to-compete. The court in Manitowoc broadened that interpretation to include non-solicitation clauses.

The Company responded to the decision by filing a petition for review with the Wisconsin Supreme Court.  If review is granted, the Court of Appeals could see a reversal. Currently, the majority of the Wisconsin Supreme Court is pro-business and may not agree with the Appeals Court that an “overreaching” non-solicitation clause is as dangerous as an “overreaching” non-compete clause.  Non-competes are generally looked at under close scrutiny because they essentially restrict the method by which someone can earn a living. Non-solicitation clauses, conversely, only prevent employees from moving among employers.

Brody and Associates regularly provides counseling on employment law issues, including non-competes, non-solicitation clauses and restrictive covenants. If we can be of assistance in this area in the states where we are licensed, please contact us at info@brodyandassociates.com or 203.454.0560.