Enforceability of Non-Compete Agreements
Many employers require employees, as part of the employment agreement, to sign non-compete agreements to protect the employer and its business after the employee leaves the company. It is essential that these non-compete agreements are properly constructed to ensure that they are enforceable. There have been changes to the laws regarding non-compete agreements and such agreements are scrutinized very carefully.
Wisconsin Statutes
Wisconsin Statutes § 103.465 outlines the requirements to enforce a non-compete agreement. It states, “a covenant by an assistant, servant or agent not to compete with his or her employer or principal during the term of the employment or agency, or after the termination of that employment or agency, within a specified territory and during a specified time is lawful and enforceable only if the restrictions imposed are reasonably necessary for the protection of the employer or principal. Any covenant, described in this section, imposing an unreasonable restraint is illegal, void and unenforceable even as to any part of the covenant or performance that would be a reasonable restraint” (emphasis added).
Federal Trade Commission’s Final Rule
The Federal Trade Commission (FTC) announced a “Final Rule” that was set to begin in September 2024, rendering nearly all non-compete clauses unenforceable. There is current pending litigation challenging the rule, but a Texas court has vacated and set aside the Final Rule nationwide holding that its issuance was outside the FTC’s authority and a Florida court has preliminarily enjoined the Final Rule, the FTC has appealed both the Texas and Florida rulings. With the new administration and FTC Chair this year, it is unknown if the FTC will continue its focus on nationwide ban of non-compete agreements and continue to appeal the decisions.
Of note, there are two exceptions to the FTC Final Rule: (1) existing non-competes(pre-September 4, 2024) with senior executives in decision-making positions and who received total annual compensation of $151,164 or more and (2) sale of a business. Both of those exceptions would still be governed by Wis. Stat. § 103.465, if, in fact, the FTC Final Rule comes into effect.
Alternative Agreements
If an employer is concerned with the enforceability of anon-compete agreement under Wis. Stat. § 103.465, protection to the business and its information can still be provided via non-disclosure agreements (NDAs)or non-solicitation agreements. Again, the language of those agreements must be drafted carefully, as they are also subject to Wis. Stat. § 103.465 (specifically the time limitation), to avoid being too broad and become de facto non-compete agreements.
Next Steps
If you have any questions regarding the enforceability of your company’s existing non-compete agreement, NDA, or non-solicitation agreement, please reach out at info@schloemerlaw.com or call our office at 262-334-3471 and ask to speak to one of our Business Law Attorneys.
Originally published: August 1, 2025
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Disclaimer: The information contained in this post is for general informational purposes only and is not legal advice. -Due to the rapidly changing nature of law, Schloemer Law Firm makes no warranty or guarantee concerning the accuracy or completeness of this content. You should consult with an attorney to review the current status of the law and how it applies to your unique circumstances before deciding to take—or refrain from taking—any action. If you need legal guidance, please contact us at 262-334-3471 or info@schloemerlaw.com.