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Update to previous article -- Wisconsin Supreme Court Set to Tackle Non-Compete Case

Last year, the Wisconsin Supreme Court granted certification in Runzheimer Int’l, Ltd.; v. Friedlen, No. 2013AP1392 to answer the following question: is continued employment for an at-will employee sufficient consideration in signing a covenant not to compete. We previously explained the facts and posture of the case in an article which can be found here.

On April 30, 2015, the Wisconsin Supreme answered the question; finding that continued at-will employment is enough consideration for a covenant not to compete (the covenant not to compete must be otherwise enforceable). The Court stated that “an employer's forbearance in exercising its right to terminate an at-will employee constitutes lawful consideration for a restrictive covenant.” The employee raised concerns over an employer forcing an at-will employee to sign a covenant not to compete and then terminating the employee shortly thereafter. The Court, however, was not persuaded because an “employee would be protected by other contract formation principles such as fraudulent inducement or good faith and fair dealing, so that the restrictive covenant could not be enforced."

What does this mean?

Wisconsin employers now have a better understanding of how to implement or modify covenants not to compete with their existing employees. Employers should still be careful if they decide to implement a “sign the restrictive covenant or your fired” approach. This is because employers will need to demonstrate that the covenant not to compete really was a condition of continued employment and be prepared to terminate those who refuse to sign. If there is any doubt as to how to implement or modify a covenant to compete, it would be prudent to consult with your DeWitt attorneys.


About the Author

Barret Van Sicklen is an attorney practicing out of our Madison office. He is a member of the Labor & Employment Relations, Litigation, and Real Estate & Land Use practice groups. Contact Barret by email or by phone at 608.252.9386.

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