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Crafting a noncompete agreement enforceable under employment law

On Behalf of | Jan 31, 2019 | Employment Law |

Business owners spend months and years developing and growing their businesses, and they want to make sure that their interests are protected. Employee contracts are a good solution to these concerns as they generally provide important protections for both employers and their workers. A well-worded noncompete clause can also ensure that sensitive business interests are safeguarded. However, it is important to make sure that these agreements fall within the confines of Wisconsin employment law.

There are three main requirements for noncompete agreements to be considered valid. For the first requirement, an employee has to receive something in exchange for promising to not work for a competitor. When signed before the start of employment, then the job itself is usually considered to be sufficient. If a boss wants an already established employee to sign an agreement, then something like a bonus or a promotion might be a more appropriate offer of value.

Secondly, the agreement must seek to protect a legitimate business interest. This means that a noncompete clause cannot cite well-known industry practices or other common business techniques. Employers using noncompete agreements usually do so to protect confidential information, including trade secrets or information that gives a business a competitive edge.

Finally, these agreements must be reasonable in scope. While it is important to protect legitimate business interests, employees must live with the real-world implications of these clauses. Any agreement that is deemed too long in duration or too wide in scope might not be enforceable, so keeping these parts of contracts focused and concise is important.

Crafting an enforceable employee contract is just one aspect of running a business, and getting it right is essential. A well-worded contract not only provides necessary protections, but it also signals to potential and current employees that an owner is professional. Since this aspect of running a business can be understandably confusing, an attorney who is well-versed in Wisconsin employment law might be able to provide clear guidance to owners.