Business owners often struggle both to find and retain qualified workers. Recruitment can also be an expensive process for any organization. In fact, according to the Society for Human Resource Management (SHRM), U.S. employers typically spend more than $4,000 every time they hire a new worker.
To encourage workers not to leave, employers may ask them to sign noncompete agreements. You should understand that the enforceability of these agreements can be tentative at best, though. If your employer has asked you to execute a noncompete agreement or has suggested that you may need to do so in the future, you should know a few things about these contracts.
The nature of noncompete agreements
Also called restrictive covenants or covenants not to compete, noncompete agreements generally prevent an individual from joining a competitor’s workforce or starting their own competing venture for a specific time after the employment relationship ends. Naturally, these agreements attempt to stop workers from using insight gained from working for an employer in a manner that may be detrimental to the organization. Nondisclosure agreements may also accomplish similar goals.
What does Wisconsin law state?
The Wisconsin State Assembly has codified noncompete agreements. Among other things, the noncompete statute notes that these agreements are legally binding, provided their restrictions are reasonably necessary to protect the employer.
Said differently, if restrictions are too broad, a court is likely to invalidate the noncompete agreement. There is a significant amount of case law on reasonable necessity, however. If you signed a noncompete agreement, you may want to research whether it is enforceable before relying on it.
Timing and area
When considering whether a noncompete agreement is reasonably necessary to protect an employer, a court is apt to consider both timing and area. Again, neither restriction may be overly broad for a noncompete agreement to remain valid. Typically, these agreements should last for a year or less. They should also not stretch too far outside the employer’s geographic area.
If you have a noncompete agreement at your current place of employment, you may think you have very few options for furthering your career by changing jobs. Nevertheless, if your contract is unreasonable, your employer may have difficulty enforcing it.